Proposed Greentech Special Economic

Zone at Atlantis
Feasibility Report

Final Report
Commissioned by the Department of Trade and Industry
11 December 2014
Contents

List of terms and abbreviations ............................................................................................................. 10

Executive Summary .............................................................................................................................. 14
I. Introduction ............................................................................................................................. 14
II. Background ............................................................................................................................. 14
III. Demand for greentech in Atlantis ........................................................................................... 15
IV. Summary of SWOT analysis .................................................................................................. 16
V. Spatial Planning and technical considerations ....................................................................... 17
VI. Legislative framework and governance structure ................................................................... 19
VII. Commercial model .................................................................................................................. 20
VIII. Financial viability..................................................................................................................... 22
IX. Economic viability of the options ............................................................................................ 24
1. Introduction .................................................................................................................................... 26
1.1. Purpose of this Report ............................................................................................................ 26
1.1.1. Special economic zones .................................................................................................. 26
2. Background ................................................................................................................................... 27
2.1. Location .................................................................................................................................. 27
2.2. History of Atlantis .................................................................................................................... 27
2.2.1. Recent developments ...................................................................................................... 28
2.2.2. Outlook ............................................................................................................................ 28
2.3. Understanding and defining the green economy and greentech industry .............................. 29
2.4. Progress to-date in establishing the greentech hub at Atlantis .............................................. 31
2.4.1. Sites identified by the CoCT for the greentech industrial park ........................................ 32
2.4.2. Incentives and support currently provided ...................................................................... 35
2.4.3. Success in attracting investors to-date ........................................................................... 36
2.4.4. Comments and observations on the current strategy and evolution towards an SEZ .... 38
3. Rationale for the Atlantis SEZ ....................................................................................................... 39
3.1. Introduction ............................................................................................................................. 39
3.2. Primary goals and desired outcomes for the Atlantis SEZ ..................................................... 39
4. SWOT Analysis ............................................................................................................................. 41
5. Market analysis –assessing the greentech opportunity for the ASEZ........................................... 44
5.1. Introduction ............................................................................................................................. 44
5.2. Overall approach to greentech market sizing and scenario development ............................. 44

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 5.3. Identification of high priority green technologies for the Atlantis SEZ .................................... 45
5.4. Summary of key greentech market sizing findings and conclusions ...................................... 47
5.5. Greentech demand scenarios ................................................................................................ 50
5.5.1. Our approach – from market sizing to scenario development ........................................ 50
5.5.2. Description of demand scenarios and assumptions........................................................ 50
5.5.3. Assessment of likely uptake under the conservative and moderate demand scenarios 50
5.5.4. Conclusions on greentech demand ................................................................................. 53
5.6. Summary of the broader opportunity for the ASEZ ................................................................ 54
5.6.1. Key conclusions on the broader opportunity ................................................................... 54
6. Technical aspects .......................................................................................................................... 56
6.1. Geo-technical investigation of land portion ............................................................................ 56
6.1.1. Geo-technical considerations .......................................................................................... 56
6.2. Land availability, suitability, and planning, ............................................................................. 57
6.2.1. Land availability ............................................................................................................... 57
6.3. Detailed Land use zoning, site planning and design density, building design ....................... 59
6.3.1. Zoning and environmental considerations ...................................................................... 59
6.3.2. Site planning and design ................................................................................................. 61
6.4. Completion of civil engineering studies .................................................................................. 64
6.4.1. Water sources ................................................................................................................. 64
6.4.2. Bulk water infrastructure .................................................................................................. 64
6.4.3. Bulk wastewater infrastructure ........................................................................................ 65
6.4.4. Stormwater ...................................................................................................................... 65
6.4.5. Solid waste infrastructure ................................................................................................ 66
6.4.6. Waste service delivery .................................................................................................... 66
6.4.7. Transport ......................................................................................................................... 66
6.4.8. Public transport................................................................................................................ 67
6.4.9. Electricity ......................................................................................................................... 67
7. Legal framework and governance structure .................................................................................. 69
7.1. Legislative framework and context ......................................................................................... 69
7.2. Recommended entity and process for application ................................................................. 69
7.3. Governance Structure............................................................................................................. 70
7.4. Conclusions\recommendations .............................................................................................. 73
8. Commercial model ........................................................................................................................ 75
8.1. Key principles for the Atlantis SEZ commercial model ........................................................... 75
8.1.1. Size and extent of the Atlantis SEZ ................................................................................. 75
8.1.1. Sector focus and eligibility for SEZ incentives ................................................................ 76
8.1.2. Delivering SEZ services cost-effectively ......................................................................... 76
8.2. Sources of funding for ASEZ infrastructure and options for facilitation of private sector
investment .......................................................................................................................................... 76
8.3. Activities and services to be provided by the Atlantis SEZ entity and SEZ Operator ............ 78

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 8.3.1. Marketing the SEZ and its facilities to attract investment by greentech firms ................. 79
8.3.2. Property development and management ........................................................................ 80
8.3.3. One-stop-shop investor services ..................................................................................... 81
8.3.4. Provision and upgrading of public infrastructure and services ........................................ 82
8.3.5. Development of a green identify for the ASEZ through provision of green infrastructure
and services ..................................................................................................................................... 83
8.3.6. Provision of range of value-adding services ................................................................... 85
8.3.7. Information and telecommunication infrastructure and services ..................................... 86
8.4. Revenue model and sources .................................................................................................. 87
8.4.1. Income from rental of land and property ......................................................................... 88
9. Financial model ............................................................................................................................. 92
9.1. Introduction ............................................................................................................................. 92
9.2. Overview of four options modelled ......................................................................................... 92
9.2.1. Low road - refurbishment ................................................................................................ 93
9.2.2. Low road – new build ...................................................................................................... 94
9.2.3. High road – refurbish ....................................................................................................... 94
9.2.4. High road – new build ...................................................................................................... 94
9.3. Key model assumptions ......................................................................................................... 95
9.3.1. Capital expenditure assumptions .................................................................................... 95
9.3.2. Operating expenditure assumptions ............................................................................... 96
9.3.3. Revenue assumptions ..................................................................................................... 97
9.4. Summary of model outputs ..................................................................................................... 99
10. Economic impact assessment .............................................................................................. 104
10.1. Summary of key findings ................................................................................................... 104
10.2. Construction related impacts ............................................................................................ 105
10.3. Operations and maintenance phase ................................................................................. 107
10.3.1. Employment and income effects (ASEZ tenants) ......................................................... 107
10.3.2. Operations and maintenance expenditure impacts (ASEZ entity only)......................... 108
10.3.3. Other socio-economic impacts ...................................................................................... 109
11. Impact on transport and spatial development ...................................................................... 111
11.1. Transportation impacts of the proposed concept layout of Atlantis SEZ .......................... 111
11.1.1. Access to site 1 ............................................................................................................. 111
11.1.2. Small industries access ................................................................................................. 112
11.1.3. Large portion access (wind blade manufacture) ........................................................... 112
11.1.4. Impact of abnormal loads on local road network ........................................................... 112
11.1.5. Impact of abnormal loads on intersection further afield. ............................................... 115
11.2. Spatial Development Framework ...................................................................................... 116
11.2.1. Spatial planning context ................................................................................................ 116
11.2.2. Site development plan ................................................................................................... 118
12. Risk analysis ......................................................................................................................... 120

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 12.1. Disaster risk assessment and plan ................................................................................... 120
12.1.1. Introduction .................................................................................................................... 120
12.1.2. Levels of hazard ............................................................................................................ 121
12.1.3. Disaster Management Recommendations .................................................................... 124
12.1.4. Disaster Risk Plan Performance Criteria ....................................................................... 126
12.2. Project Risk Register ........................................................................................................ 127
13. Conclusions .......................................................................................................................... 132
13.1. Demand for greentech in Atlantis...................................................................................... 132
13.2. Spatial Planning and technical considerations ................................................................. 133
13.1. Commercial model ............................................................................................................ 135
13.1. Financial viability ............................................................................................................... 136
13.2. Economic viability of the options ....................................................................................... 137
13.3. Key conclusions ................................................................................................................ 138
Annexure 1: Schedule of Interviews ................................................................................................... 140
Annexure 2: Spatial policy and planning context ................................................................................ 141
Annexure 3: Legal Opinion on entity ................................................................................................... 148
Annexure 4: Memo on operational and governance framework ......................................................... 154
Annexure 5: Disaster Risk Assessment .............................................................................................. 168
A. Introduction ........................................................................................................................... 168
B. Background ........................................................................................................................... 175
a) SEZ-related emergencies and disasters .............................................................................. 175
b) Methodology ......................................................................................................................... 176
c) Key performance areas for disaster management planning ................................................ 177
C. Hazards related to Atlantis SEZ ........................................................................................... 178
D. Natural Hazards .................................................................................................................... 178
a) Lightning strikes .................................................................................................................... 178
b) Wind direction, High Winds and Gust factor ......................................................................... 180
c) Floods ................................................................................................................................... 183
d) Hail storms ............................................................................................................................ 184
e) Fire ........................................................................................................................................ 184
E. Man-made Hazards .............................................................................................................. 186
a) Condition of access roads .................................................................................................... 186
b) Socio-cultural stability ........................................................................................................... 188
c) Crime, especially drug-related concerns .............................................................................. 194
d) Societal instability based on external factors ....................................................................... 195
e) Aerial and aviation-related hazards ...................................................................................... 195
f) Bulk services supply failure: Bulk water, waste water treatment and storm water; solid waste
197
g) Electricity supply failure ........................................................................................................ 197
h) Power station hazard ............................................................................................................ 197

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 i) Fire and Rescue Emergency Services ................................................................................. 199
j) Public Protection Services .................................................................................................... 199
k) Health Services ..................................................................................................................... 199
F. Disaster management recommendations ............................................................................. 200
a) Early Warning Processes ..................................................................................................... 200
b) Awareness and Training ....................................................................................................... 201
c) Establishment of SEZ Disaster Management Protocols and implementing agent ............... 201

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Table of figures

Figure 1 Summary SWOT ................................................................................................................................ 16

Figure 2: Location of Atlantis ........................................................................................................................... 27
Figure 3 Greentech taxonomy - examples of greentech products and services ............................................. 31
Figure 4 Site diagrams ..................................................................................................................................... 33
Figure 5 Site 2 - Portion Cape Farm CA 1183 portion 4 portion 1 ................................................................... 34
Figure 6 Portion Cape Farm CA 1183 and Cape Farm 4 portion 93 ............................................................... 34
Figure 7 Land Portion purchased by Gestamp ................................................................................................ 37
Figure 8 Primary goals and desired outcomes for the Atlantis SEZ ................................................................ 40
Figure 9 Market sizing approach ..................................................................................................................... 45
Figure 10 Description of prioritisation approach ............................................................................................. 46
Figure 11 Overall greentech opportunity prioritisation ..................................................................................... 49
Figure 12 Land Ownership in Atlantis Industrial Area (CoCT) ......................................................................... 57
Figure 13 Proposed SEZ Site (AECOM site planning study) ........................................................................... 62
Figure 14 Potential ASEZ Industrial Park Design (AECOM site planning study) ............................................ 63
Figure 15 Flow chart of SEZ governance framework ..................................................................................... 72
Figure 16 Governance structure for ASEZ ....................................................................................................... 74
Figure 17 Marketing roles and responsibilities................................................................................................ 80
Figure 18 Process under account manager’s model ...................................................................................... 82
Figure 19 Greenfield only property development model ................................................................................. 89
Figure 20 Back-to-back lease model .............................................................................................................. 89
Figure 21 Brownfield anchor tenant development model ............................................................................... 90
Figure 22 Large anchor tenant model including a property developer ........................................................... 91
Figure 23 Overview of the capital costs required for each option, excluding any capital contingencies ......... 99
Figure 24 Summary of total revenue and operating expenditure over 20 year period .................................. 101
Figure 26 Annual funding shortfall\surplus under different options ............................................................... 102
Figure 26 The economy-wide GDP impacts per year due to construction and refurbishment activities ...... 106
Figure 28 Construction jobs per option per year (construction period) ......................................................... 107
Figure 29 Annual wealth and income tax generated per option, 2015 - 2030 .............................................. 108
Figure 30 GDP impacts associated with the management of the SEZ entity, per annum ............................ 109
Figure 31 Impact of 36 m blade on Charl Uys Drive/Dassenberg Road intersection ................................... 113
Figure 32 Impact of 55m blade on Charl Uys Drive/Dassenberg Road intersection ..................................... 113
Figure 33 Impact of 36 m blade on Dassenberg Road/R27 intersection ....................................................... 114
Figure 34 Impact of 55m blade on Dassenberg Road/R27 intersection ........................................................ 115
Figure 35 The benefits of risk management often outweigh the costs .......................................................... 169
Figure 36 Lightning Ground Flash Density: Flashes per square km (2006 – 2012) ...................................... 179
Figure 37 Total Lightning risk for Southern Africa (2006 – 2012) .................................................................. 179
Figure 38 Average Wind Speed and direction at Atlantis .............................................................................. 181
Figure 39 Wind Speed and direction at Atlantis during January 2014, representing the general wind
direction and speed during summer months, between October and March .................................................. 181

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Figure 40 Wind Speed and direction at Atlantis during May 2014, representing the general wind
direction and speed during autumn months ................................................................................................... 182
Figure 41 Wind Speed and direction at Atlantis during June 2014, representing the general wind
direction and speed during winter months ..................................................................................................... 182
Figure 42 Wind Speed and direction at Atlantis during September 2014, representing the general wind
direction and speed during spring .................................................................................................................. 183
Figure 43 Map indicating fire hot-spots in the Atlantis area ........................................................................... 184
Figure 44 Eskom high voltage power lines south of Atlantis SEZ ................................................................. 185
Figure 45 Unused tires dump/storage site in Atlantis industrial area ............................................................ 185
Figure 46 Level of Education ......................................................................................................................... 191
Figure 47 Present school attendance ............................................................................................................ 191
Figure 48 Employment Status ........................................................................................................................ 192
Figure 49 Annual Household Income ............................................................................................................. 192
Figure 50 Tenure status per household ......................................................................................................... 193
Figure 51 Age Distribution of people living in Atlantis .................................................................................... 194
Figure 52 Crime statistics for 2014 visualised ............................................................................................... 194
Figure 53 Control areas and runway approaches for CTIA ........................................................................... 196
Figure 54 Koeberg Nuclear Power Station .................................................................................................... 198
Figure 55 Wesfleur Clinic ............................................................................................................................... 199
Figure 56 Household communication services availability in Atlantis ............................................................ 201
Figure 57 Internet access by residents of Atlantis ......................................................................................... 201

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List of tables

Table 1 Summary of financial assessment of four development options over 20 year period ........................ 23
Table 2 Summary of quantifiable economic impacts of the SEZ ..................................................................... 25
Table 3 Definition of a Green Economy .......................................................................................................... 29
Table 4 Definition of greentech ....................................................................................................................... 30
Table 5 Description of greentech park sites .................................................................................................... 33
Table 6 Atlantis Greentech Industrial Park leasing and disposal rates ........................................................... 35
Table 7 SWOT analysis for proposed Atlantis greentech SEZ ........................................................................ 41
Table 8 Conservative scenario ....................................................................................................................... 51
Table 9 Moderate scenario ............................................................................................................................. 52
Table 10 Size of likely uptake, conservative and moderate scenarios ........................................................... 53
Table 11 Sources and potential sources of funding for ASEZ infrastructure .................................................. 78
Table 12 Services provided in Atlantis and potential revenue streams for the SEZ entity ............................. 87
Table 13 Overview of demand and property assumptions for four options modelled...................................... 93
Table 14 Overview of the capital expenditure required for each option ......................................................... 95
Table 15 Summary of infrastructure items to be funded by dti and assumed grant value .............................. 96
Table 16 Overview of the operating cost assumptions used for each option in the model. ........................... 96
Table 17 Summary of rental rates assumed .................................................................................................... 97
Table 18 Levy to recoup SEZ operating expenses .......................................................................................... 98
Table 19 Typical additional rates for a CID ...................................................................................................... 98
Table 20 Overview of the total government grants for capital expenditure under each option ....................... 99
Table 21 Overview of the sources of funds .................................................................................................... 100
Table 22 Capital Expenditure in the first 3 year period by source ................................................................. 100
Table 23 NPV of the cash flow over the 20 year period ............................................................................... 102
Table 24 Project returns – greenfield anchor tenant sensitivity .................................................................... 102
Table 25 Project returns – refurbishment sensitivity ..................................................................................... 103
Table 26 Summary of key economic impact findings ................................................................................... 105
Table 27 Permanent jobs per year per option............................................................................................... 108
Table 28 Key aspects of a spatial framework ................................................................................................ 117
Table 29 Ranking and mitigation measures for natural hazards .................................................................. 122
Table 30 Type of SEZ entity.......................................................................................................................... 155
Table 31 Significance to core business ......................................................................................................... 161
Table 32 Summary of Municipal, Provincial Government Business Enterprise and Provincial Public
Entity .............................................................................................................................................................. 167

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 List of terms and abbreviations

AADD Average Annual Daily Demand

ACSA Airports Company of South Africa

ASEZ Atlantis Special Economic Zone

AWRMS Atlantis Water Resource Management Scheme

B-BBEE Broad-based Black Economic Empowerment

BPO Business Process Outsourcing

CAD China-Africa Development

CBD Central Business District

CDE Centre for Development Enterprise

CFL Compact Fluorescent Light bulb

CIPC Companies and Intellectual Property Commission

CoCT City of Cape Town

CSP Concentrated Solar Power

CST Concentrated Solar Thermal

CTIA Cape Town International Airport

CTSDF Cape Town Spatial Development Framework

DCC Divisional Council of the Cape of Good Hope

DEA&DP Department of Environmental Affairs and Development Planning

DFI Development Finance Institution

DoE Department of Energy

dti Department of Trade and Industry

ECAMP Economic Areas Management Programme

EEDSM Energy Efficiency and Demand Side Management

EGS Economic Growth Strategy

EIA Environmental Impact Assessment

ELIDZ East London IDZ

EMPr Environmental Management Programme

EPRI Economic Policy Research Institute

EPZ Export Processing Zone

EST environmentally sound technologies

FEED Front End Engineering Design

FET Further Education and Training

FIAS Foreign Investment Advisory Service

GBCSA Green Building Council of South Africa

GDP Gross Domestic Product

GEEF Green Energy Efficiency Fund

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GHG Greenhouse Gas

GTMEC Greentech Manufacturing Evaluation Committee

HP High-pressure

HVAC Heating Ventilation and Air Conditioning

ICT Information and Communication Technology

IDC Industrial Development Corporation

IDM Integrated Demand Management

IDP Integrated Development Plan

IDZ Industrial Development Zone

IPAC Immovable Property Adjudication Committee

IPAP Industrial Policy Action Plan

IRP Integrated Resource Plan

ISC Institute for Sustainable Communities

ITP Integrated Transport Plan

LC Local Content

LED Light Emitting Diode

LCOE Levelised Cost of Electricity

LDZ Low-carbon Zone

LNG Liquefied Natural Gas

LP Low-pressure

LSM Living Standard Measure

MCEP Manufacturing Competitive Enhancement Program

MIP Manufacturing Investment Program

MTEF Medium-term Expenditure Framework

MNC Multi-national company

Mtpa Million tons per annum

MV Medium Voltage

MVA Megavolt ampere

MYPD Multi-year Price Determination

NDP National Development Plan

NDRC National Development and Reform Commission

NEMA National Environmental Management Act

NEMWA National Environmental Management Waste Act

NERSA National Energy Regulator of South Africa

NLTA National Land Transport Act

NNR National Nuclear Regulator

NPC Not for Profit Company

NQF National Qualification Framework

NT National Treasury

NWA National Waste Act

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OECD Organisation for Economic Cooperation and Development

OEM Original Equipment Manufacturer

PAYE Pay as You Earn

PICC Presidential Infrastructure Coordinating Commission

PPA Power Purchasing Agreement

PPP Public Private Partnership

PSDC Penang Skills Development Centre

PSDF Provincial Spatial Development Framework

PV Photovoltaic

R&D Research and Development

REIPPP Renewable Energy Independent Power Producer Procurement

RFP Request for Proposal

SABS South African Bureau of Standards

SACU Southern African Customs Union

SADC Southern African Development Community

SAIA South African Insurance Association

SANRAL South African National Roads Agency Limited

SANS South African National Standards

SAPVIA South African Photovoltaic Industry Association

SAREBI SEDA Atlantis Renewable Energy Business Incubator

SARETEC South African Renewable Energy Technology Education Centre

SAWEA South African Wind Energy Association

SEDA Small Enterprise Development Agency

SESSA Sustainable Energy Society of South Africa

SEZ Special Economic Zone

SIC Standard Industry Classification

SIP Strategic Infrastructure Project

SMME Small Medium and Micro Enterprise

StatsSA Statistics South Africa

SWH Solar Water Heater

TEU Twenty-foot Equivalent Unit

TFR Transnet Freight Rail

TISA Trade and Investment South Africa

TNPA Transnet National Ports Authority

UN United Nations

UNEP United Nations Environment Programme

UPZ Urgent Potective Action Planning Zone

VAT Value-Added Tax

WCIF Western Cape Infrastructure Framework

WCG Western Cape Government

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WtE Waste-to-Energy

WWF World Wildlife Fund

WWTW Wastewater Treatment Works

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 Executive Summary

I. Introduction
In 2014 the Department of Trade and Industry (dti) commissioned Deloitte to undertake a
prefeasibility, strategy and feasibility study for the proposed Atlantis Special Economic Zone. The
purpose of this feasibility report is to investigate the viability of establishing a greentech SEZ in
Atlantis, a suburb of the City of Cape Town (CoCT). The study also considers how the proposed SEZ
might best be configured to achieve the stated objectives of key stakeholders and to maximise the
associated economic and social benefits.

This document provides an overview of the proposed Atlantis SEZ (ASEZ) including the history of the
area, progress made in establishing a greentech hub to date, the rationale for the ASEZ, a summary
of key market analysis conducted at prefeasibility phase. The report continues with an overview of the
technical aspects of the feasibility study, the proposed legal and governance framework and finally an
assessment of the financial and economic viability.

II. Background

Special economic zones

In 2012 the dti announced that it would replace its Industrial Development Zone (IDZ) programme with
a more inclusive model of industrial facilitation in the form of the Special Economic Zones. The dti
notes that the purpose of SEZs is to support and accelerate industrial development by facilitating
targeted investment in certain manufacturing and tradable service activities. The SEZs are also
envisaged as a mechanism to promote regional development, exploit existing technological and
industrial capacity and attract foreign and domestic investment.

The SEZ bill and policy was released for public comment in 2012 and applications for designation as
an SEZ were invited by the dti in 2013. After a process of extensive consultation, the SEZ Act was
gazetted in May 2014.

History of Atlantis, development of a greentech park and progress in attracting

investors
The concept of establishing a green technology (greentech) industrial park in Atlantis was borne out
of a City of Cape Town (CoCT) initiative in 2011 to promote the revitalisation of this industrial node.
The suburb of Atlantis was established during the 1970’s by the Apartheid government as an
industrial centre and a community for the coloured population of Cape Town under the infamous
Group Areas Act.

In order to attract industry and residents to Atlantis the government introduced various incentives to
attract manufacturing firms via an elaborate system of relocation tax credit. In its heyday in the early-
to-mid 1980s there were approximately 50 industrialists in Atlantis employing people drawn from
nearly 8 000 households. These industries included large manufacturing concerns such as Tedelex
and Atlantis Diesel Engines.1

1Department of Water Affairs (2010), The Atlantis Water Resource Management Scheme: 30 years of Artificial
Groundwater Recharge.

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Manufacturing activities in Atlantis declined with the termination of the incentive programmes and the
defence manufacturing contracts from the mid-1980s. The withdrawal of incentives significantly
reduced the attractiveness of the area and while Atlantis has since been through a series of mini-
economic booms and busts the trend decline in the economy of the area persisted.

In late-2011 the council of the City of Cape Town provided support for an initiative to establish a
greentech industrial park in Atlantis and approved the release of two large parcels of vacant city-
owned land for this purpose. The CoCT also approved a number of incentives to attract investors to
the identified sites in the area.

In 2014, GreenCape - working together with the CoCT and WCPG - was successful in securing its
first investor to the sites earmarked for the greentech industrial park. Gestamp, a Spanish wind tower
manufacturer purchased a portion of Site 1 in May 2014. Gestamp is in the process of building its
plant and will be producing components for utility-scale wind projects that are currently being
commissioned in South Africa as part of the Renewable Energy Independent Power Producers
Procurement (REIPPP) programme.

III. Demand for greentech in Atlantis

After an extensive analysis of the greentech market in South Africa and the potential of Atlantis to
attract a share of the firms that will serve that market, we concluded that demand would be sufficient
to support the development of a small-scale greentech SEZ.

Atlantis is better suited to manufacturing of green technologies and materials than provision of
greentech services (e.g. research and development, installations, waste services etc.). This is partly
because it was originally established as an industrial node and still has ample existing industrial
infrastructure and land zoned for industrial use. It is also because Atlantis is still relatively far from the
city centre and tertiary education institutions is not particularly well located to serve the commercial
and residential market for greentech services in the suburbs of Cape Town.

The demand for local manufacturing of green technologies is largely contingent on government
support – this includes direct government procurement of greentech, enabling policy and regulation,
programmes and standards and localisation requirements. The increasing focus on and clear support
for the green economy in national, provincial and local government policy - including NDP, Climate
change white paper, carbon tax policy paper, Western Cape “green is smart’ green economy strategy
framework and CoCT Economic Growth Strategy provide a good foundation for the creation of a
greentech SEZ.

The demand for locally manufactured components for utility-scale renewable energy in South Africa is
driven by the REIPPP programme which sets out the allocations for renewable energy generation
technologies and provides opportunities for investment through a competitive bidding process. Local
content thresholds and targets stipulated within the REIPPP bidding process are generating demand
for locally manufactured components and related services.

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For the commercial, industrial and residential market key government programmes include the Eskom
IDM programme, the Department of Energy (DoE) solar water heater roll-out plan, the SANS building
standards and the 12L income tax allowance. Uncertainty around the status and support available via
these programmes has negatively affected suppliers and manufacturers of compact fluorescent lamps
(CFLs), LED light emitting diodes (LEDs), heat pump, solar water heaters (SWHs) and other
greentech industries. It is envisaged that the SEZ entity would work with other stakeholders in
government to ensure better continuity in types of support provided. In the commercial, industrial and
residential market the rising cost of electricity and falling relative cost of green technologies will
continue to play a role in driving uptake independent of government support.

The immediate (next 3 years) high-potential opportunities for Atlantis include the manufacturing of
selected photovoltaic (PV) module components, wind turbine blades and towers, solar water heaters
and basic components of CFL and LED lights. These activities, with the exception of lighting
components are all directly supported through targeted government initiatives and would likely have
setup without SEZ incentives. The purpose of the SEZ therefore would be to attract these activities to
a relatively under-utilised industrial node and to promote the ‘clustering’ of these activities to foster
greater collaboration and development of greentech activities in future.

The opportunity for the ASEZ is likely to improve over the medium-to-long term (beyond 2018)
because of increased Integrated Resource Plan (IRP) allocations and movements in demand drivers,
such as rising electricity prices or falling technology costs.

IV. Summary of SWOT analysis

A SWOT analysis was performed across six themes including, attracting investors, financial, labour,
policy, land availability and location. A summary of the key strength, weaknesses, threats and
opportunities for the Atlantis SEZ is provided in Figure 1.

Figure 1 Summary SWOT

Strengths Weaknesses
• Strong support for the greentech sector in government policy, plans • Challenges in execution of green policies, targets and incentives that
g
and standards. Initiatives that direct support local manufacturing of creates uncertainty for investors. Specifically , uncertainty around IRP
greentech include the REIPPPP and DOE Solar water heater allocations to renewable energy and support for key programmes
programme while other taxes, incentives and targeted subsidies drive such as Eskom IDM and DoE solar water programme which have
market demand and uptake. been put on hold.

• CoCT has made two large sites available to SEZ entity to lease to • Atlantis remains relatively remote from the urban centre and port
SEZ tenants at very competitive prices compared (50km) to other industrial areas in Cape Town -a
disadvantage identified by both existing firms and potential investor
• CoCT already provides a range of incentives for firms to invest in
Atlantis (e.g. fast-tracked development approvals, fee exemptions • Some of the buildings in Atlantis are in need of significant
from building plan applications) refurbishment and have been built with materials no longer in use
(e.g. Asbestos)
• Ample existing industrial property (632 195m2) which is underutilised
• Atlantis suffers from socio-economic issues including crime, business
• Atlantis is well located to service REIPPPP projects within the
robberies and high unemployment but these issues also prevalent in
Western Cape and Northern Cape. Close to large metropolitan area
other areas of Cape Town and South Africa
which provides natural markets for greentech products and services.

Threats Opportunities
• Adequate pool of unskilled semi-skilled labour in Atlantis, high-skilled
• Demand and
labour also uptake and
available local manufacturing
in broader of greentech is heavily
Cape Town area • The greentech SEZ entity can play a role in motivating for increased
reliant on government support, the discontinuation and\or stalling of government support for greentech in terms of enabling regulation,
key programmes is a threat. incentives, localisation strategies, improved implementation of green
economy initiatives etc.
• Small scale SEZ may not be able to realise economies of scale in
service provision and investment promotion • SEZ entity could lease and refurbish existing buildings to save cost
and contribute to revitalisation of Atlantis
• Lack of cooperation or resistance from existing firms in Atlantis to
SEZ if they feel they have not benefitted or have been adversely • A number of high quality tertiary institutions who already specialise in
affected. greentech research and R&D
• Private land and property owners may inflate rental prices in a bid to • The SEZ could be used to support the further development of the
take advantage of SEZ designation status existing manufacturing cluster in Atlantis
• Budget cuts for electricity transmission infrastructure upgrades may • Positive spill over effects may occur if sources of natural gas are
pose a risk to future electricity supply in Atlantis obtained for use in or around the Atlantis SEZ

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 V. Spatial Planning and technical considerations
A broad range of Provincial and CoCT sectoral, integrated, and/ or spatial policy and planning
frameworks support the focus and spatial location of the proposed Atlantis SEZ.

Because the proposed Atlantis SEZ forms part of an existing serviced industrial are, most of the
overarching spatial requirements for the initiative are already in place. New layout, infrastructure
design, and township establishment activities are therefore not required. The area was originally
planned as an industrial estate and the distribution of land uses and provision of infrastructure in the
area support industrial development. The area identified for the SEZ is clearly identifiable as a defined
area of industrial activity.

The CoCT has already made sufficient land available to the SEZ entity to accommodate expected
demand. There is also ample city and privately owned land available to accommodate considerable
future growth of the SEZ if needed. Atlantis is somewhat unique in that there is also ample existing
industrial property (some 632 195m 2) and much of this is currently underutilised.

The most important spatial planning decision in relation to the proposed Atlantis SEZ appears to be
where and in what form to develop. Gestamp and a wind blade manufacturer both require very large
custom designed manufacturing spaces. The two sites made available by the CoCT are ideal for their
purposes. The majority of firms indicated they would prefer to lease sites within an already developed
and serviced industrial park. The issue is how to provide for these firms and particularly smaller users
who don’t have the ability to lease space on a long-term basis and customise it.

One option is to build a new industrial park; another is to refurbish existing vacant or underutilised
space. Building a new industrial park (with flexible, modular spaces which can readily accommodate a
range of space requirements and phased as demand grows) provides the opportunity to consolidate
all SEZ activities in close proximity with the industrial area and provide for a clearly “identifiable” SEZ.
It appears that from the financial modelling that refurbishing existing industrial space within Atlantis to
accommodate smaller users seeking already developed space may however provide a cheaper
alternative. Refurbishment would also contribute to upgrading of existing industrial property in the
area.

It is recommended that smaller users and the OSS (at least during initial years in the life cycle of the
SEZ) be clustered together in a purpose built industrial park. Both shorter and longer term expected
user demand for a future large user and the smaller users could be accommodated on site 1. In this
way, a clearly identifiable SEZ facility is provided and the SEZ entity is assured full flexibility to
negotiate user agreements related to site 2 in future. Site 2 is large in extent and very few, if any,
development-ready industrial sites of a similar extent remain in the CoCT’s ownership. Ideally, this
site should not be “parcelled” into smaller land units but rather be kept in reserve should a major
manufacturer (and employer) in future require such a land holding in Cape Town. The proposed
concept lay-out for site 1 requires minimal changes to the local road network.

Pursuing a 4-Green Star rating (as determined by the Green Building Council of SA) for buildings in
the Atlantis SEZ can result in a dramatic reduction in building heating, cooling, ventilation and lighting
costs, both capital and operational. As part of the ‘green demonstration’ effect, it would be desirable if
buildings built and refurbished by the SEZ entity and its tenants strive to meet some minimum green
building standards.

17
In terms of the greenfield sites identified by the CoCT, both can accommodate a range of users with
different and perhaps unique space requirements and can be “parcelled” easily to accommodate
different users and a very large range of building configurations; and both are flat in slope, enabling
easy provision of manufacturing space (requiring large flat surfaces). In terms of the CoCT zoning/
land use provisions, both sites have the necessary land use rights in place to permit green industry
enterprises and environmental authorisation is in place to undertake the activities envisaged for the
proposed SEZ.

Most of the required bulk infrastructure is also in place. Overall bulk water availability on the
greenfield sites identified by the CoCT should be adequate to provide for both conservative and
moderate development scenarios. Bulk waste water and storm water infrastructure should also be
adequate. Regional landfill facilities catering for different waste classifications are situated in the
vicinity of the Atlantis and have sufficient capacity to accommodate demand under both scenarios.

The Atlantis area is one of the key industrial freight centres within the Cape Town Metropolitan area
and well integrated with regional freight movement networks. Investigations to ascertain the extent of
local road improvements which could be required as a result of large users and the industrial park
envisaged to comprise the SEZ were undertaken. These include, minor improvements to
intersections and turning radii to cater for large users such a wind blade manufacturer. It is suggested
that the SEZ entity budget approximately R8 million for associated improvements.

The 4 MVA electricity available to the two sites identified by the CoCT should be sufficient to
accommodate demand over the 2014-2017 period. The expected 2018-2030 up-take on the two sites
could require an additional ±1 MVA, but planned improvements to electricity supply in Atlantis.
Roughly R80 million has already allocated by the CoCT to bulk electricity upgrades and this should be
sufficient to accommodate longer term needs.

A Disaster Risk Assessment has been prepared focusing on elements of disaster risk that are not
covered by existing research and reports, and covering “potential fatal flaws”, “critical consideration”,
“general considerations”, and “insignificant” elements. It recommends that SEZ-wide area-based
disaster risk and operational planning (across the entire disaster risk management continuum from
prevention and mitigation, to early warning, response and recovery) should be considered as opposed
to site-specific risk management.

The gap analysis undertaken as part of the preparation of a high-level logistics plan for the SEZ
identified two core logistics strategies for further work: cost reduction/minimisation (specifically smaller
users cooperating in order to share logistic costs), and the implementation of green supply chain
practices.

There are currently no high speed broadband services available to Atlantis Industria businesses. The
CoCT is however currently reviewing its 2014/15 broadband investment priorities and is considering
funding a project to constructing seven Atlantis fibre rings (R12m) and\or providing a “redundant”
connection to Atlantis, meaning that there are two separate and independent routes for connectivity to
ensure service continuity if the one would malfunction (R11m). The reviewed expenditure plan is
awaiting approval.

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VI. Legislative framework and governance structure

Recommended entity and process for application

The MEC for Finance and Economic Development will apply for designation as an SEZ on behalf of
the Western Cape Provincial Government. As the applicant for designation is the Province, the SEZ
entity must be a Provincial Government Business Enterprise in terms of the SEZ Act. A Provincial
Government Business Enterprise is –

 a juristic person under the ownership control of a provincial executive;

 has been assigned financial and operational authority to carry on a business activity;
 as its principal business, provides goods or services in accordance with ordinary business
principles; and
 is financed fully or substantially from sources other than a Provincial Revenue Fund or by way of a
tax, levy or other statutory money.
The SEZ Act does not specify what form the Provincial Government Business Enterprise should take.
Two possible forms of the SEZ Entity that were considered were a Non-Profit Company (NPC) and a
State Owned Company (SOC). While there is no specific legal preference for either a SOC or a NPC
it was decided that the NPC was the preferred option.

Governance Structure
The MEC for Finance and Economic Development will apply for designation as an SEZ on behalf of
the Western Cape Provincial Government. Once an SEZ license has been granted, the licensee
should seek the necessary PFMA approvals as set out in the Annexure 3 and then register a NPC.
This should be done in a way that meets the requirements of both the Companies Act (specifically the
objects of the NPC) and the section 1 definitional requirements of a Provincial Government Business
Enterprise in the PFMA. The SEZ Board should also be appointed by the Licensee.

Once this has taken place, the NPC can start to function as the SEZ entity. The process of registering
the NPC as a Provincial Government Business Entity in Schedule 3D should also begin at this point.
An SEZ operator should also be appointed. Whether this process is done “in house” or as an open
tender is unclear at this point and will hopefully be determined by the SEZ regulations to be published
in due course. It is recommended that an open tender is used as this is a broader interpretation of the
wording of the SEZ Act. The agreement between the SEZ entity and the operator should clearly state
whether the operator can bind the SEZ entity to future contracts or not, as this will impact the liability
of the SEZ entity.

An SEZ entity must be established by the holder of an SEZ license to manage the SEZ. The licensee
will appoint an SEZ board of directors for the efficient governance and management of the business
affairs of that SEZ entity and must provide the resources and means necessary to manage and
operate the SEZ. The SEZ board could be constituted of representatives from the Province, City of
Cape Town, dti as long as the Province maintains “ownership control” in terms of the PFMA. In terms
of the Companies Act is that there should be a minimum of three board members. The licensee also
reserves the right to appoint a private sector representative(s) with technical expertise in relevant to
the SEZ to the board.

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VII. Commercial model

Key principles for the Atlantis SEZ commercial model

The key principles for the design of the Atlantis SEZ commercial model are as follows:

 Size and extent of the Atlantis SEZ - The Atlantis SEZ is envisaged as a relatively small-
scale greentech SEZ when compared to existing IDZs such as Dube Tradeport and Coega or
city-wide greentech SEZs Boading in China or Masdar City in the United Arab Emirates
 Sector focus and eligibility for SEZ incentives - The WCG proposes that all greentech
firms and their direct suppliers that locate within the boundaries of the ASEZ will qualify for
fiscal and other SEZ incentives. Non-qualifying enterprises located within the SEZ will still
benefit from a range of public infrastructure improvements and services.
 Delivering SEZ services cost-effectively - We have estimated that 20 greentech firms will
be operating before the end of 2030. Given the relatively small-scale of the proposed Atlantis
SEZ one of the key principles will be to provide infrastructure and services in a cost-effective
manner by making use of existing infrastructure in the area.
The rationale for the extended demarcation is to provide the SEZ with a broader reach and enable it
to act as a catalyst for the upliftment of the entire Atlantis industrial area. As such, not all companies
within the Atlantis SEZ boundaries will qualify for SEZ incentives. But both non-qualifying enterprises
(which include all the existing firms in Atlantis Industria) and qualifying enterprises will be able to co-
locate within the SEZ.

In addition to leveraging existing institutions and infrastructure, we have also proposed that the ASEZ
provide selected services to both qualifying and non-qualifying enterprises within Atlantis Industria in
order to increase both the impact and beneficiaries of the ASEZ and to realise economies of scale in
service delivery.

Sources of funding for ASEZ infrastructure and options for facilitation of

private sector investment
It is clear from the case studies and interviews conducted as part of the Atlantis SEZ funding models
and sources report2 that national government does not intend to replicate the infrastructure funding
models implemented previous IDZs where substantial grant-funded investments were made in
respect of both top structures and onsite infrastructure in the absence of commitments by investors.

Atlantis SEZ’s onsite and public infrastructure spend requirements are likely to be less onerous than
that of many of the new SEZs as it is located in a developed area where much of the bulk
infrastructure is in place and a number of brownfield sites could potentially be incorporated into the
SEZ. The most likely funder of onsite and public infrastructure within the Atlantis SEZ is the SEZ Fund
that is administrated by the dti. Given the uncertainty around the number of tenants that will locate in
Atlantis SEZ, private sector developers are unlikely to be willing to take on significant development
risk in respect of onsite infrastructure unless it receives material guarantees or capital grants to
mitigate the development risk. The dti will only fund 60% of infrastructure provided and the remainder
will need to be funded from commercial loans taken out by the SEZ entity and the SEZ entity cash
flow. The CoCT is expected to fund offsite bulk infrastructure required and may fund high-speed
broadband infrastructure.

2 Contained in the Atlantis SEZ strategy document, 2014

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Activities and services to be provided by the Atlantis SEZ entity and SEZ
Operator
The core activities of the proposed ASEZ entity and its operator will include:

 Marketing the SEZ and its facilities to attract investment by greentech firms
 Managing, developing and facilitating the lease of land and buildings within the SEZ
 One-stop-shop services and investor facilitation and aftercare
 Provision and upgrading of public infrastructure and services (e.g. security, street cleansing,
environmental upgrading)
 Development of a green identity for the Atlantis SEZ through provision of green infrastructure and
services
− provision of green logistics services
− provision of waste management and\or minimisation services
 Provision of range of value-adding services including:
− facilitation of skills development and upgrading in the area
− facilitating the collaboration of greentech firms
− small and medium enterprise incubation and development through SAREBI
Other potential services that have been investigated include:

 provision of ICT infrastructure and services

Revenue model and sources

The dti will not fund the operations of the SEZ and it is envisaged that after initial support from
Provincial Government operational expenditure will be fully or substantially recovered by the SEZ
entity through revenue from services and activities provided to firms in the SEZ.

It is envisaged that the SEZ entity and\or operator will be able to earn revenue chiefly through:

 the rental of properties

 the collection of a levy for the provision of public infrastructure and services.
We have assumed that all firms in Atlantis would be willing to contribute to broader area
improvements which may include top-up security services, street cleansing and environmental
upgrading. These types of ‘top-up’ services would typically be provided elsewhere in the City of Cape
Town under the auspices of the Special Ratings Area policy and levies would be collected by the city
in the form of additional property rates.

One possible option is that the CoCT collect revenues on behalf of the SEZ entity\operator to provide
these area wide services within the existing SRA framework. Alternatively the SEZ entity\operator
would need to collect and administer levies itself but this may be more difficult to enforce outside of
existing SRA frameworks.

Non-qualifying firms in the Atlantis area cannot be expected to contribute to SEZ specific services
which may include investment promotion and market of SEZ incentives and benefits, greentech
collaboration activities and greentech skills development etc. Additional fees may need to be levied on
qualifying enterprises to cover the costs of these services or alternatively they will need to funded out
of provincial government grants initially and over time out of general revenues.

21
As mentioned, one of the key sources of income for the SEZ entity will be income generated from the
lease of land and existing, refurbished and\or newly developed industrial property in the Atlantis
Industria Area. The four lease\property development models that we feel are most appropriate for the
ASEZ are: lease of greenfield land, back-to-back leases, anchor tenant lease, greenfield property
development. These are described in the sections that follow:

 Lease of greenfield land – SEZ entity leases greenfield sites from the CoCT and leases it on to
SEZ tenants who require greenfield (undeveloped sites) such the wind tower and wind blade
manufacturers
 “Back-to-back leases”– the SEZ entity will lease developed property (buildings) from existing
Atlantis Industria property owners and will lease the buildings onto SEZ tenants with the same
terms and lease period (e.g. 10 years)
 Anchor tenant lease – SEZ entity leases property from Atlantis Industria property owners (e.g. 10
to 20 years), undertakes refurbishment of the property(ies) at its own expense (or dti funded) and
makes space available to SEZ tenants on a shorter term leases (and at higher rentals)
We have also explored an option where the SEZ entity would lease land from the CoCT in order to
develop a portion or portions of the greenfield sites:

 Greenfield property development - In this arrangement the ASEZ entity leases the required
amount of land from one of the two CoCT greenfield sites for a period of at least 30 years. The
ASEZ entity then leases the land to the property developer (public or private) for construction of a
new facility. The property developer then independently secures finance for the construction of its
property or facility. The SEZ entity can also act as the property developer, however, due to the
relatively small amount of anticipated revenue income the SEZ entity would have to utilise a
combination of funding sources, including dti grant funding, development finance institution low
interest loans or commercial loans.

VIII. Financial viability

The financial viability of the SEZ was considered in terms of four different development options:

 Low road, refurbishment

 Low road, new build
 High road, refurbishment
 High road, new build
The key difference between the “Low road” and “High road” options is that in the “Low road” none of
the 10 smaller firms establish themselves in the SEZ because of a lack of immediate, suitable and
marketable space. In the “High road” options, additional capital to develop marketable space to attract
the small users is required.

The options also differ in terms of the decision whether to refurbish existing industrial property in
Atlantis or whether to build new facilities. The cost of refurbishing brownfield sites at R2 818/m 2 is
estimated to be approximately half of the cost to develop greenfield sites at R5 636/m 2 excluding the
provision of additional on-site bulk infrastructure associated with new developments at R1 305/m 2.

We assumed that the dti would grant fund 60% of all onsite and public infrastructure and 50% of the
large-user top structure. We assumed that the WCG would provide grant funding for operations
amounting to R10 million a year for the first 5 years or R38 million in net present value terms which
amounts to roughly 20% of operating expenditure over the life of the project.

The results of the assessment of financial viability are summarised in Table 1.

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Table 1 Summary of financial assessment of four development options over 20 year period
Low road – Low road – New High road – High road – New
Refurbishment build Refurbishment build

NPV (ZAR) NPV (ZAR) NPV (ZAR) millions NPV (ZAR)

millions millions millions
Capital expenditure (capex) 145 147 423 623
Dti grant funding of capex 87 88 227 335
Dti grant funding % of total capex 60% 60% 54% 54%
Operating expenditure 173 170 173 183
WCG grant funding opex 38 38 38 38
WCG grant funding % of opex 22% 22% 22% 21%
Revenue 286 286 491 489
Project return (cumulative cash flow) 39.4 39.3 77.1 -10.1

Capital expenditure required for establishment of SEZ

Significantly lower total capital expenditure is required for the low road options than for the high road
options but the SEZ is also able to attract fewer tenants because the SEZ does make readily
marketable space available to smaller tenants seeking brownfield property. In terms of the two high
road options, the difference between the cost of refurbishment and new build is roughly R200 million.
The high-road refurbishment option can therefore be viewed as a less capital intensive way to provide
suitable accommodation for tenants seeking brownfield property.

Financial viability of the options - project return over 20 year period

The net present value for each of the options has been calculated based on the cash flows generated
by the project over a 20 year period. All options with the exception of ‘high-road new build’ are
financially viable based on their cumulative discounted future cashflows. The ‘high road –
refurbishment’ option is the most attractive option as it has the potential to generate the most net
revenue over the period with an discounted net future cash flows of R77.1 million. The ‘high road-
new build’ option makes a net loss of R10 million over the period and would require additional grant
funding (or be able to realise higher rentals than what we have assumed) in order to achieve a
positive project return.

Affordability – short-term funding gap

Under the current assumption on grant funding available, none of the four options are able to
generate sufficient cash flows at the beginning of the project and will require additional funding to
support the SEZ during this period. The low road options are only experience funding shortfalls in the
first two years at an average of R39.5 million for both years. This represents the total amount the
province or dti would need to provide in additional grant funding to support the SEZ under these
options. Thereafter, the SEZ entity under the low road scenario generates sufficient income to
generate a funding surplus.

23
The least affordable option is the high-road new build option as it requires both significant capital
expenditure and grant funding in order to setup the SEZ. The cash flows generated from the rental of
the properties and collection of management fees for the first 6 years is insufficient for the project to
be self-sustaining. This option does however eventually achieve cash break even in its 13 th year of
operation. A total of R 243 million in additional provincial grant funding would be required to plug the
shortfall in the first 6 years.

The high-road refurbishment option represents a reasonable middle ground. It also generates a
funding shortfall in the first 6 years however at a value of R 123 million this is recouped in the 10 th
year of operation.

IX. Economic viability of the options

The key economic impacts associated with each option are summarised in Table 2. Around 720 full-
time permanent jobs are created in the ‘low road’ scenarios and 1060 permanent jobs in the ‘high
road’ scenarios. The overall capital expenditure incurred per permanent job created is between
roughly R200 000 in the ‘low road’ scenarios and R590 000 in the ‘high road new build’ scenario.

While the ‘low road’ options are more capital efficient in term of jobs created they do result in lower
overall jobs because we have assumed it would not be possible to attract smaller firms to the area if
the SEZ doesn’t act as an anchor tenant and provide suitable facilities.

The ‘high road refurbishment’ option is significantly more capital efficient than ‘high road new build’
but results in the same number of overall jobs – in other words the same employment outcomes can
potentially be achieved with less capital investment going the refurbishment rather than new build
route.

The cost-effectiveness of refurbishment will need to be weighed against the benefits of building a new
green-star rated industrial park (with flexible, modular spaces which can readily accommodate a
range of space requirements and phased as demand grows). The new industrial park will provide an
opportunity to consolidate all SEZ activities in close proximity with the industrial area and provide for a
clearly “identifiable” SEZ. Refurbishment would have the benefit of upgrading of existing industrial
property in the area but it may not be possible to consolidate all users in one space.

Activities relating to the construction and refurbishment of infrastructure will contribute between R168
million in the low road and R704 million in high road to GDP over the 8 year construction phase. The
higher the construction spending associated with the option, the higher the associated impact on
GDP. Activities relating to ongoing SEZ operations will contribute roughly R8.7 million annually
under all options to GDP.

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Table 2 Summary of quantifiable economic impacts of the SEZ
Low road – Low road – New High road – High road – New
Refurbishment build Refurbishment build

Number of firms that setup in SEZ 10 10 20 20

Total direct jobs created (permanent) 720 720 1 060 1 060

Total annual construction jobs (direct, indirect
76 77 221 325
and induced)

Capital invested in infrastructure for each direct

R 201 389 R 204 167 R 399 057 R 587 763
permanent job created

Annual GDP impact (construction, during 8 year

21 21 60 88
period), R million
Annual GDP impact (operations), R million 8.7 8.7 8.7 8.7
Total GDP impact (construction) over 8 years 168 168 480 704

The establishment of the SEZ will also be associated with a number of additional economic benefits
including:

 The creation of greentech manufacturing and services cluster in the Western Cape - while
some greentech firms may have setup in the absence in the SEZ and its incentives, the SEZ will
facilitate clustering of firms in this sector and efficiencies and benefits of collaboration typically
associated with clustering. Some firms that would not otherwise have considered investing in
South Africa may also be attracted to South Africa because of the clear support for the
development of a local greentech sector.
 Support the renewable energy generation build - The ASEZ is a good location for
manufacturers who intend to supply goods and services to REIPPP programme renewable energy
generation projects in the Northern and Western Cape.
 Attracting FDI and domestic private investment - When multi-national companies enter a new
market, they bring with them technology transfers, new employment opportunities, transfers of
best practices or competencies, entrepreneurship, access to markets and an increase in demand
for goods and services produced by local firms. Atlantis could receive between R600 million and
R650 million in foreign direct investment in the period 2014 to 2017, including the investment
already committed by Gestamp (roughly R300 million). The provision of SEZ infrastructure,
activities and incentives will also assist domestic private sector investors to participate in the
greentech sector.
 Potentially increase the utilisation of existing infrastructure in Atlantis and promoting urban
renewal - Increased activity may make better use of existing infrastructure, especially in the case
of refurbished brownfield properties.
 Positive impact on trade balance through import substitution opportunities – the SEZ will
help to support locally produced greentech projects that will replace components that may
otherwise have been imported. Import substitution (provided the products aren’t sold at significant
additional cost to the SA consumer) will increase the amount of income and wealth generated
within the South African economy which may otherwise have been lost to other markets.

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 1. Introduction

1.1. Purpose of this Report

In 2014 the dti commissioned Deloitte to undertake a prefeasibility, strategy and feasibility study for
the proposed Atlantis Special Economic Zone. The purpose of this feasibility report is to thoroughly
investigate the viability of establishing a greentech SEZ in the suburb of Atlantis. The objective of the
study was also to consider how the proposed SEZ might best be configured to achieve the stated
objectives of key stakeholders and maximise the associated economic and social benefits.

This document provides an overview of the proposed Atlantis SEZ (ASEZ) including the history of the
area, progress made in establishing a greentech hub to date, the rationale for the ASEZ, a summary
of key market analysis conducted at prefeasibility phase. The report continues with an overview of the
technical aspects of the feasibility study, the proposed legal and governance framework and finally an
assessment of the financial and economic viability.

1.1.1. Special economic zones

A Special Economic Zone (SEZ) is an economic development tool to promote national economic
growth and export by using targeted support measures to attract foreign and domestic investments
and technology3. Traditionally SEZs geographically delineated and fenced- in areas that allowed for
the duty- and tax-free import of raw and intermediate materials for processing and re-export. Modern
forms of SEZs are not exclusively export focused and can encompass larger areas and support a
wider range of economic activities or have a specific technology or sector focus. The typical SEZ
policy package includes, “import and export duty exemptions, streamlined customs and administrative
controls and procedures, liberal foreign exchange policies and income tax incentives.”4

In 2012 the Department of Trade and Industry announced that it would replace its Industrial
Development Zone (IDZ) programme with a more inclusive model of industrial facilitation in the form
of the Special Economic Zones. The dti notes that the purpose of SEZs is to support and accelerate
industrial development by facilitating targeted investment in certain manufacturing and tradable
service activities. The SEZs are also envisaged as a mechanism to promote regional development,
exploit existing technological and industrial capacity and attract foreign and domestic investment.

The SEZ bill and policy was released for public comment in 2012 and applications for designation as
an SEZ were invited by the dti in 2013. After a process of extensive consultation, the SEZ Act was
gazetted in May 2014.

3 SEZ Act
4 FIAS (2008) Special Economic Zones – Performance, Lessons Learned and Implications for Zone Development

26
 2. Background

2.1. Location
Atlantis is located approximately 40km north of the central business district (CBD) of Cape Town, 19
kilometres north of Melkbosstrand and 76km south of Saldanha. It lies between the N7 route to
Namibia and the R27 West Coast road (Figure 2).

Figure 2: Location of Atlantis

Source: GreenCape (2014) Atlantis Greentech Industrial Park

2.2. History of Atlantis

Atlantis was established during the 1970’s by the Apartheid government as an industrial centre and a
community for the coloured population of Cape Town. This was in accordance with the provisions of
the Group Areas Act which, at that time, forced the residential separations of South Africans
according to race. The local government at the time, the Divisional Council of the Cape of Good Hope
commonly referred to as DCC, was tasked to build a town that could provide housing for
approximately 500 000 people in six interlinked towns. 5 However, only one town known as Wesfleur
was developed and over time has become known as Atlantis. The policy rationale for the
development of Atlantis was purportedly to build a coloured town that would help to ease the over
population in Elsie’s River. In 1976 Atlantis was declared a National Growth Point under the
governments “decentralised initiative”. 6

5 Department of Water Affairs: The Atlantis Water Resource Management Scheme: 30 years of Artificial
Groundwater Recharge 2010
6 ACCES Sanitation Case Study Atlantis, South Africa 2012

27
In order to attract industry and residents to Atlantis, which was far from Cape Town at that stage, the
government introduced various incentives to attract manufacturing firms via an elaborate system of
relocation tax credit. These included firms that were part of the apartheid government’s defence arms
manufacturing projects, textile, and automotive parts manufacturers. The transport of people and
goods to Cape Town was greatly subsidised.

Manufacturing activities in Atlantis declined with the termination of the incentive programmes and the
defence manufacturing contracts in the mid-1980s. A number of companies closed factories and
permanently relocated. Some of the smaller branch plants that chose to remain in Atlantis battled to
remain competitive within the changing South African and global economic environment and
eventually closed down in the early nineties. These firms tended to be in sectors that were highly
impacted by cheaper imports into the South African market. The withdrawal of incentives significantly
reduced the attractiveness of the area, contributing to the long-term decline of the Atlantis economy.

2.2.1. Recent developments

The Atlantis Business Retention & Expansion (BR&E) report, March 2012, states that “whilst the
numbers of firm closures during the 1980s and 1990s were significant, and substantial job losses
were incurred, the Atlantis economy as a whole remained dynamic evidenced by the fact that of the
91 firms interviewed for the BR&E study, 43 established during the same period.” These firms were
not dependent on incentives being offered but located primarily for market-competitive reasons,
including a favourable business climate linked to land availability and prices.

Some of the notable recent investments in Atlantis include the establishment of the Hisense plant in
2013. The Tellumat factory will be closing down in 2014 due to the unforeseen termination of a key
international contract, but Gestamp, a Spanish wind tower manufacturer has invested in a new facility
at Atlantis and is due to commission and begin production in 2014.

Atlantis Foundries, which was established by the Industrial Development Corporation in 1978 as
Atlantis Diesel Engines, remains the ‘anchor tenant’ has been recognised as one of the country’s top-
performing manufacturing plants. Established to produce diesel engines for the South African market
as part of the apartheid government’s strategy of inward-facing industrialisation, it was acquired by
the Daimler Chrysler group in 1999 and now produces automotive castings and machines cylinder
blocks and crankshafts, predominantly for the export market. Premier Helen Zille in her state of the
province address noted that “Atlantis Foundries has also become one of the top performing plants in
the country”. It employs 1,170 people mostly from Atlantis and surrounding communities. All modern
freightliner trucks in America use Atlantis Foundries engine blocks, which are the most modern and
technically sophisticated engines available overseas. In 2013, the foundry surpassed its sister plant in
Germany when it comes to quality.7

2.2.2. Outlook
The demand for industrial property in Atlantis remains relatively low compared to Cape Town’s more
central industrial nodes which include Airport Industria, Epping, Montague and Killarney Gardens,
Paarden Eiland and South Bellville among others. This is evident from significantly lower rental rates
and land value.

7 State of the Province Address, Western Cape Premier Helen Zille, February 2014

28
Vacancy rates in Atlantis for developed property currently stand at about 5% which is slightly higher
than the Western Cape average of 1.5%8. Rental rates for existing industrial floor space currently
range between R15m2 and R19m2 as compared to the Western Cape average of R31.50m 2 and up to
R50m2 in premier industrial parks such as Montague Gardens.

Atlantis currently offers the lowest rental rates on industrial property and some of the least expensive
industrial land (vacant and developed) on the Cape Peninsula. Data from the CoCT’s Economic Areas
Management Programme (ECAMP)9 suggest that Atlantis, in general, exhibits average industrial
location potential, with a significant concentration of conventional industries coupled with extensive,
cheap industrial land. These positives are weighed down by its geographic remoteness to logistics
gateways, regional markets, skilled workers and consumers.

2.3. Understanding and defining the green economy and greentech

industry
The proposed focus of the Atlantis SEZ is the greentech industry. In this section we have provided a
brief overview of the concepts of the ‘green economy’ and ‘greentech' industry and ‘resource-efficient
low-carbon production’ as well as definitions of the terms as they are used in the remainder of this
report.

The term ‘green economy’ was coined about 20 years ago, and represents the promise of a new
economic growth paradigm that is more sensitive to the impact of development on the earth’s
ecosystems and that can also contribute to poverty alleviation. 10

The following United Nations Environment Programme (UNEP) working definition of the green
economy is one of the most widely acknowledged11:

Table 3 Definition of a Green Economy

Definition of a Green Economy

“A green economy is one that results in improved human well-being and social equity, while significantly
reducing environmental risks and ecological scarcities.”

Source: UNEP, 2011

UNEP suggests that in practical terms a green economy is one whose growth in income and
employment is driven by public and private investments that reduce carbon emissions and pollution,
enhance energy and resource efficiency, and prevent the loss of biodiversity and ecosystem services.
And, in its simplest form, a green economy can be thought of as one which is low carbon, resource
efficient and socially inclusive.12

8 SAPOA, Industrial Property Report, October 2013. Interview with Atlantis Realtors, Rolf Franke, 19 June 2014
9 A diagnostic model which consolidates a wide range of raw City data (together with open source and
proprietary data) into actionable information about changing area-specific business conditions
10 “Working towards a balanced and inclusive green economy”, United Nations, 2011

11 “Green Economy Report: Towards a Green Economy: Pathways to Sustainable Development and Poverty

Eradication”, UNEP, 2011

12 What is the Green Economy”, UNEP, available at: www.unep.org

29
The mobilisation of green technologies and nurturing of green technology innovation has been
identified as one of key means of practically enabling the green economy. UNEP notes that
technological innovation in product design, production processes, service systems and organisational
management has played, and always will play, a major role in reducing negative environmental and
social impacts and improving resource efficiency.

According to UNEP the term ‘cleantech’ became popular with the investment community in the last
decade and refers most often to an asset class of climate friendly or renewable energy technology.
They note that the terms cleantech and greentech are used interchangeably today and broadly refer
to cleaner or environmentally sound technologies (ESTs) and the systems and processes around
them.13

The greentech industry cannot be defined in terms of the conventional standard industry classification
(SIC) system and there is also no unique or universally accepted definition of the term. The UN
however recommends the following broad definition of greentech used originally to describe
environmentally sound technologies in Agenda 21, their 1992 plan to achieve sustainable
development14:

Greentech includes technologies that “protect the environment, are less polluting, use all resources in
a more sustainable manner, recycle more of their wastes and products, and handle residual wastes in
a more acceptable manner than the technologies for which they are substitutes. Furthermore,
greentech refers not just to the ‘individual technologies’, but total systems which include know-how,
procedures, goods and services, equipment as well as organizational and managerial procedures.”

The following definition of greentech, a slight adaptation of the UNEP definition of environmentally
sound technologies will be used to describe the sector in this report:

Table 4 Definition of greentech

Definition of Greentech

Greentech refers to technologies that limit or prevent harm to the natural environment relative to
conventional alternatives because they:
 are less polluting and\or
 use all natural resources in a more sustainable manner and\or
 recycle more of their wastes and products and\or
 handle residual wastes in a more acceptable manner
Furthermore greentech refers not just to the ‘individual technologies’, but total system around these which
include know-how, procedures, goods and services, equipment as well as organisational and managerial
procedures.

Source: Based on “Working towards a balanced and inclusive green economy”, United Nations, 2011.

Examples of greentech services and products are provided in Figure 3. This taxonomy is by no
means exhaustive and simply provides examples of the types of services and products that are
typically referred to as greentech and could be classified as such, in terms of the definition provided
above.

13“Working towards a balanced and inclusive green economy”, United Nations, 2011
14UNEP international environmental technology sector, available at: www.unep.org “Working towards a balanced
and inclusive green economy”, United Nations, 2011

30
Figure 3 Greentech taxonomy - examples of greentech products and services
Utility-scale Non-residential self generation Residential self generation
• Solar PV/CPV • Solar PV • Solar PV
Renewable • Solar CSP • Solar CSP • Solar water heaters
energy • Biomass • Biomass • Biomass (heat)
generation • Biogas • Biogas • Mini-Wind
• Hydro &ocean • Micro-Hydro
• Wind • Wind
• Geothermal • Geothermal
• Geothermal heating • Building design and insulation
• Heat pumps • Waste heat recycling
Energy
• Energy efficient lighting and sensors • Energy efficient heaters and air conditioning
efficiency
• Smart meters • General energy efficient consumer electronics
• Smart grids with demand side management
• Biofuel and Biodiesel • assembly/production
• Congestion reducing technology and infrastructure • Energy efficient (environmentally friendly) vehicle
Transport
• Batteries parts
• Energy efficient car motors and • Energy efficient public transport services
Materials and • Bio-based fabrics, plastics and other environmentally friendly materials
chemicals • Environmentally friendly chemicals (bio-chemistry)
• Environmental protection and emissions reduction technology
Environmental
• General waste (incl. water) recovery technology or processes
and waste
• Recycling and waste treatment technology
services
• Biogas and landfill gas production

Source: Deloitte analysis based on several sources 15

2.4. Progress to-date in establishing the greentech hub at Atlantis

In 2011 the CoCT constituted an intergovernmental technical task team (consisting of representatives
of both WCG and the national department of economic development) to develop a framework to
promote the revitalisation of Atlantis. The initiative was in response to a severe socio-economic crisis
in the area which had been exacerbated by the recent closure of several factories and loss of almost
900 jobs.

The establishment of a greentech manufacturing hub at Atlantis was identified as one of the potential
medium to long-term interventions that could be undertaken to revitalise the area. It was noted that
both a re-engineering of the existing business clusters and support for future-focused sectors would
be required. The ‘greentech’ sector was identified as one that was future-focused.16

At its Council Meeting in September 2011, the CoCT provided its support for an initiative to establish
a Greentech Manufacturing Cluster in Atlantis. The CoCT noted that the cluster would be positioned
to take advantage of the multi-billion rand investments in utility-scale renewable energy investments
driven by the DoE and its REIPPP programme. It was anticipated that as a result of this programme, a
number of manufacturers (including contractors, subcontractors and service providers) of wind and
solar energy generating equipment, would need to secure land to establish manufacturing plants. 17

In a proposal to the Mayoral Committee on the Green Industrial Hub at Atlantis in 2011, GreenCape
noted that it would seek to attract the following anchor tenants:

 A wind blade manufacturer

15(“How can we meet the worlds environmental challenges and ensure economic prosperity”, Siemens,
“Definition of Clean Tech” - Innovation Policyworks,2013; “GreenTech made in Germany 3.0”, 2012)

16
Draft Atlantis Revitalisation Framework, Intergovernmental Technical Task Team, September 2012
17
City invites green technology manufacturers to apply for land in Atlantis Green Hub, media release,
NO. 486 / 2012, 11 June 2012

31
 A wind tower manufacturer
 A wind turbine manufacturer
 A PV manufacturer
 A PV inverter manufacturer
It was noted, that the City’s Property Management Department would facilitate the location of ‘green’
industry manufacturers on City-owned land in Atlantis at highly competitive rentals. The land-
earmarked was undeveloped and the initiative was aimed at the rapid release of land in Atlantis
Industria for the establishment of greentech industries.18

In December 2011 the CoCT Council approved a land release procedure for this initiative whereby
land was allocated for purchase or lease within a short timeframe and at very competitive land prices,
to interested parties qualifying in terms of greentech criteria. Two vacant portions of undeveloped
land, approximately 29ha and 38ha respectively, within the existing Atlantis industrial area were
allocated by the City for this purpose.

Establishment of the greentech hub has been part of the City’s ‘Atlantis Revitalisation Framework’ and
Atlantis has been identified as a focus area in the Cape Town Spatial Development Framework.
Establishing a Green Manufacturing Hub forms part of this strategic intent as reflected in the City’s
recently approved Integrated Development Plan (IDP).

2.4.1. Sites identified by the CoCT for the greentech industrial park
In early 2012, the CoCT advertised in local and national newspapers inviting greentech
manufacturers, contractors and service providers that qualify, to apply for industrial land in Atlantis to
establish manufacturing plants.

The sites identified for the ‘greentech park’ consist of two land parcels within close proximity
representing nearly 75 hectares land available for development. The first abuts Dassenberg Road and
the second Neil Hare Road. Both properties are zoned General Industrial and are wholly owned by
the City of Cape Town. The land is fully serviced with utilities and offer good access to the major
highway infrastructure and port opportunities.

Descriptions of the properties are provided in Table 5. The site diagrams are illustrated in Figure 4
and aerial photographs of the site are provided in Figure 5 and Figure 6.

18City supports green technology with new project in Atlantis, media release NO. 606 / 2011,
06 September 2011

32
Table 5 Description of greentech park sites
ERF APPROXIMATE LOCATION ZONING
EXTENT

1. Site 1 - Portion Cape Farm CA ±29,99 hectares Dassenberg General

1183 and Cape Farm 4 portion Road/ John van Industrial
93 Niekerk Road

2. Site 2 - Portion Cape Farm CA ±38,65 hectares Neil Hare Road General
1183 portion 4 portion 1 Industrial

Source: AECOM analysis

Figure 4 Site diagrams

Source: AECOM analysis

33
Figure 5 Site 2 - Portion Cape Farm CA 1183 portion 4 portion 1

Source: AECOM analysis

Figure 6 Portion Cape Farm CA 1183 and Cape Farm 4 portion 93

Source: AECOM analysis

34
 2.4.2. Incentives and support currently provided
The city currently offers potential investors a number of incentives to invest in the area identified for
the greentech park.19 These include:

 Land offered at very competitive prices for purchase or lease

 A quick application process for developers
 Environmental authorisation in place
 ‘One-stop shop’ support and information provided by the GreenCape initiative
 Small business support and incubation through the SEDA Atlantis Renewable Energy Business
Incubator (SAREBI)
 Access to a range of existing CoCT incentives available to firms investing in Atlantis

2.4.2.1. Land disposal and lease arrangements

The Atlantis Greentech Industrial Park provides attractive leasing and disposal rates for prospective
tenants and developers as presented in Table 6. This includes:

 Leases in multiples of 5 years up to 30 years.

 Periods of rental review can be negotiated to give security of tenure while retaining the principle of
market related rental.
 Option to purchase after a period of 5, 10, 15 years or upfront.

Table 6 Atlantis Greentech Industrial Park leasing and disposal rates

Monthly Rental
Market Value Disposal ('000s) utilising
Extent Rate/m² Rate in Rand (Rental)
(’000s) 8% return on
land value

0 - 500m² 180 R 90 R 0.6 R1.20/m²

501m² - 1 000m² 180-165 R90 – R165 R 0.6 – R1.1 R1.20/m² - R1.10/m²
1 000m² - 5 000m² 165-150 R165 – R 750 R1.1 – R5 R1.10/m² - R1.00/m²
5 001m² - 10 000m² 150-120 R750 – R1 200 R5 – R8 R1.00/m² - R0.80/m²
10 001m² - 50 000m² 120-100 R1 200 – R5 000 R5 – R33 R0.80/m² - R0.67/m²
50 001m² - 70 000m² 100-80 R5 000 – R5 600 R33 – R37 R0.67/m² - R0.53/m²
70 000m² - 100 000m² 80 -65 R5 600 – R6 500 R37 – R43 R0.53/m² - R0.43/m²
100 001m² - 150 -000m² 65-50 R6 500 – R7 500 R43 – R50 R0.43/m² - R0.33/m²
150 001m² - 200 000m² 50-40 R7 500 – R8 000 R50 – R53 R0.33/m² - R0.27/m²
200 001m² - 250 000m² 40-35 R8 000 – R8 750 R53 – R58 R0.27/m² - R0.23/m²
250 001m² - 300 000m² 35-30 R8 750 – R9 000 R58 – R60 R0.23/m² - R0.20/m²
300 001m² - 350 000m² 30-27 R9 000 – R9 450 R60 – R63 R0.20/m² - R0.18/m²
350 001m² - 386 500m² 27-25 R9 450 ± R9 700 R63 – R65 R0.18/m² - R0.17/m²

Source: Atlantis Greentech Industrial Park, Application Form - APPLICATION A01P/2011/12

2.4.2.2. Quick Application process

There is a clear, transparent application process in place for those businesses interested in applying
for a site. It involves submitting an application form to the Greentech Manufacturing Evaluation

19 Atlantis Green Technology Industrial Park Information Brochure, Arup and GreenCape, 2014

35
Committee (GTMEC), who then provide a recommendation to the Immovable Property Adjudication
Committee (IPAC). IPAC which meets weekly will either approve or decline the disposal or lease.

2.4.2.3. Environmental authorisation

Environmental Authorisation and exemptions were awarded for both sites in January 2013 so that
investors will be able to develop the sites immediately on lease or purchase.

2.4.2.4. Investment support provided by GreenCape

The GreenCape Initiative is a Sector Development Agency established by the Western Cape
Provincial government and The City of Cape Town in November 2010. The GreenCape Initiative was
established to unlock the manufacturing and employment potential in the Green Economy in the
Western Cape. Through partnerships with Wesgro, Provincial Government and academia,
GreenCape provides ‘one-stop shop’ information and investment facilitation support.

2.4.2.5. Small business support and incubation through SAREBI

SAREBI is a small business incubator located in Atlantis with the goal of growing and nurturing small
and medium enterprises operating within the “Green Economy”. SAREBI provides business support,
facilitation of access to markets and access to finance as well as technology transfer and joint
ventures.

SAREBI is in the process of identifying candidates for incubation - it is envisaged that successful
applicants will be established in the incubator facilities which include recently refurbished factory floor
space and will receive full support from incubator staff and enjoy shared services and resources. This
will enable companies to focus on their core business.

It is envisaged that SAREBI will be a feeder for both upstream and downstream opportunities in the
Atlantis Greentech Industrial Park. SAREBI is funded by the CoCT and dti.

2.4.2.6. CoCT incentives available to firms investing in Atlantis

The CoCT offers a range of additional incentives to firms investing in the broader Atlantis area
including the site identified for the Greentech Park 20.

These include:

 Fast-tracked development approvals in respect of land use and building plan applications
 Fee exemption from land use and building plan application fees
 Development contribution deferral/debt write off which applies in respect of both civil and electrical
DCs where enhanced development rights granted
 A municipal electricity tariff subsidy - “Time of Use” tariff for Atlantis pegged at 2012/2013 level
(thus no increase for the 2013/2014 financial year)

2.4.3. Success in attracting investors to-date

In 2014, GreenCape working together with the CoCT and WCG was successful in securing its first
investor to the sites earmarked for the greentech industrial park. In May 2014, Gestamp Corporation
(Gestamp), a Spanish wind tower manufacturer purchased a portion of Site 1. They will be producing
components for utility-scale plants mostly in the Northern Cape and Western Cape to meet the

20 City of Cape Town, Atlantis Investment Incentives: 2013/14

36
requirements of independent power producers that were successful in the Renewable Energy
Independent Power Producers Procurement (REIPPP) programme bid rounds 2 and 3. Gestamp was
a successful bidder in round 2 and will be developing Noblesfontein wind farm in the Northern Cape in
its entirety. Beyond the REIPPP bid rounds Gestamp envisages it will export wind towers to the
African and Middle Eastern Market.

Gestamp have purchased the eastern 1/3rd of what is referred to as site 1 (Portion Cape Farm CA
1183 and Cape Farm 4 portion 93) measuring 7.8ha in extent, as illustrated in

Figure 7. Gestamp will be investing in the development of a R200 million wind tower manufacturing
facility on the site (their total investment will be in the order of R300 million).

Figure 7 Land Portion purchased by Gestamp

Source: CoCT

GreenCape noted that it also played a role in attracting the investment of a number of component
manufacturers for the REIPPP programme utility-scale renewable projects to the City of Cape Town 21.

21 Personal Communication with Mike Mulcahy, Operations Manager at GreenCape, 3 July 2014

37
These firms include the following:

 SMA Solar Technology (producers of inverters and system monitors located in Centurion and
Cape Town)

 Jinko Solar (producers of PV modules located in Epping)

 SARETEC (providers of specialised renewable energy training located in Belville)

 AEG Power Solutions (producers of solar inverters and combiner boxes located in Milnerton)

While a number of these firms considered the sites identified for a greentech industrial park in Atlantis
they chose to locate at other sites in the Cape Town metropolitan area. This, GreenCape notes, was
chiefly because they preferred to rent floor space in suitable existing brownfields industrial property.
Should developed industrial property (or upgraded existing facilities) be made available as part of the
proposed Atlantis Special Economic Zone (ASEZ), together with SEZ incentives, Atlantis could well
become the preferred location for these types of greentech investors in future.

2.4.4. Comments and observations on the current strategy and evolution

towards an SEZ
The concept of establishing the greentech hub was borne out of the Atlantis Revitalisation Framework
and as such, the spatial planning objectives and focus on Atlantis as the site for the green hub have
been inherent to the concept since its inception.

The concept of the ‘greentech park’ as it stands is focused on capturing a share of the domestic
utility-scale renewables market and suppliers to this market. The undeveloped ‘greenfield’ sites and
incentives provided have been designed to capture the interest of these relatively large-scale capital-
intensive manufacturers. This concept, which has been successful in attracting at least one firm in this
category of investors to Atlantis, will need to be adapted to suit the broader objectives of the SEZ as a
policy tool. This is particularly true if the SEZ is aiming to attract a broader range of greentech and/or
manufacturing activities.

It is also clear that the CoCT and WCG recognised the concept of greentech hub as an opportunity to
capture a share of a growing and future-focused manufacturing industry for the Western Cape
economy. The focus on a growing manufacturing sub-sector is strategic, particularly given that the
regional manufacturing sector had been in decline and was particularly hard-hit when the South
African economy entered recession in 2009.

The Atlantis revitalisation framework also sought to ‘re-engineer’ the existing sectors which include
textiles, food –processing, consumer electronics and automotive amongst others. In interviews with
existing firms in Atlantis it is clear that the majority of manufacturers are focused on the domestic
market and are therefore constrained by growth in the domestic and regional market and ability to
compete with imports. In general these firms noted that they were not able to compete in the
international export market given a number of factors including the fact that South Africa is
geographically remote from major markets, our local market is relatively small and does not provide
sufficient economies of scale in production and labour is relatively costly. The notable exceptions are
Atlantis Foundries and CA Components who produce largely for export and Swartland that exports
50% of output.

38
 3. Rationale for the Atlantis SEZ

3.1. Introduction
The rationale for the use of special economic zones as a policy tool varies and typically differs
between developing and developed countries. In developing countries SEZs and particularly export
processing zones are typically used to:

 boost the competitiveness of manufacturers and service providers and reduce business entry and
operating costs
 realise agglomeration benefits of concentrating an industry in geographic place
 promote economic reform in support of exports when the country has an anti-export bias and
strong protectionist trade measures in place
 attract foreign direct investment
 test new policies and approaches before introducing them more widely
In developed countries SEZs most often seek to:

 Enhance trade efficiency and manufacturing competitiveness

 Attract foreign direct investment as is the case in Japan
 Revitalise economically distressed urban and rural areas- often the motivation in enterprise-zone
style programmes in Europe and the USA

3.2. Primary goals and desired outcomes for the Atlantis SEZ
A clear understanding of the primary objectives and desired outcomes for the proposed Atlantis SEZ
is crucial in that it informs recommendations on the overall design, commercial and operating
structure, and monitoring and evaluation of strategic outcomes. Since SEZs gained popularity as a
policy tool, their forms and objectives have become increasingly wide-ranging. In light of this it is also
necessary to have a clear view of the primary objectives of the Atlantis SEZ in order to evaluate it
against relevant ‘good practice’ examples that have similar objectives.

The key rationale for the SEZ must be evaluated from the perspective of key project stakeholders -
CoCT and WCG who submitted the application for designation.

The primary objectives of establishing an SEZ with a greentech focus at Atlantis are:

 To grow the greentech sector in the Western Cape and South Africa
 To further the CoCT’s objective of revitalising Atlantis as a key industrial node in the region
In achieving these objectives, CoCT and WCG would hope to create employment, enable smart green
economic growth, to revitalise the area and attract foreign direct investment and domestic investment.
These can be thought of as the desired outcomes.

39
Key stakeholders also recognised that in working towards these objectives and in support of the
outcomes the CoCT and WCG would need to ensure that certain key enablers were in place. This
would include providing supporting infrastructure, developing and strengthening institutional
arrangements between government academia and business to support the vision of ‘green is smart’
growth and more general to continue to work towards creating an enabling environment for business
to flourish.

Figure 8 Primary goals and desired outcomes for the Atlantis SEZ 22

Primary Goals
• To grow the green technology sector in the Western Cape and
South Africa
• To promote the revitalisation of Atlantis as a key industrial node in
the region

Desired Outcomes

• To create employment

• To enable economic growth that is smart and green

• To attract domestic and foreign direct investment

Key Enablers
• Develop and strengthen institutional arrangements between
government, academia and business to enable green is
smart
• Providing supporting infrastructure
• Support SMME development
• Creating an enabling environment for business

Source: Deloitte analysis

22 Based on input from a workshop held with representatives of GreenCape and the WCG on 28 May 2014

40
 4. SWOT Analysis

The comparative advantages of Atlantis as a site for the proposed greentech SEZ and the key
challenges it faces are summarised in terms of the SWOT analysis (strengths, opportunities,
weaknesses and threats) provided in Table 7.

Table 7 SWOT analysis for proposed Atlantis greentech SEZ

Incentives - attracting investors

Strengths Weaknesses Opportunities Threats

CoCT already provides a Atlantis suffers from socio- Opportunity to engage with Fixed term of the proposed 10
range of incentives for firms to economic issues including National Treasury to improve year corporate income tax
invest in Atlantis (e.g. fast- crime, business robberies and design of proposed fiscal incentive may be insufficient
tracked development high unemployment but these incentives. to attract investors who join
approvals, fee exemptions issues are also prevalent in the SEZ later and\or are
from building plan other areas of CoCT and longer term investors.
applications) South Africa
CoCT has made two sites Opportunity to introduce other May be difficult to compete on
available to SEZ entity to targeted incentives at level playing field with other
lease to SEZ tenants at very local\provincial government SEZs where grant-funding has
competitive prices level. historically been substantial.

GreenCape, a sector
development agency and the
South African Renewable
Energy Business Incubator
(SAREBI) in Atlantis have
already been established to
facilitate development of and
investment in the Green
economy
Policy support

Strengths Weaknesses Opportunities Threats

Government plans and Challenges in execution of The greentech SEZ entity can Demand and uptake and local
standards that directly support green policies, targets and play a role in motivating for manufacturing of greentech is
local manufacturing of incentives that creates increased government support heavily reliant on government
greentech e.g. REIPPP uncertainty for investors. for greentech in terms of support, the discontinuation
programme, DOE Solar water Specifically, uncertainty enabling regulation, and\or stalling of key
heater programme. around IRP allocations to incentives, localisation programmes is a threat.
renewable energy and support strategies, improved
for key programmes such as implementation of green
Eskom IDM and DoE solar economy initiatives etc.
water programme which have
been put on hold.
Government interventions to
promote greentech uptake
include market-mechanisms
such as the proposed carbon
tax, incentives such as
section12L energy efficiency
tax incentive, subsidies,
building standards and direct
procurement.
Increasing focus on and clear
support for the green
economy in national,
provincial and local
government policy - including
NDP, Climate change white
paper, carbon tax policy
paper, Western Cape “green
is smart’ green economy
strategy framework and CoCT
Economic Growth Strategy
etc.

41
Financial and economic viability

Strengths Weaknesses Opportunities Threats

Property rentals at R15- Market analysis suggests that Small scale SEZ may not be
R19/m2 are half the WC demand sufficient to support a able to realise economies of
average of R32/m2 small scale greentech SEZ scale in service provision and
and CoCT investment promotion
Land at an average of Existing industrial properties Risk of a low return on
R150m2 and developed could be utilised instead of property investment given that
property at R900-R2000/m2 is developing new facilities to rentals over the past decade
inexpensive save costs and reduce waste have remained unchanged in
real terms (inflation adjusted)
Existing institutions, such as Existing firms in Atlantis can Lack of cooperation or
GreenCape, Wesgro or TISA benefit from and contribute to resistance from existing firms
(division of the dti) which can SEZ services. The SEZ could in Atlantis to SEZ if they feel
be leveraged to reduce cost of be used to support the further they have not benefitted or
ASEZ activities development of the existing have been adversely affected.
manufacturing cluster in
Atlantis while maintaining a
focus on greentech and
commitment to the ‘green
economy’ more broadly
Private land and property
owners may inflate rental
prices in a bid to take
advantage of SEZ designation
status
Labour and skills

Strengths Weaknesses Opportunities Threats

There is a local West Coast
Adequate pool of unskilled
Training provided by the local FET College - this presents an Potential skills shortage as
semi-skilled labour in Atlantis,
West Coast FET College does opportunity is to upgrade the greentech manufacturing is a
high-skilled labour also
not currently align with firm college and improve courses relatively new skillset in South
available in broader Cape
needs to better align with local firm Africa
Town area
needs
Although on the outskirts of
the City of Cape Town
Metropolitan, the urban
A number of high quality
minimum wage applies in
tertiary institutions who
Atlantis, making it less
already specialise in
competitive than nearby ‘rural
greentech research and R&D
areas’ for low-skilled labour-
intensive activities such as
clothing manufacturing
Land availability and cost

Strengths Weaknesses Opportunities Threats

There is a third site which
Ample vacant land in Atlantis
could also be used in the
zoned for industrial use to
future for the SEZ, however,
provide for future expansion -
additional land assessments
100 to 150ha
are still required
Two existing city-owned
greenfield sites (67ha) where Cheap land available to build
environmental authorisation new identifiable ‘green-rated’
has already been obtained for SEZ buildings in a clearly
development by greentech identifiable greentech
firms will be made available to industrial park.
SEZ.
Two city-owned greenfield
sites are already adequately
serviced with bulk water and
sewerage and city is willing to
make two sites available to
SEZ entity to lease to tenants
at very competitive prices
Infrastructure

Strengths Weaknesses Opportunities Threats

42
Ample existing industrial No one identifiable SEZ entity could lease and Budget cuts for electricity
property, - 632 195m2 of government owned industrial refurbish existing buildings to transmission infrastructure
existing developed industrial property that would be save cost and contribute to upgrades may pose a risk to
property which is suitable for refurbishment by revitalisation of Atlantis future electricity supply in
underutilised. SEZ entity Atlantis
Some of the buildings in
Atlantis are in need of
significant refurbishment and
have been built with materials
no longer in use (e.g.
Asbestos)
Location

Strengths Weaknesses Opportunities Threats

Access to both the Saldanha Atlantis remains relatively Atlantis is situated on an

(110km) or Cape Town remote from the urban centre identified future city growth
(50km) ports and port compared (50km) to corridor (between Blaauwberg
other industrial areas in Cape and Atlantis) so will become
Town -a disadvantage less remote from the urban
identified by both existing centre
firms and potential investors
Atlantis is well located to Demand for property in The SEZ could in future be
service REIPPP programme Atlantis remains relatively low designated as a wider-scale
projects within the Western compared to other industrial “West-Coast economic growth
Cape and Northern Cape. nodes in greater Cape Town. corridor” to unlock greentech
Close to large metropolitan opportunities that are tied to
area which provides natural particular locations outside of
markets for greentech Atlantis
products and services.
Removed from city traffic and Located near offshore gas
congestion field and there have been
proposals to land either
domestic gas or LNG near
Atlantis. There may be
positive spill-overs for ASEZ if
natural gas becomes
available.

43
 5. Market analysis –assessing the
greentech opportunity for the ASEZ

5.1. Introduction
The Atlantis SEZ has been envisaged by the City of Cape Town and Western Cape Provincial
Government as a hub for the delivery of a range of greentech products and services. Most of the
effort in sizing the market for the proposed ASEZ was therefore spent on developing a granular
understanding of the specific opportunity for Atlantis in the greentech sector. Because the detailed
findings of the market analysis conducted have already been presented in the prefeasibility report, we
have attempted to summarise only the key findings in this report.

While the envisaged focus of the Atlantis SEZ was green technology, we also explored whether value
could be added to this concept – whether the SEZ framework and incentives could be used to unlock
additional opportunities for industrial and\or economic development in the area in order to maximise
economic benefits.

The opportunities identified included considering an extended sector focus to support existing or
emerging clusters, the expansion of the SEZ along the West Coast corridor and the potential
emergence of a natural gas supply linked to the SEZ.

5.2. Overall approach to greentech market sizing and scenario

development
Our overall approach to sizing the potential greentech market for the Atlantis SEZ is illustrated in
Figure 9 below. The first step was to develop an understanding of the current landscape at Atlantis in
order to identify the competitive advantages23 that the site has to offer to potential investors in the
proposed special economic zone. The findings of this analysis were presented in the prefeasibility
report.

Given that green technology had already been identified as the proposed focus of the SEZ, we
focused on developing a sound understanding of the greentech industry and the types of economic
activities that a typical definition would encompass and produced the high-level ‘taxonomy’ for green
technology illustrated in the prefeasibility report. We also researched the industry value-chains for
each of the major categories of green technology and developed detailed value-chains. The process
included extensive stakeholder consultation and engagement to derive insights into a number of
areas.

23 According to traditional economic theory regional comparative advantages include factors that are inherent to a
region and cannot be easily changed including land, location, natural resources (minerals, water), labour and
population size. In Michael Porter’s work these ‘factor conditions’ are just one category of the factors which affect
‘competitive advantage’. Others include demand conditions, related and supporting industries, firm strategy,
structure and rivalry. This analysis focused on traditional comparative advantages but some sources of
competitive advantage were also assessed.

44
Figure 9 Market sizing approach
Competitive advantages Green taxonomy Market analysis and Scenario
Consultation
of Atlantis and value-chains sizing development
• Identify and summarise the • Green technology taxonomy • Conducted over 50 • Initial prioritisation of green • Defined two demand
existing attributes and and value chains interviews with stakeholders technologies and activities scenarios (conservative and
Description

comparative advantages of including: Industry appropriate for the Atlantis moderate) based on
• Unpacking the value-chains
Atlantis participants, potential SEZ assumptions on key
investors, technology demand drivers.
• Identify existing industry • Further market analysis on
experts, DFIs, trade
clusters high and medium potential
promotion agencies,
technologies
education institutions etc.

• Initial view of any • Developed an Interviewees gave input into:

Based on market research Developed two scenarios
disadvantages and understanding of the scope and interviews: based on:
• the market analysis and
advantages of the Atlantis and definition of the green
sizing of green technologies • Ranked green technologies • Defined assumptions on key
industrial area including technology industry
in terms of their market demand drivers for each
location, industrial activity, • Policy and regulation issues
• Listed activities and potential in South Africa and scenario.
skills, socio-economic faced by potential and
Detailed outcomes or activities

components within the suitability for Atlantis.

challenges, rent, wages, existing greentech firms • Based on market analysis
‘greentech’ taxonomy which
utility costs and logistical • Conducted further market and sizing develop detailed
provide examples of core • Market outlook and
considerations analysis on high and scenarios describing the
or anchor activities sentiment of RE
medium potential number type and size of
• Understanding of the manufacturers
• Unpacked green technology technologies for utility-scale firms that could potentially
existing industry presence
value chains. • Commented on incentives renewables and residential, locate to Atlantis
and clusters at Atlantis.
proposed and required to commercial and industrial
• Commented on the
attract SEZ investors markets.
additional ‘unquantifiable’
• Identified business services opportunities in ‘greentech’
to support potential SEZ sector.
SMMEs
• Attractiveness of Atlantis as
a site for investment or
expansion

Source: Deloitte analysis

Based on interviews and initial market research we developed a view of the high-and medium-
potential green technologies. We conducted further market research on only these technologies for
the proposed Atlantis SEZ. In general the high-potential activities were found to be the manufacturing
or partial manufacturing of technologies supported directly by government through initiatives such as
solar water heaters and renewable energy technologies under the renewable energy independent
power producer procurement (REIPPP) programme.

Using the insights gained from the market sizing process we developed two Atlantis SEZ uptake
scenarios – conservative and moderate. The first scenario reflects a conservative view which
assumes uptake from only those investors who already demonstrate interest in Atlantis and who are
involved in producing high-potential technologies. The second scenario, the moderate scenario,
assumes that some market opportunities are targeted sooner than expected due to improved market
conditions and the approval of supporting policies currently under discussion and with a high
probability of being enforced within the next two to four years.

5.3. Identification of high priority green technologies for the Atlantis SEZ
In order to assess the feasibility of the proposed Atlantis greentech SEZ, we had to determine which
of the greentech suite of activities Atlantis could viably attract in the short term given:

 The demand for the activity in South Africa and potential export markets
 Whether local industry can competitively produce the good or service for the local and\or export
market
 The proposed dti incentives and existing City of Cape Town incentives
 The advantages and limitations of the Atlantis business environment

45
To evaluate the greentech activities in terms of the considerations above, we developed a simple two-
axis framework for activity prioritisation Figure 10.

Figure 10 Description of prioritisation approach

Viable in SA but not suitable for Atlantis Viable in SA and suitable for Atlantis

There is adequate demand (locally and\or There is adequate demand (locally and\or in
in feasible export markets) to attract new feasible export markets) to attract new
investment to produce this activity in SA investment to produce this activity in SA and to
and to produce it competitively. Atlantis produce it competitively. Atlantis could attract
however is not a suitable location. this type of activity.
Viability in South
Africa These activities are likely to choose to These activities are the current high-
Determined on basis locate elsewhere in South Africa potential opportunities for Atlantis
of level of local and
feasible export Not viable in SA and not suitable for Viable in medium to long-term and suitable for
demand, ability to Atlantis Atlantis
compete with imports There is insufficient demand to support Current demand (locally and\or in feasible export
(assumes proposed the local production of these markets) is not sufficient to support a new entrant
SEZ incentives are in goods\services and local producers or expansion of existing local production. There is
place) cannot compete in the export market. however some identified potential and the activity
Atlantis is also not a suitable location to could be viable in future. Atlantis may attract this
produce these products and services type of activity beyond 2018.
These activities are not targets for These activities represent potential
Atlantis future opportunities for Atlantis

Suitability of Atlantis
Extent to which Atlantis is a suitable location for
production and services given the site’s natural attributes
and the proposed incentive package

Source: Deloitte analysis

On the vertical axis we ranked each activity in terms of its viability in the SA context – this
encompasses an assessment of the demand for the activity in South Africa and its potential export
markets and the extent to which South African producers can competitively produce it given the
proposed dti and City of Cape Town incentives. On the horizontal axis we assessed the extent to
which Atlantis could feasibly attract the activity given its location, business environment and other
attributes.

With respect to the viability of the activity in South Africa, the first major component is the demand for
greentech products and services. For example, in South Africa national policies that mandate and
incentivise the use of green technologies is one of the main drivers influencing demand.

The second major factor affecting the viability of producing the product or service in South Africa is
the effect of global competition. This depends on differences in productivity (i.e. the costs of
production) between South African producers and their global counterparts. In general, products
which are relatively simple to produce, expensive to transport (when considering imports into South
Africa) and require readily accessible local inputs will face less global competition. In considering this
factor, we also take into account the proposed dti and City of Cape Town incentives, which in some
instances, may be sufficient to overcome differences in productivity.

With respect to the advantages and limitations of the Atlantis business environment (the horizontal
axis), we consider attributes of the local labour supply, adequacy of infrastructure and relative cost of
doing business in Atlantis and compare these to the needs of each business activity.

46
 5.4. Summary of key greentech market sizing findings and conclusions
A summary of our overall ranking and prioritisation of greentech activities for the proposed ASEZ is
provided in Figure 11. The high-opportunity activities (and in some cases specific components) are
highlighted in the top-right quadrant while medium-opportunity activities are in the bottom-right
quadrant.

For the residential, commercial and industrial market our key conclusions were as follows:

1. Atlantis is suited to manufacturing activities

 Atlantis is better suited to manufacturing of green technologies and materials than provision of
related services (e.g. Research and development, installations, waste services etc.). This is
a function mainly of its location – its relative isolation from the CoCT urban centre and ample
existing industrial infrastructure.
2. Government support and rising electricity prices drive demand

The demand for local manufacturing of green technologies this segment is contingent largely on:

 Direct government support for uptake of the end-product policy, programmes and standards,
coupled in some cases with additional localisation requirements. Key programmes being the
Eskom IDM programme, the DoE solar water heater roll-out plan, the SANS building
standards and the 12L income tax allowance.
 The rising cost of electricity
 Falling cost of green technologies.
3. While demand has increased the outlook is uncertain

 Two of the most successful government-support uptake programmes are on hold - the Eskom
IDM programme is on hold due to funding constraints and the DoE solar water heater
programme will soon be re-launched in a new format
 This has negatively affected suppliers and manufacturers in CFL, LED, heat pump, SWH and
other energy efficient and renewable energy industries who were servicing the commercial
and industrial sectors.
 While some alternative funding may become available in the short-term it is likely the
programme will be discontinued when Eskom’s coal-fired plants come online. The rising cost
of electricity and falling relative cost of green technologies will continue to play a role in
driving uptake independent of government support 24.
4. Local manufacturers primarily serve the domestic and regional market

 The majority of existing local manufacturers supply the domestic and regional (SADC) market.
Opportunities for expansion are therefore limited by growth in this market.
 It is difficult to compete in the international export market because of a combination of one or
more of the following factors - geographic remoteness of SA from key international markets,
the relative cost and productivity of labour, the domestic\regional market is small and doesn’t
provide sufficient economies of scale in production.
 Exceptions in niche areas – CA components in Atlantis for example supplies natural
gas\biogas engines to Europe on contract.
5. Commercial & Industrial market is the larger opportunity

24 Andrew Etzinger, head of IDM at Eskom

47
  While the household market has a higher number of potential users, the commercial and
industrial market represents the larger opportunity for manufactures of green technology in
South Africa.
 Demand is driven by the rising cost of grid electricity prices and falling cost of green
technologies.
 The business case for self-generation or energy efficiency initiatives is much clearer in these
segments due to much higher overall energy consumption and longer operating hours within
this segment and high opportunity costs of power outages or rising electricity costs.
6. Result – the high-opportunity and medium-opportunities greentech activities for Atlantis

 The high-potential opportunities identified were the manufacturing of SWHs and basic LED
components, including assembly of LED lights. We expect both of these markets to receive
continued government support (through rebates and standards) and note that growth in these
markets will potentially support the establishment of new entrants or expansion of existing
firms to Atlantis.
 The other market opportunities which we identified for the Atlantis region include the
manufacturing or assembling of heat pumps, building insulation, solar batteries, smart meters
and roof top PV. Again, due to shipping costs and size requirements, assembling and
manufacturing for the commercial and industrial market provides the greatest opportunity for
additional manufacturing activities in Atlantis.
 The medium-potential technologies are future opportunities because they are typically
contingent on some additional government support in terms of enabling regulation, standards
or funding or growth in the regional market. These include Rooftop PV (which depends on
progress in embedded generation) and/or larger local markets to breach the tipping points for
local investments into additional manufacturing activities in the country.
There are a wide range of greentech products and services in the residential, commercial and
industrial market. These greentech solutions span across all the categories within the greentech
‘taxonomy’. The technologies which we assessed as providing the greatest short-to-medium term
opportunities for manufacturing in Atlantis are solar water heaters, heat pumps, rooftop PV,
components of inverters, LED and CFL luminaires, building insulation and components of waste to
energy technologies.

As electricity prices increase and technologies improve over time, local demand could sustain
additional manufacturing in other technologies such as PV silicone cells, advanced components of
inverters and heat pumps, electrical cars and their components, bio-fuels, batteries and other storage
solutions, small scale waste heat recovery and other industrial solutions to reduce resource usage.

A number of existing greentech manufacturers and service providers have already indicated that a
greentech SEZ in Atlantis would be an attractive location to operate from. In addition to the short term
tangible opportunities already identified, the proposed greentech Atlantis SEZ would also provide
future local and international greentech firms with a location that consists of fiscal incentives and an
easier and more productive environment to do business from, depending on individual needs.

Local and international demand for greentech products and components will continue to grow thus
increasing the likelihood of demand from firms wishing to gain access to the ASEZ property and
incentives. We foresee demand for ASEZ eligibility growing on the back of increasing electricity
prices, growing consumer awareness, increasing support for embedded generation, rising income
levels, improving environmental awareness and falling technology prices.

48
Figure 11 Overall greentech opportunity prioritisation

High Opportunity
• Basic inverter parts (casings, windings and wiring) • Solar PV components (Glass, frame, junction box,
packaging, adhesives, backing sheet, mounting
structures)
• Wind turbine blades
• Wind turbine towers
• Solar water heaters (HP & LP)
• Basic components (luminaires, fittings) for LED &
CFL lighting
Viability in South
Africa • Solar CSP (heliostats, parabolic troughs, etc.)
Medium Opportunity
Based on the level of • Waste management & recycling activities
• Solar CSP tracking systems, glass and mounting
local and export • Energy efficient appliances structures
market demand, • PV silicone cells
competitiveness with • Batteries & other PV storage
• Wind turbines (including bearings, generator,
global production and • Insulation (built environment)
brakes, etc.)
proposed incentives • Geothermal Energy • Heat pumps
• Hydropower • Smart meters (embedded generation, bi-directional
• Biogas and automated meter reading)
• Manufacturing of components for electrical • Biomass components (utility and co-gen)
vehicles • Rooftop PV
• Residential gas solutions (heat, water heating and
• Production of biofuel and related machinery
cooking)
• LED lamps (residential, commercial & industrial) • Waste to energy components (biomass/biogas) for
utility and non-utility scale users
• Micro-wind power

Suitability of Atlantis
Extent to which Atlantis is a suitable location for
production and services given the site’s natural attributes
and the proposed incentive package

Source: Deloitte analysis

For the utility-scale renewables market our key conclusions were as follows:

The IRP allocations and REIPPP programme together with local content requirements is the key
driver of demand within the utility-scale market, especially within the wind, solar PV, CSP, biomass
and biogas technologies. These technologies are capable of providing power to the national grid while
also providing opportunities for additional local manufacturing in the proposed ASEZ.

The local manufacturing opportunities differ for each technology in terms of both timing and
complexity. For instance within the wind energy market the fabrication of the wind blades and towers
is already taking place in South Africa and Gestamp has already started building their plant in Atlantis.
For the local CSP technology market it may take several more years before firms in South Africa start
producing more advanced components such as curved mirrors or energy storage solutions. For now
though the current opportunities in CSP occur within the manufacturing of solar trackers, steel and
aluminium frames, flat plate glass and mirrors and other BOP components.

Overall:

The immediate (next 3 years) high-potential opportunities for Atlantis include the manufacturing of
selected PV module components, wind turbine blades and towers, solar water heaters and basic
components of CFL and LED lights. These activities, with the exception of lighting components are all
directly supported through targeted government initiatives and would likely have setup without SEZ
incentives. The purpose of the SEZ therefore would be to attract these activities to a relatively under-
utilised industrial node and to promote the ‘clustering’ of these activities to foster greater collaboration
and development of greentech activities in future.

49
The medium-opportunity activities represent future opportunities for the ASEZ to attract because
growth in these markets is still contingent on additional government interventions (in terms of
regulation, standards or direct support) or movement in other key demand drivers (e.g. falling cost of
the technology or higher energy prices).

5.5. Greentech demand scenarios

5.5.1. Our approach – from market sizing to scenario development

Having identified high-potential and medium-potential greentech opportunities for Atlantis in both the
utility-scale and broader residential, commercial and industrial market we estimated the size, number
and nature of the firms that would likely setup in the ASEZ to take advantage of each of the identified
opportunities. These estimates provide the basis for two demand scenarios –‘conservative’ and
‘moderate’.

The assessment of the type, nature and number of firms representing each high and medium
greentech opportunity was based on primarily on information obtained during interviews with potential
investors, existing greentech firms and other industry experts at institutions including the IDC,
SAREBI at Stellenbosch Centre for Renewable Energy Studies. For some of the identified
technologies we were able to estimate the number of firms that would be required to support tangible
future demand. Gestamp was included in all scenarios.

We split each scenario into two periods with the high-potential greentech opportunities translating into
investment in the first period (2014 – 2017) and the medium-potential opportunities likely to translate
into investments in the second period (2018 – 2030). The 2030 end-date was chosen to coincide with
the end of the long-term planning horizon set by government in the Integrated Resource Plan (which
provides guidance on future allocations to utility-scale renewables) and the National Development
Plan.

5.5.2. Description of demand scenarios and assumptions

5.5.2.1. Conservative scenario – description and assumptions

This is the low-road scenario. Government support for greentech is a key driver of demand and we
assume no further support beyond what is currently committed to the development of renewable
energy and energy efficiency technologies over the period 2014 to 2030. We have also assumed that
only investors that expressed a keen interest in locating in the ASEZ during this period will do so. Key
assumptions of this scenario are laid out in the prefeasibility document.

5.5.2.2. Moderate demand scenario – description and assumptions

In the moderate scenario we assume that the demand for greentech improves primarily due to
increased support by government and stronger enforcement of energy efficiency standards but also
due to an increase in the cost of electricity which drives independent uptake of energy-efficient
technologies. We have assumed that greentech investors beyond those directly identified for Atlantis
and some investment by those in adjacent clusters. We assume that an additional 30% of firms will
setup to take advantage of greentech opportunities that we have not been able to specifically identify.
Key assumptions of this scenario are laid out in the prefeasibility document.

5.5.3. Assessment of likely uptake under the conservative and moderate

demand scenarios

50
An overview of the type, nature and size of firms that the ASEZ could feasibly attract under
‘conservative’ assumptions is provided in Table 8 and under ‘moderate’ assumptions in
Table 9.

Under the conservative scenario we estimate that the ASEZ could attract 12 firms in the first 3 years
and an additional eight firms in the following period. The moderate scenario assumes a marginally
higher and earlier interest by firms wishing to invest in the Atlantis SEZ compared to the conservative
scenario. For instance in the moderate scenario we anticipate that a PV module manufacturer will
show interest in the SEZ within the next two years and begins operating before the end of 2017. Also,
due to a slightly higher than anticipated uptake in the demand for SWHs we foresee the market being
able to support an additional SWH manufacturer and assembler in the short term.

Table 8 Conservative scenario

Source: Deloitte analysis

51
Table 9 Moderate scenario

Source: Deloitte analysis

Differences in the scale and impact the greentech SEZ could have under conservative and moderate
scenarios in terms of number of greentech firms and suppliers, direct permanent jobs created per
year and the required industrial floor space are outlined in Table 10.

In the conservative scenario the wind blade manufacturer and Gestamp represent the two large
manufacturers employing 550 workers and requiring 41 000m2 of industrial floor space. In the
moderate scenario we assume an additional ten greentech firms will set up over the 17 year period
(2014 to 2030) increasing our overall estimate of total direct and permanent jobs created by 380 and
increasing required floor space of 32 000m2. These ten firms represent six medium greentech firms,
three small greentech firms and one additional small greentech supplier. No additional large
manufacturers were assumed to set up in the moderate scenario above those already identified in the
conservative scenario. In both of our demand scenarios presented here the proposed Atlantis SEZ
would be considered a small scale greentech SEZ.

The majority of foreign direct investment will likely be attracted by the two large anchor tenants,
Gestamp and the wind turbine blade manufacturer. According to our market research and interviews
with manufacturers this investment could be in the range of R500 million for each scenario. If
international PV module manufacturing firms make investments of R50 million each then an additional
R100 million and R150 million in FDI could be attracted in the conservative and moderate scenarios
respectively.

52
Table 10 Size of likely uptake, conservative and moderate scenarios
Conservative Moderate

Firm Size Large Medium Small Total Large Medium Small Total

No. greentech firms 2 5 3 9 2 11 6 18

No. of greentech
- 3 7 10 - 3 8 11
suppliers

Direct permanent jobs

550 370 140 1 060 550 690 200 1 440
created per year

Industrial floor space

41 000 30 500 9 100 80 600 41 000 60 500 11 100 112 600
required, m2

FDI, million R500 R100 - R600 R500 R150 - R650

Source: Deloitte analysis

5.5.4. Conclusions on greentech demand

Our analysis of the greentech market in South Africa and the potential of Atlantis to attract a share of
the firms that will serve that market suggest that demand will be sufficient, even under the more
conservative scenario, to support the development of a small-scale greentech SEZ.

In the short-term (2014 to 2017) the ASEZ would focus on trying to attract manufacturers of SWHs
and components for wind and solar PV as well as basic LED/CFL lighting components and/or
assembly. The SEZ would also focus on supporting a number of SMME greentech suppliers focusing
on servicing the larger anchor tenants such as Gestamp or a wind blade manufacturer. We
acknowledge that these activities, with the exception of lighting components are all directly supported
through targeted government initiatives and would likely have setup without the provision of SEZ
incentives.

However, the SEZ would play a role in regional development in that it would likely attract these
activities to a relatively under-utilised industrial node and to promote the ‘clustering’ of these activities
to foster greater collaboration and development of greentech activities in future.

The opportunity for the ASEZ is also likely to improve over the medium-to-long term (beyond 2018)
because of increased IRP allocations and movements in demand drivers, such as rising electricity
prices or falling technology costs. In the medium term the ASEZ could potentially attract two large
greentech firms and 14 medium and small firms with a host of smaller suppliers creating 1 440 direct
and permanent jobs once fully realised. The majority of these positions could be filled by Atlantis
residents thereby contributing to the upliftment of people in the area.

Overall the current market demand is capable of sustaining a small scale greentech SEZ in Atlantis,
particularly if the SEZ entity adopts and incremental approach to investment based on realised
demand. If additional demand from neighbouring countries or other international markets for South
African made products increases or new local markets such as co-generation and embedded
generation are unlocked, then this would only further increase the viability and potential of the
proposed Atlantis greentech SEZ.

53
 5.6. Summary of the broader opportunity for the ASEZ
Our analysis of the greentech market in South Africa and the potential of Atlantis to attract a share of
the firms that will serve that market suggest that demand will be sufficient, even under the more
conservative scenario, to support the development of a small-scale greentech SEZ.

However we also explored whether still more value could be added to this concept – how the SEZ
framework and incentives could potentially be used to unlock additional opportunities for industrial
and\or economic development in the area and to maximise the benefits in terms of attracting
investment and job creation.

The opportunities identified include:

 Extended sector focus to support existing or emerging clusters– the SEZ could be used
to support the further development of the existing manufacturing cluster in Atlantis while
maintaining a focus on greentech and commitment to the ‘green economy’ more broadly.
 West Coast SEZ corridor - Designating the SEZ as a wider-scale “West-Coast economic
growth corridor” to unlock greentech opportunities that are tied to particular locations outside
Atlantis and to use the SEZ as a catalyst for a broader West Coast regional development
initiative.
 Emergence of a natural gas supply – Understanding the positive spill over effects from the
likely emergence of a natural gas supply in Atlantis through either local production or imports
could have on the proposed ASEZ and understanding how it can support the business case.

5.6.1. Key conclusions on the broader opportunity

Key project stakeholders including the CoCT and WCG felt that in the short-term the geographic and
sector focus of the proposed SEZ should initially be limited to Atlantis Industria and greentech
activities.

In the medium-term the Atlantis SEZ, once a proven concept, could consider applying to be
designated as a ‘West Coast corridor ‘to unlock a range of other greentech and possibly ‘low-carbon
resource-efficient activities’ along this corridor. These could include but are not limited to, landfill sites,
small-scale biogas or biomass, co-generation opportunities, biomass pellets production, biofuel
production, greentech installers and maintenance, energy audits and any other greentech firms who
supply the medium firms on the corridor or who need to be close to a commercial/residential hub

Another way in which in the SEZ could consider broader opportunities once established would be to
extend its greentech sector focus to include resource-efficient low-carbon manufacturers. This could
support the growth and development of the existing manufacturing clusters in Atlantis while retaining
the SEZ’s ‘green’ identity and focus.

Interviews held with firms in Atlantis suggest that for those firms who are able to serve a broader and
growing export market in Africa, SEZ incentives may indeed tip the business case in favour of
incremental expansion into new product lines and markets. The SEZ employment tax incentive could
provide an opportunity to attract new low-skill labour intensive manufacturers to Atlantis where growth
in the domestic and broader regional market is also supportive.

However it was noted that the concept of ‘resource-efficient low-carbon’ manufacturing is not as
clearly defined as greentech and while there are several international guidelines emerging, there may
be increased administration in assessing on what grounds a firm may qualify as a resource-efficient
low-carbon manufacturer.

54
On the subject of natural gas it was noted that post 2020 there is the possibility of excess gas being
available for a range of end-users at prices lower than other forms of power, including electricity and
diesel. At this stage, however, it is difficult to predict what the relative price of natural gas will be.
Nevertheless, should the gas be competitively priced relative to grid electricity it could attract a range
of energy consumer and intensive users to locate/re-locate to Atlantis and firms already established in
Atlantis would benefit from a cleaner, potentially cheaper source of energy.

55
 6. Technical aspects

6.1. Geo-technical investigation of land portion

6.1.1. Geo-technical considerations

A geotechnical desk study of the two sites identified for greentech industry was undertaken focusing
on site geology, site geohydrology, typical founding conditions, excavation conditions, and materials
utilisation potential.

Key conclusions of the study are:

 The site is most likely underlain by naturally deposited generally sandy aeolian and alluvial soils.
Generally, the near surface soils can be regarded as generally very loose to loose, improving in
consistency with depth.
 Groundwater is likely to be located at depth at this site due to the assumed thickness of the sandy
‘permeable’ soils at the site. Groundwater is not expected to be problematic at the site. Moisture
within the respective soil horizons will fluctuate seasonally.
 Hand labour and suitable earthmoving plant can be used for excavation purposes. Suitable
battering of the side slopes will be required for areas in cut. In terms of long term slope stability, all
cut slopes should be constructed to gradients not greater than 1v:2.0h and should allow for the
inclusion of a suitable erosion blanket and planting. Suitable wind erosion measures will also be
required in the drier summer periods during construction.
 In terms of the material utilization potential the sandy transported soils are suitable as use as
structural fill and as G7 selected subgrade once suitably compacted. Due to the variability in the
clay/silt content within the transported soils, careful selection of suitable material may be required
on site. Due to the fine grained nature of the site soils, soil moisture content needs to be carefully
controlled.
 In general, founding conditions for structures are regarded as unfavourable for conventional
founding at shallow depth and will require improvement to ensure competent founding conditions.
The naturally deposited transported soils at depth are suitable to support structures up to a
minimum bearing pressure of 175 kPa.
 The strength characteristics of the sub-soils can only be adequately assessed with a site specific
geotechnical investigation aimed at the assessment of the sub-soils using intrusive investigative
techniques such a trial pitting. Should heavy structural loading of the sub-soils be anticipated then
investigation of the subsoil characteristics at depth will be required to assess the risk of adverse
settlement. Small rotary diameter boreholes (with Standard Penetration Tests) would be
recommended for a deeper assessment of the sub-soils.
Subject to the specific measures outlined above related to excavation, material utilisation, founding,
and the strength characteristics of sub-soils, there are no significant geotechnical considerations
which should detract from the feasibility of the proposed SEZ. The full geotechnical desktop study has
been provided separately.

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 6.2. Land availability, suitability, and planning,

6.2.1. Land availability

It is expected that the two sites made available to greentech manufacturing enterprises by the CoCT
are sufficient in size to accommodate demand from qualifying enterprises (this aspect is discussed in
more detail in section 6.5.1). Nevertheless, as indicated in figure 12, the CoCT owns numerous other
large and smaller erven other distributed throughout the Atlantis Industrial area. Therefore, should
growth of the SEZ exceed anticipated demand, ample CoCT owned land is available.

Figure 12 Land Ownership in Atlantis Industrial Area (CoCT)

6.2.1.1. Development context

In general terms, the spatial structure of Atlantis comprises a rectangular area, some 2.5km wide and
5-6km long stretching south-north some 10km from the coast and 40km north of Cape Town. The two
halves of the rectangle are respectively reserved for residential areas (in the north), and industrial use
(in the south). An undeveloped buffer zone divides the residential and industrial areas. A south-north
route, Charel Uys Drive, connects the residential and industrial areas.

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The Atlantis CBD is located in the middle of the residential area, and is surrounded by “cellular”,
internally focused communities with public facilities (e.g. schools, places of assembly) at the centre of
these. In keeping with “modernist” town planning practice, the neighbourhood/ local road network is
curvilinear – with frequent cul-de-sacs – in an attempt to force most movement onto the main road
network. Linear open space systems traverse the area, but remain largely undeveloped, “lost”
(undeveloped) space. Most of the residential area is zoned for single dwelling use (albeit erf sizes are
relatively small in line with the originally intended “worker” status of the community) with general
residential use (intended for apartments) along busier routes or at major intersections. Parts of the
residential area – specifically towards the north – remain undeveloped.

The industrial area to the south shows a gradation of erf sizes from the north to the south with larger
erven to the south. Clearly the original intent of this layout was for larger industries – those with
potentially the most adverse impact (e.g. in terms of industrial vehicular movement) – to locate in the
south, furthest from residential areas. The northern part of the industrial area is most developed while
large tracts of vacant land occur to the south. The inner industrial area is served by a continuous ring
road – Neil Hare Road – which intersects with Charel Uys Drive. A major route, Dassenberg Road,
serves the industrial area to the west. Dassenberg Road also intersects with Charel Uys Drive.

As a planned industrial estate, the “sunk” infrastructure of the area has been designed to standards
suitable to accommodate further industrial development. The overall “square” shape of the industrial
area makes it clearly identifiable as a defined area of specific land use. Internally, the area provides a
range of erf sizes, accommodating the needs of different manufacturing activities.

Atlantis Industrial contains a very high extent of industrial floor space; some 4 074 461m² of “bulk” is
provided for in the zoning scheme of which 632 195m² (16%) – on 137 land parcels – is developed. In
terms of land, some 39.5% of available industrial land is developed with 1 567 175m² remaining
vacant.

The average value of improved industrial property is above the city average while the m² cost of
vacant industrial land (R160) is regarded as cheap compared to the city average. Between 2005 and
2013, 33 vacant industrial land parcels were sold for an overall value of more than R77 million. This
rate and value of sales is regarded as high compared to the rest of the city.

6.2.1.2. Land suitability

As part of the established industrial area, there are no non-industrial activities adjoining the identified
sites that would be negatively impacted upon by the proposed green industry uses. Both sites are
located in the western and southern part of the industrial area which is less developed and comprise
of larger erven (suitable to large space users such as Gestamp). The less developed nature and
larger erven of the western and southern part of Atlantis also enables more flexibility – if needed – in
the configuration/ re-alignment of infrastructure and land units to accommodate the specific and
different needs of users. Further, although removed from residential areas within Atlantis, both sites
are readily accessible to labour settlement areas.

In terms of physical attributes, both sites:

 Are large in extent, enabling accommodating of a range of users with different and perhaps unique
space requirements.
 Have a relatively simple shape/ configuration (square or rectangular), enabling easy “parcelling” of
land to accommodate different users and a very large range of building configurations.
 Are flat in slope, enabling easy provision of manufacturing space (requiring large flat surfaces).

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 Are currently vacant, with no previous structures to be removed or contaminants related to earlier
activities requiring remedial removal/ clean-up.

6.3. Detailed Land use zoning, site planning and design density, building
design

6.3.1. Zoning and environmental considerations

6.3.1.1. Zoning
The General Industry Subzone Gl zoning of the sites identified for the SEZ permits to greentech
industries identified through market segmentation and sizing. In making the land available specifically
for the SEZ, the City has further limited use rights on the land in that only applicants who comply in
terms of one or more of the following categories will qualify for evaluation, i.e, companies that:

 have been awarded power purchase agreements.

 Are Supplying components to utility scale renewable energy installations.
 Manufacture/ supply energy efficient equipment.
 Manufacture/ supply green technology.
 Specialise in the construction and/ or management and/ or maintenance of renewable energy
installations.
 Manufacture and/ or repair components for primarily green manufacturing industries.
 Are involved in research and experiments in respect of renewable energy.
It is acknowledged that a specific green technology activity may require further deviation from the
applicable zoning regulations, for example in relation to building height, setbacks, floor area, or
coverage. In these cases, departures from the provisions of the zoning scheme could be applied for.
Given the City’s specific support for the Atlantis SEZ, such applications would in all likelihood be
supported.

6.3.1.2. Environmental context and approvals

Atlantis forms part of the transition zone of the Cape West Coast Biosphere Reserve. The area has a
Mediterranean climate, with warm summers and cool winters. Rain occurs mainly in winter. Wind
direction in summer is predominantly south-westerly and south-easterly, and in winter north-westerly.
Situated on a coastal plain, the area comprises mainly unconsolidated quartz sand sediments
deposited to an average of 25m deep on shale bedrock of the Malmesbury Group. The area is gently
sloping and largely lacking in rivers and streams but productive springs are located at Silwerstroom
and Mamre.

As part of the Cape Floristic Region the area contains a high percentage of endemic and threatened
plant species. Previous studies (Ankerlig Power Station Conversion and Transmission Integration
Project, Western Cape, Final Scoping, March 2008), indicated that it is doubtful that any Red Data
invertebrate taxa occur in the area. Out of 67 mammal species in the broader area, eight are
endemic. Two hundred and one bird species occur in the area, 15 of which are red-listed and 44
regional endemic or near endemic.

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The Atlantic coastline presents an area of natural amenity with unique views of Table Mountain.
Portions of the coastline and inland areas are susceptible to the effects of sea level rise which may
impact on coastal development and infrastructure. Vast areas of rural land are located in the broader
area including extensive farms and smallholding areas. Whilst portions are actively farmed, a large
proportion is the subject of private sector land banking and development speculation.

The Blaauwberg District – with Atlantis at its north – is viewed as a major growth axis of the City.
However, given its environmental value, it is imperative that high conservation worthy remnants is
protected and that ecological corridors are provided to allow for the movement of fauna and flora.
Atlantis itself has been identified as within the urban edge of the City of Cape Town – suitable for
further urban development. The area as a whole is largely surrounded by designated core
conservation and agriculturally significant land. The current urban edge of Cape Town “proper” is
further to the south of Atlantis. However, over the long term it is expected that this edge will be
adjusted to integrate Atlantis with development along the City’s west coast (the proposed “Wescape”
development is situated to the south of Atlantis).

A favourable environmental authorisation for use of the two sites identified by the CoCT by green
technology manufacturing enterprises was received from the Department of Environmental Affairs and
Development Planning (DEA&DP) on 16 January 2013 by virtue of the powers conferred on it in terms
of the National Environmental Act 1998 (Act No. 107 of 1998) and the Environmental Impact
Assessment Amendment Regulations, 2010. The EIA process for the two sites found that both erven
contain natural vegetation in medium habitat condition. These erven do not, however, form part of the
City of Cape Town’s Biodiversity Network. The vegetation type is classified as Cape Flats Dune
Strandveld (West Coast subtype) and is nationally endangered. It is also endemic to Cape Town and
can only be conserved within the City’s borders.

In order to mitigate the effect of the conservation requirements in respect of the endangered
vegetation on the properties the City has recently resolved to acquire an alternative site, the Klein
Dassenberg site, as an off-site biodiversity offset site which will enable the minimum conservation
thresholds for the relevant vegetation types to be met and will compensate for the loss of endangered
vegetation on the subject properties.

As a result the development of the subject properties will not be constrained by any requirements
regarding conservation of any endangered vegetation and the vegetation may be removed.

Some additional actions and possible approvals that may be required on designation of the SEZ
include:

 The draft Environmental Management Programme (EMPr) need to be amended when needed to
ensure compliance with the conditions contained within the environmental authorisation or further
applications. During this process, the EMPr is to be reviewed and made site specific, ensuring
compliance with the requirements of NEMA Section 24N.

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 Chapter 4 of the National Water Act (NWA) refers to the use of water and eleven uses are
described in Section 21 of the Act. Two of these “uses” clearly fall within the realm of artificial
recharge, namely “storing water”, and “the intentional recharging of an aquifer with any waste or
water containing waste”. Other uses such as “altering the bed, banks, course or characteristics of
a watercourse”, could be applicable in the case of a bank filtration artificial recharge scheme.
Based on the definitions as contained in the NWA, artificial recharge can therefore be considered
a water use. Therefore waste water emanating from the bio retention facility may require a water
use license. Furthermore, the basic assessment indicates that a (man-made) retention pond has
been identified on site. Should this pond perform the functions of a wetland, it may be classified as
such. The NWA does not differentiate between natural and man-made wetlands, and as such any
activity occurring within 500m of a wetland may require a water use license.
 The removal of endangered plants prior to the commencement of construction related activities
requires a permit from inter alia CapeNature. This is not a long lead item and will not significantly
impact upon the development. The small population of the endangered Ruschia indecora should,
where possible, remain undisturbed (in situ) and be incorporated in the landscaping, thereby
receiving protection; alternatively, these must be used as part of the greater site landscaping.
 Section 38 of the National Heritage Resources Act, 1999 (Act No. 25 of 1999) requires developers
to notify the responsible heritage resources authority and furnish it with details regarding the
location, nature and extent of the proposed development. A Notice of Intent to Develop has been
submitted to Heritage Western Cape as part of the basic assessment. The environmental
authorisation requires that a qualified archaeologist be appointed should heritage artefacts be
discovered on site during earth works/development.

6.3.2. Site planning and design

6.3.2.1. Land usage

Market segmentation and market sizing investigations for the Atlantis SEZ have indicated that:

 Over a ten-year period another large enterprise – possibly a wind blade manufacturer – requiring a
large landholding and floor area similar to Gestamp (some 7.2ha and ±20 000m²), could locate
within the Atlantis SEZ
 During years 1-3 between 1.6-2.4ha (8 000m²-12 100m² of floor space) and during years 4-10 an
additional 2-5.5ha (10 000m²-27 500m² of floor space) would be required to accommodate smaller
users in an industrial park. Further, the Atlantis SEZ would require an One Stop Shop (OSS),
estimated to be at least 500m² in floor area
There are two options for accommodating a further large space user: either on site 1 (part of which is
used by Gestamp), or on site 2. Gestamp has taken up some 7.8ha of the 29.9ha site 1 with the
remainder left undeveloped. Site 2 measures 38.7ha in extent and is completely undeveloped.

It follows that there is sufficient space available to accommodate a further large user with similar
space needs to Gestamp on site 1. Site 2 is large in extent and very few, if any, development-ready
industrial sites of a similar extent remain in the CoCT’s ownership. Ideally, this site should not be
“parcelled” into smaller land units but rather be kept in reserve should a major manufacturer (and
employer) in future require such a land holding in Cape Town. If for operational reasons the
remainder of site 1 is not suitable for the next large user, such a user could be located on site 2.

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Two broad options appear possible for accommodating smaller users. The first is to refurbish existing
space within Atlantis Industrial. The second is to build new purpose-built accommodation for small
users on a portion of one of the two sites identified by the CoCT for green manufacturing enterprises.
Accommodating smaller users in existing refurbished buildings would appear advantageous from a
larger Atlantis Industrial urban renewal perspective – in line with various CoCT initiatives. However,
building anew provides various advantages in terms of a facility which is purpose designed (to meet
both user and “green” standards), carefully phased as need arises, and the “identity” of a first phase
SEZ.

A new industrial park could be located on site 1 or 2. Assuming a 10 year maximum need of some
8ha for smaller users, the remainder of site 1 should be sufficiently large to accommodate both a
further large manufacturer and the industrial park. Again, in this way the SEZ entity is assured full
flexibility to negotiate user agreements related to site 2 in future

Figure 13 indicates how the 10-year projected SEZ demand could be accommodated on site 1.

Figure 13 Proposed SEZ Site (AECOM site planning study)

6.3.2.2. Site lay-out and design

It is likely that a further large space user (similar to Gestamp) will require purpose designed space,
responding to specific assembly processes. A site lay-out was therefore not prepared for a further
large user.

A concept site lay-out and design (refer to Figure 14) has been prepared for an industrial park
accommodating the anticipated 10-year demand for smaller Atlantis SEZ users. The lay-out pursues:

 A grid-like movement structure enabling easy movement from and to the surrounding route
network as well as between and through buildings.
 Building orientation to maximise natural light.
 Appropriate yard/service space to individual units.
 Space for a possible taxi-rank, market facility (for small traders, depending on demand), and
recycling facility, at the main entrance/exit.

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 Consolidated recreation space (and possible urban agriculture opportunity) in association with the
OSS in the centre of the development.
 Modular buildings (based on a grid design which could be easily converted/ adapted to
accommodate larger or smaller units depending on the specific needs of users, and phasing of the
development based on demand), repeated in rows.
Figure 14 Potential ASEZ Industrial Park Design (AECOM site planning study)

6.3.2.3. Green building

Consistent with the proposed SEZ’s focus on manufacturing to support green infrastructure and
products, it is believed appropriate for the SEZ entity to pursue green buildings to accommodate its
own operational needs (the OSS), as well as manufacturers.

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The Green Building Council of South Africa (GBCSA) uses the Green Star South Africa (SA) rating
system to provide an objective measurement for green buildings in South Africa and to recognise and
reward environmental leadership in the property industry. Currently, there is no GBCSA rating tool
which can assess industrial developments. However, the SEZ entity, can obtain GBCSA approval to
develop a project specific rating tools for SEZ accommodation.

South Africa is pioneering building criteria beyond traditional green considerations to assess the
social and economic elements of building projects, and how these contribute to broader national
development and sustainability objectives (including poverty alleviation, unemployment, and poor
health), through the GBCSA’s voluntary pilot socio-economic Category (SEC) for Green Star SA
rating tools. Given the broader urban renewal context of the proposed Atlantis SEZ, it would be
appropriate for the SEZ entity to incorporate these criteria in developing a SEZ specific building rating

6.4. Completion of civil engineering studies

The following detailed engineering studies may be required once the exact nature, extent, and form of
SEZ related development is known:

 Investigation of the subsoil characteristics at depth should heavy structural loading of the sub-soils
be anticipated
 If Council considers it necessary, a transport or traffic impact statement or assessment
 If Council considers it necessary, a stormwater impact assessment and/or stormwater
management plan
 The detail capacity of the water reticulation network in the vicinity of the two sites identified
 The detail capacity of the wastewater reticulation network in the vicinity of the two sites identified
 The detailed electricity needs of SEZ users and electricity distribution between the two sites
identified

6.4.1. Water sources

Bulk water sources for Atlantis include the:

 Witzands well-field/ boreholes (potential capacity of15 Ml/d)

 Silwerstroom well-field/boreholes (potential capacity of 6 Ml/d)
 CoCT Bulk supply system (potential capacity of 25 Ml/d)
The Average Annual Daily Demand (AADD) for Atlantis residential and industrial water use is
respectively 4 168.1 Kl and 8 521.7 Kl. Thus, both the residential and industrial water needs of
Atlantis could potentially be met through its groundwater supply, recharged through the Atlantis Water
Resource Management Scheme (AWRMS) which replenishes 30% of groundwater through recycling
stormwater and treated domestic effluent. During the recent rehabilitation programme of the well-
fields, the whole of Atlantis’s water needs was supplied through the CoCT bulk water supply system.

6.4.2. Bulk water infrastructure

Bulk water infrastructure in Atlantis comprises:

 Two 20 Ml Melkbos reservoirs, supplied via the 700 mm diameter Melkbos supply pipeline, in turn
supplied via its connection to the 1 500 mm diameter Voëlvlei pipeline
 A 500 mm pipeline which supplies water from the Melkbos reservoirs to the Witzands well-field

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 A 400 mm and 450 mm diameter pipeline which supplies bulk water further northwards from the
Witzands well-field
 Two pumpstations located at the Witzands well-field (Witzands A and B pumpstations). Witzands
A pump-station pumps bulk water via a 400 mm diameter pipeline to the 10 Ml and 40 Ml Pella
reservoirs, and Witzands B via a 450 mm diameter pipeline to the 10 Ml and 20 Ml Hospital
reservoirs
 Pumpstations pumping water from the Silwerstroom well-field to the 10 Ml and 40 Ml Pella
reservoirs
 Aquifer extraction from the Witzands and Silverstroom well-fields is chlorinated prior to the point
where it meets up with the bulk water supply
For the purpose of developing the two sites identified for the greentech manufacturing, the overall
bulk water availability should be adequate.

6.4.3. Bulk wastewater infrastructure

The Wesfleur Wastewater Treatment Works (WWTW), located south-east of Atlantis, serves waste
water needs of Atlantis. All industrial wastewater is treated and employed with urban stormwater to
recharge the groundwater supply. Wesfleur WWTW has a combined existing residential and industrial
capacity of 14 Ml/d. The WWTW currently receives an inflow of approximately 10 Ml/d, and therefore
has 4 Ml/d spare capacity. The Wesfleur WWTW can potentially be extended to have a combined
treatment capacity of 25 Ml/d. For the purpose of developing the two sites identified for the Atlantis
SEZ, the Wesfleur WWTW currently has spare capacity.

6.4.4. Stormwater
The existing bulk stormwater system of Atlantis consists of a comprehensive network of pipes, canals
and stormwater detention ponds, which collect and convey stormwater runoff in a south-westerly
direction. Stormwater is discharged towards natural low lying areas where it infiltrates the sandy soils.
In this way, the bulk stormwater system can be considered as independent from the stormwater
infrastructure of the greater city area.

Atlantis Industrial is drained by two bulk stormwater systems located along the northern and southern
edges of the area. The catchment for the northern stormwater system extends to the north eastern
edge of the industrial area, near the location of the first site proposed as part of the SEZ. Stormwater
runoff collected in this system drains in a south-westerly direction towards a pond located along the
western outskirts of Atlantis, from where the stormwater is discharged to a natural depression located
west of the pond.

The catchment for the drainage system along the southern edge of Atlantis extends to the residential
area located in the eastern parts of Atlantis and also includes the southern parts of the Atlantis
industrial area. This system conveys stormwater in a south-westerly direction towards a natural
depression approximately 2 km south-west of Atlantis.

The natural drainage direction of both sites proposed for the SEZ is in a general south-westerly
direction. Site 1 drains to the corner of Charel Uys Drive and Neil Hares Road, the latter which is
drained by a 450 mm diameter pipe which forms part of the stormwater system along the northern
boundary of Atlantis. Site 2 drains towards an existing municipal stormwater detention pond located at
the south-western corner of the site, which forms part of the stormwater system along the southern
edge of Atlantis. Existing bulk stormwater infrastructure provides sufficient access to both of the sites.

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 6.4.5. Solid waste infrastructure
At present, if not reclaimed or recycled, all solid waste generated by Atlantis is either disposed at the
CoCT owned Vissershok South Landfill or the privately owned EnviroServ Vissershok Landfill. In
future, two new sites will be commissioned within close proximity to the proposed SEZ. The
Vissershok North Landfill – an extension of Vissershok South – is scheduled to open in 2015. The
exact location of the new Regional Landfill is still to be confirmed but is expected to be in the region of
Kalbaskraal (some 15 km east of Atlantis) and be operational by 2018.

The classification of the various landfill sites are as follows:

 The Visserhok South Landfill is licensed as a H:h site, a containment landfill which accepts
hazardous waste with hazard ratings 3 and 4. The site had a life expectancy of three years left in
2013
 The Vissershok North Landfill is licensed as a G:L:B⁺ site, a general waste, large sized landfill with
leachate generation. It is envisaged that the classification of this site be amended to H:h once the
existing informal settlers on the site have been relocated. The site is expected to be commissioned
in 2015 and have a service life of 10 years
 The EnviroServ Vissershok Landfill is privately owned and licensed as a H:H site, a containment
landfill which accepts all hazardous waste
 The Regional Landfill is envisaged to be licensed as a Class A site in terms of the new National
Environmental Management Waste Act, 2008 (Act No. 59 of 2008), a landfill which accepts Types
1,2,3 and 4 Waste

6.4.6. Waste service delivery

The CoCT does not provide a waste collection service to industries. Industrial and health care entities
must have a contract with a legitimate private sector service provider that is able to provide a service
according to the nature of the waste that must be collected, treated, recycled, and/or disposed. The
minimum service level requirement for collection by external entities is once per week.

The CoCT offers no waste minimisation services to industries. Although in general terms removal of
recyclable waste by the City from the source is part of the municipal service, the waste enters the
“waste beneficiation stream” once removed from the waste stream and from that point forms no
longer part of the municipal service. The City has elected to control and regulate, rather than provide
these services. For example, the City developed and maintains a recycler’s database to facilitate
market exposure of those involved in providing the public and/or businesses with recycling or waste
minimisation related services.

6.4.7. Transport
Atlantis is located between the N7 freeway route to Namibia and the R27 West Coast freeway. Klein
Dassenberg Road, the R304, and Dassenberg Road are primary arterials which provide access
between Atlantis and the western and eastern freeways.

The Atlantis area is one of the key industrial freight centres within the Cape Town Metropolitan area.
Although traditionally dislocated from the rest of the city, Atlantis Industrial has locational advantages
for manufacturing activities sensitive to “urban” transport movements (e.g. large vehicles not readily
mixed with city traffic). The regional freight movement networks consist mainly of the following
corridors:

 Atlantis to Namibia (N7 - Road Network)

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 Atlantis to Cape Town (R27 & N7 or Rail Network)
 Atlantis to Port of Saldanha (R27 & N7 - Road Network)
 Atlantis to Cape Town International Airport (R27, R300, N7 & N2 - Road Network)
Abnormal loads are mostly transported via the N1 and N7, where infrastructure permits such
movements. The major attractors and generators of abnormal loads are the Koeberg Nuclear Power
Station, transformers to electricity sub-stations, the yacht building industry, freight movement between
the Port of Cape Town and the west coast and the wind turbine industry and wind farms. The South
African National Roads Agency Limited (SANRAL) is in the process of upgrading National Route 7
(N7) in a phased manner.

There are two provincial overloading control stations located along the strategic freight route between
Cape Town and Saldanha, on the N7 at Vissershok and at the intersection of TR85/1 and the R27
near Saldanha.

There are two well-maintained ports in the Western Cape significant to the Atlantis area; the Port of
Cape Town and the Port of Saldanha Bay. The Port of Cape Town is located 50 km from Atlantis and
is the major seaport in the region for general cargo import and export. It is also the second busiest
container port in South Africa and is fully equipped to handle all types of general break-bulk and
containerised cargo via specialised terminals. Other than the freight handling facilities, the port also
provides dry docking facilities as well as a dedicated ship repair quay. The Port of Cape Town is
served by well-developed inland road and rail transport infrastructure. The Port of Saldanha is a
common user port and South Africa's largest natural anchorage and the port with the deepest water. It
is located 60 nautical miles northwest of Cape Town or about 110 km from Atlantis. The Port of
Saldanha handles predominately iron ore and crude oil.

Cape Town International Airport is located about 60km from Atlantis and is the only major commercial
airport in the region and therefore the focus of all air freight operations. The airport is well serviced
with a complete range of support agents, clearing and forwarding and transport services.
Investigations are in progress to increase the capacity of the airport.

6.4.8. Public transport

The City is implementing its MyCiTi bus rapid transit service in phases. The west coast route has now
been extended to include Atlantis, the informal settlements of Du Noon and Jo Slovo Park, and the
industrial area of Montague Gardens. This route has considerably improved labour mobility in and out
of Atlantis. MyCiTi bus stations are located in close proximity to the sites identified for the SEZ.

The City is also pursuing the increased responsibilities for the rail mode of public transport as
provided for in the National Land Transport Act (NLTA). In parallel, the City is investigating the
feasibility of a new commuter service from Cape Town CBD to Du Noon/Atlantis (on an existing
freight line).

6.4.9. Electricity
Atlantis Industrial and the erven identified for the proposed SEZ fall within the municipal electrical
supply area of the CoCT. The whole Atlantis area is serviced by means of a single Eskom 80MVA
firm supply step-down substation, which distributes to numerous CoCT substations located within the
residential and industrial areas of Atlantis. This substation is currently running at capacity. However, it
is understood that Eskom intends to:

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 Upgrade capacity of the feeder bay that supplies electricity from Koeberg to Atlantis from 90MW to
approximately 130MW
 Construct a second 80MVA substation for - and for the account of - the CoCT to meet growing
demand for electricity in Atlantis (the construction of the second step-down substation will take
three to four years once the necessary plans and approvals have been agreed between Eskom
and the CoCT)
The CoCT’s Medium Term Income and Expenditure Framework make provision for a significant
contribution to improve electricity supply to Atlantis.

A representative of the CoCT Distribution System Development service has confirmed that each of
the sites identified for the proposed SEZ can currently be serviced up to a maximum of 2MVA. The
Supply Authority has indicated that while 2 MVA is readily available for use, electrical demands in
excess of 2MVA will trigger upgrades to the existing infrastructure and the construction of an indoor
substation.

Gestamp has required 1.6 MVA of the 2MVA available on site 1. A future large user (possibly a wind
blade manufacturer) is expected to have an electricity demand similar to Gestamp. A ±12 100m²
industrial park could use 484 KVA (.48 MVA), based on an estimated load of 40VA/m2 of GLA. An
additional 27 500m² to the industrial park will require 1MVA. The 4 MVA available for the two sites
should therefore be sufficient to accommodate Gestamp, a wind blade manufacturer and a ±12 100m²
industrial park on the site 1 and 2 identified over the 2014-2017 period. However, the longer term
demand for industrial park accommodation would require improvements to electricity supply in
Atlantis.

Medium Voltage (MV) infrastructure can be located in John van Niekerk Street and Neil Hare Road
located on the east and south-east boundaries of Site 1 and Gideon Basson Road and Neil Hare
Road located on the south-west and south-east boundaries of Site 2.

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 7. Legal framework and governance
structure

7.1. Legislative framework and context

When assessing the operational and governance framework of the proposed Special Economic Zone
(“SEZ”) entity, in addition to assessing the type of entity that is established, all applicable legislation
needs to be considered. The primary pieces of legislation governing this will be the:

 Special Economic Zones Act 16 of 2014 (“SEZ Act”);

 Public Finance Management Act 1 of 1999 (“PFMA”);
 Municipal Finance Management Act 56 of 2003 (“MFMA”);
 Municipal Systems Act 32 of 2000 (“MSysA”);
 Municipal Structures Act 117 of 1998 (“MStructA”); and
 Companies Act 71 of 2008 (“Companies Act”).
In addition to the above, there are certain regulations that will also apply. Firstly, Treasury Regulations
for departments, trading entities, constitutional institutions and public entities issued in terms of the
PFMA (“Treasury Regulations”) apply to the proposed SEZ. And secondly, the Minister for Trade
and Industry may make regulations regarding any matter which, in terms of the SEZ Act, is required
or permitted to be prescribed any ancillary or incidental administrative or procedural matter that it is
necessary to prescribe for the proper implementation of administration of the SEZ Act. No SEZ
regulations had been published at the time of drafting.

7.2. Recommended entity and process for application

The SEZ Act states that upon the designation of an area as a SEZ and the granting of a SEZ license
to the applicant, the applicant must establish an entity to manage the SEZ. The SEZ Act then goes
further and states that in the case of a provincial government, the entity must be established as a
provincial government business. As the applicant is the Western Cape Province, this entity must be a
Provincial Government Business Enterprise. A Provincial Government Business Enterprise is –

 a juristic person under the ownership control of a provincial executive;

 has been assigned financial and operational authority to carry on a business activity;
 as its principal business, provides goods or services in accordance with ordinary business
principles; and
 is financed fully or substantially from sources other than a Provincial Revenue Fund or by way of a
tax, levy or other statutory money.
The SEZ Act does not specify what form the Provincial Government Business Enterprise should take
two possible forms of the SEZ Entity that were considered were a Non-Profit Company (“NPC”) and a
State Owned Company (“SOC”). While there is no specific legal preference for either a SOC or a NPC
it was decided that the NPC was the preferred option. An NPC is defined in the Companies Act as “a
company –

(a) incorporated for a public benefit or other object as required by item 1(1) of Schedule 1; and

69
(b) the income and property of which are not distributable to it incorporators, members, directors,
officers or persons related to any of them except to the extent permitted by it 1(3) of Schedule 1."

There are restrictions on an NPC that need to be borne in mind. Should an NPC be utilised, then it will
have to have “a public benefit object; or an object relating to one or more cultural or social activities,
or communal or group interests”. The wording of the objects of an NPC in its MOI will need to reflect
this and be reconciled with PFMA requirements given in the section 1 definition of a Provincial
Government Business Government Enterprise. There is a further restriction placed on a NPC that it
may not amalgamate, merge or convert to a profit company according to the Companies Act.

As one of the objects of the proposed SEZ is to facilitate economic growth in the Atlantis area through
the development of a greentech hub with any profits that may accrue to be re-allocated to the SEZ,
this form of entity will meet these requirements. This is supported by Advocate Krull’s opinion,
attached hereto as Annexure 3 which states that if the Western Cape Province

“… having met the requirements of sections 51(1)(m) and 54(2)(a) of the PFMA, establishes an
NPC (or SOC, for that matter), and it meets the requirements set out in the definition of “provincial
government business enterprise”, it will automatically, and by operation of law, be regarded as a
Provincial Government Business Enterprise, to be included in Schedule 3D to the PFMA, and this
qualifies for purposes of section 25 of SEZA.”

From the above it should be noted that the NPC, which is established, will be the entity required by
the SEZ Act in terms of section 25. The registration of the SEZ entity in Schedule 3D to the PFMA
does not facilitate the registration of a new entity; this registration only results in the entity, which is a
Provincial Government Business Enterprise by definition, becoming a listed entity in Schedule 3D of
the PFMA as a provincial government business enterprise.

Once all requirements for designation of the SEZ have been met and the responsible Member of the
Executive Council (the “MEC”) submits application for designation, if the Minister for Trade and
Industry be satisfied with the application, the geographical area set out for designation will be
designated a SEZ and a SEZ license will be granted to the applicant. The MEC will then establish the
SEZ entity in the form of a NPC, which meets the Companies Act and the PFMA requirements, and
appoint its board (“SEZ Board”). Once this has happened, the NPC will, by operation of law, be a
Provincial Government Business Entity, which will need to be registered as such and be listed in
Schedule 3D of the PFMA.

7.3. Governance Structure

The SEZ Act makes provision for the following overall governance framework regarding SEZ:

 SEZ Advisory Board;

 Applicant who is awarded the SEZ license;
 SEZ entity with SEZ Board; and
 SEZ Operator.
The SEZ Advisory board is established in terms of section 7 of the SEZ Act and will consist of 15
member board appointed by the Minister of Trade and Industry. The board will be made up of 7
members from different government departments and state owned entities, 3 members representing
organised business, labour and civil society and 5 independent members appointed for their
knowledge, experience and expertise. One of the functions of the SEZ Advisory Board is to liaise with
a SEZ Board and an operator on the implementation of the SEZ strategic plans.

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A SEZ entity must be established by the holder of an SEZ license to manage the SEZ. The licensee
will appoint an SEZ board of directors for the efficient governance and management of the business
affairs of that SEZ entity and must provide the resources and means necessary to manage and
operate the SEZ. There is no indication as yet as to how the SEZ Board should be constituted,
however the only requirement in terms of the Companies Act is that there should be a minimum of
three board members. One of the duties on the SEZ Board is to develop and implement a strategic
plan.

The SEZ entity must appoint an operator to develop, operate and manage the SEZ. The SEZ operator
will be a company according to section 33 of the SEZ Act and have its own distinct board of directors.
Only in the case of an SEZ entity established by a Public Private Partnership (“PPP”) licensee, can
that SEZ entity be allowed to also develop, operate and manage the SEZ. This means that the
proposed SEZ entity to be established will not be able to also develop, operate and manage the SEZ.

The following diagram taken from the Deloitte Memorandum on the Operational and Governance
framework, attached hereto as Annexure 4, sets out the governance structure explained above:

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Figure 15 Flow chart of SEZ governance framework

SEZ Advisory Board

SEZ Advisory Board  The SEZ Advisory Board is constituted in terms of section 7
of the SEZ Act. The main function of the Advisory Board is
The Advisory board is established in to advise on policy, monitor implementation, consider
terms of the SEZ Act and reports to the applications for designation and operator permits and
Minister for Trade and Industry. liaise with the SEZ Board.
 The Advisory Board does not take part the operation and
governance of the SEZ. The Advisory Board only advises
the Minister with regard to the implementation of the SEZ
strategy

SEZ Licensee
SEZ Licensee
 The applicant for designation may be any one of the
entities mentioned in section 23 of the SEZ Act.
The applicant for the designation of a
SEZ is granted a license to manage  Establishes an SEZ Entity to manage and operate the SEZ
and aappoints a SEZ board responsible for governance
and develop the SEZ.
and business affairs of the SEZ entity
 Provides the entity with the resources and means
necessary to manage and operate the SEZ, including the
transfer of ownership or control of the land comprising the
SEZ.
SEZ Entity
SEZ Entity
 Established by the SEZ Licensee depending on the type
The SEZ entity is established by the of licensee.
SEZ Licensee. The Board of Directors
of this entity is appointed by the SEZ  Special Economic Zone Board manages the SEZ entity –
Licensee. keeps financial records, provides strategic direction and
appoints an SEZ operator
 Manages and operates the SEZ in terms of section 25 of
the SEZ Act. This will include concluding lease
agreements

SEZ Operator
SEZ Operator
 SEZ Board must follow a fair, equitable, transparent,
An SEZ Operator is appointed by the competitive and cost-effective procurement process,
SEZ Board. when appointing an operator to develop, operate and
manage the SEZ on behalf of the SEZ Board. The SEZ
Operator is tasked to develop, operate and manage the
SEZ in terms of section 31(1) of the SEZ Act.

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In the SEZ Act, operational control and management of the SEZ are given to both the SEZ entity and
an operator and the makes no clear division of responsibility for the SEZ. In terms of section 25, it is
the relevant ‘SEZ entity, under the control of the specific ‘SEZ Board’, that is given the specific task of
managing and controlling the SEZ. Then in terms of section 31(1) the SEZ Operator is – appointed to
‘operate and manage the Special Economic Zone behalf of the [SEZ] Board”.

Whether an SEZ operator is mandatory or discretionary is also unclear. The SEZ Act only requires
that the SEZ Board must follow a fair, equitable, transparent, competitive and cost-effective
procurement process, when appointing an operator to develop, operate and manage the SEZ on
behalf of the SEZ Board.

The relationship between the SEZ entity and an operator is also not clearly set out. Two possible
forms this relationship could take are either as a principal-agent relationship (where the operator can
bind the SEZ entity to agreements with third parties) or as a normal contractual relationship (where
the operator is a contractor which will conclude sub-contract agreements with third parties but will
remain liable under those contracts). It appears that the relationship envisaged by the drafters of the
SEZ Act intended a principal-agent relationship due to the wording of section 31(1) of the SEZ Act
which states the following, “… when appointing an operator to develop, operate and manage that SEZ
on behalf of the (our emphasis) SEZ Board.” As a result of the uncertainty caused by the SEZ Act,
the relationship between the SEZ entity and the operator will be determined by the wording of the
section 34(1) written agreement to be put in place between the SEZ entity and the operator.

7.4. Conclusions\recommendations
The MEC for Finance and Economic Development will apply for designation as an SEZ on behalf of
the Western Cape Provincial Government. Once an SEZ license has been granted, the licensee
should seek the necessary PFMA approvals as set out in the Annexure 3 and then register a NPC.
This should be done in a way that meets the requirements of both the Companies Act (specifically the
objects of the NPC) and the section 1 definitional requirements of a Provincial Government Business
Enterprise in the PFMA. The SEZ Board should also be appointed by the Licensee.

The SEZ board could be constituted of representatives from the Province, City of Cape Town, dti and
as long as the Province maintains “ownership control” in terms of the PFMA. The licensee also
reserves the right to appoint a private sector representative(s) with technical expertise in relevant to
the SEZ to the board.

Once this has taken place, the NPC can start to function as the SEZ entity. The process of registering
the NPC as a Provincial Government Business Entity in Schedule 3D should also begin at this point.
An SEZ operator should also be appointed. Whether this process is done “in house” or as an open
tender is unclear at this point and will hopefully be determined by the SEZ regulations to be published
in due course. It is recommended that an open tender is used as this is a broader interpretation of the
wording of the SEZ Act. The agreement between the SEZ entity and the operator should clearly state
whether the operator can bind the SEZ entity to future contracts or not, as this will impact the liability
of the SEZ entity.

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Figure 16 Governance structure for ASEZ

SEZ Advisory Board

The Advisory board is established in terms of the SEZ Act

and reports to the Minister for Trade and Industry

SEZ Licensee

MEC for Finance and Economic Development on behalf of

the Western Cape Provincial Government

SEZ Entity
Provincial Business Enterprise 3D, registered as a not-for-
profit (NPC) in terms of the Companies Act 71 of 2008.
SEZ licensee appoints SEZ Board. This could be constituted
of representatives from the Province, City of Cape Town, DTI
as long as the Province maintains “ownership control” in
terms of the PFMA.

SEZ Operator
An SEZ Operator is appointed by the SEZ board
through a fair and transparent process

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 8. Commercial model

8.1. Key principles for the Atlantis SEZ commercial model

8.1.1. Size and extent of the Atlantis SEZ

The Atlantis SEZ is envisaged as a relatively small-scale greentech SEZ when compared to existing
IDZs such as Dube Tradeport and Coega or city-wide greentech SEZs Boading in China or Masdar
City in the United Arab Emirates which were described in the Atlantis prefeasibility report. Results of
the detailed market analysis conducted at prefeasibility phase suggest that the scale of the SEZ will
initially be limited by the location and nature of Atlantis Industria which 40km north of Cape Town is
mainly suitable for manufacturing and related activities and the size and growth in the market for
greentech products and services in the Western Cape and Northern Cape which is the largest
‘natural’ market for the ASEZ.

It is however our recommendation that the whole of Atlantis Industria, including the vacant land that is
currently zoned for industrial use, be designated as an SEZ. The rationale for the extended
demarcation is to provide the SEZ with a broader reach and enable it to act as a catalyst for the
upliftment of the entire Atlantis industrial area. This would be achieved through improvements in
public services and infrastructure available to all businesses within the demarcated area. This is in
line with international best practice notions that SEZs should serve as catalysts for broader economic
and industrial development and not as isolated enclaves.

As such, not all companies within the Atlantis SEZ boundaries will qualify for SEZ incentives. But both
non-qualifying enterprises (which include all the existing firms in Atlantis Industria) and qualifying
enterprises will be able to co-locate within the SEZ.

Furthermore, in interviews held with existing businesses in Atlantis some expressed disappointment
that they would not be eligible to receive SEZ incentives as some of them are struggling enterprises.
The extension of the zone demarcation would grant these businesses with access to some of the SEZ
benefits and likely improve their overall disposition towards the SEZ. Additionally, the extended
demarcation provides further land options to potential investors and makes it easier for the SEZ entity
and its tenants to make use of existing buildings in Atlantis.

In the medium-term the Atlantis SEZ could consider applying to have its boundaries extended along
the West Coast corridor to unlock a range of other greentech and possibly ‘low-carbon resource-
efficient activities’ along this corridor. These could include but are not limited to, landfill sites, small-
scale biogas or biomass, co-generation opportunities, biomass pellets production, biofuel production,
greentech installers and maintenance, energy audits and any other greentech firms who supply the
firms on the corridor or who need to be close to a commercial/residential hub.

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 8.1.1. Sector focus and eligibility for SEZ incentives
The primary objectives of the ASEZ are to grow the greentech sector in the Western Cape and to
further the CoCT’s objective of revitalising Atlantis as a key industrial node in the region. Based on the
options presented in the prefeasibility study and in line with the primary objectives of the proposed
Atlantis SEZ, the applicant, the Western Cape Provincial Government, proposes that all greentech
firms as defined in section 2.3 and their direct suppliers that locate within the boundaries of the ASEZ
will qualify for fiscal and other SEZ incentives. Non-qualifying enterprises located within the SEZ will
still benefit from a range of public infrastructure improvements and services.

8.1.2. Delivering SEZ services cost-effectively

As noted in section 5.5 under the conservative demand scenario for the greentech ASEZ we have
estimated that 20 greentech firms will be operating before the end of 2030. Of these 20 firms, seven
are expected to be small and medium enterprises who would set up as suppliers to anchor tenants.
One of the 20 firms, Gestamp has almost completed construction of its facility on site 1 of the Atlantis
Special Economic Zone. The other large anchor tenant, expected to invest into the zone under
conservative demand assumptions, is a wind blade manufacturer. In the moderate demand scenario
we have estimated that 29 greentech firms will be in operation by 2030.

Given the relatively small-scale of the proposed Atlantis SEZ one of the key principles will be to
provide infrastructure and services in a cost-effective manner by making use of existing buildings and
infrastructure in the area and leveraging the capacity of existing institutions such as GreenCape,
Wesgro, SAREBI, TISA (the dti), CoCT and WCG. In addition we have proposed that the ASEZ
provide selected services to both qualifying and non-qualifying enterprises within Atlantis Industria in
order to increase both the impact and beneficiaries of the ASEZ and to realise economies of scale in
service delivery.

8.2. Sources of funding for ASEZ infrastructure and options for facilitation
of private sector investment
It is clear from the case studies and interviews conducted as part of the Atlantis SEZ funding models
and sources report25 that national government does not intend to replicate the infrastructure funding
models implemented at Coega IDZ and Dube TradePort where substantial grant-funded investments
were made in respect of both top structures and onsite infrastructure in the absence of commitments
by investors. Instead, it intends to unlock private sector investment and funding by paying for targeted
infrastructure spending in the SEZs through the SEZ Fund.

The most likely funder of onsite infrastructure within the Atlantis SEZ will be the SEZ Fund that is
administrated by the dti. As only R3.9 billion is currently committed in the MTEF to the SEZ Fund,
Atlantis is unlikely to be able to apply for grant funding in excess of its share of the allocated funding.
In the event that 15 SEZs are designated, Atlantis’s share (assuming the funds are allocated equally)
would only be approximately R260m over the three year period.

PPPs have were also identified by national government as a mechanism to minimise public sector
spend and facilitate private sector investment in South African SEZs and a draft framework has been
developed by National Treasury which sets out the process for the procurement of a PPP or private
sector operator/developer.

25 Contained in the Atlantis SEZ strategy document, 2014

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Based on the research conducted as part of the Atlantis SEZ funding models and sources report, four
potential private sector participation development models were considered for Atlantis SEZ. The first
two models are likely to be classified as PPPs given the level of risk transfer and contract length
whilst the fourth model is unlikely to be deemed a PPP as it would involve a contract between two
private sector parties. The third model could result in a PPP if significant risk is transferred to the
private sector. The four models include:

1. The provision of onsite infrastructure and services by the private sector;

2. The provision of top structures, onsite infrastructure and services by the private sector;
3. The provision of top structures by single private sector developer; and
4. The provision of top structures by multiple private sector developers.

Given the uncertainty around the number of tenants that will locate in Atlantis SEZ, private sector
developers are unlikely to be willing to take on significant development risk in respect of onsite
infrastructure unless it receives material guarantees or capital grants to mitigate the development risk.

Atlantis SEZ’s onsite infrastructure spend requirements are likely to be less onerous than that of many
of the new SEZs as it is located in a developed area and a number of brownfield sites could
potentially be incorporated into the SEZ. However, there is a risk that the Atlantis SEZ will be less
competitive than Coega IDZ or Dube Tradeport IDZ if it is required to fund onsite infrastructure
through DFI or commercial funding that will require funding costs and debt repayment costs to be
passed onto tenants. It is worth noting that Coega IDZ and Dube IDZ have benefited from at least
R4.4 billion and R3.0 billion of historical grant funding from national and provincial government
respectively which allows them to operate on a non-cost reflective basis.

The SEZ entity could minimise its upfront capital expenditure requirements by entering into lease
agreements with the City of Cape Town, the IDC and other potential private sector land owners in
Atlantis Industria. To further reduce initial commitments, the SEZ entity may want to take out options
with private land owners and the IDC to lease land parcels.

The options would require the SEZ entity to pay a specified amount to the land owners upfront for the
option to lease the land at a specified rate. In the absence of sufficient demand, the options would be
allowed to lapse, but if demand warrants it the options could be exercised and converted into leases.
Leases should be entered into for a 30 to 60 year period to allow private sector developers to enter
into 30 year sub-leases with a renewal option.

The most appropriate private sector participation model in infrastructure development that Atlantis
could adopt appears to be where multiple private sector developers can develop top structures for
tenants. The model is likely to be the most efficient and affordable for the public sector as it will
require no grant funding or guarantees from the public sector. However, smaller and less credit
worthy investors may not be able to get access to accommodation within Atlantis SEZ if all top
structures are developed through this model.

Table 11 summarises the envisaged allocation of funding between the SEZ Fund, the City of Cape
Town and commercial funders. The proposed allocation seeks to achieve National Government’s
objective of using targeted government funded spending on onsite infrastructure to leverage private
sector funding of top structures.

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Table 11 Sources and potential sources of funding for ASEZ infrastructure
Telkom or
City of Cape Commercial
SEZ fund SEZ entity private
Town funding
sector
Funding of top structures ? ? √
Funding of onsite infrastructure
Electrical sub-stations √ ?
Water and sewerage storage √ ?
Water and sewerage treatment and pumping √ ?
Clearing and servicing of the land √ ?
Fencing √ ?
Landfills √ ?
Security and lighting √ ?
Access roads √ ?
ICT ? √ ? √
Shared service centre √
Anchor tenant contract ?*
Funding of offsite infrastructure √
√ - Primary funder
? - Potential funder
?* - Potential contractual party

8.3. Activities and services to be provided by the Atlantis SEZ entity and
SEZ Operator
The core activities of the proposed ASEZ entity and its operator will include:

 Marketing the SEZ and its facilities to attract investment by greentech firms
 Managing, developing and facilitating the lease of land and buildings within the SEZ
 One-stop shop services and investor facilitation and aftercare
 Provision and upgrading of public infrastructure and services (e.g. security, street cleansing,
environmental upgrading)
 Development of a green identity for the Atlantis SEZ through provision of green infrastructure and
services
− provision of green logistics services
− provision of waste management and\or minimisation services
 Provision of range of value-adding services including:
− facilitation of skills development and upgrading in the area
− facilitating the collaboration of greentech firms
− small and medium enterprise incubation and development through SAREBI
Other potential services that have been investigated include:

 provision of ICT infrastructure and services

The nature of these services and activities are described in further detail in the sections below.

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 8.3.1. Marketing the SEZ and its facilities to attract investment by greentech
firms
The primary objectives of the ASEZ are growing the greentech sector in the Western Cape and the
promotion of Atlantis as a key industrial node in the region. These dual objectives are achieved by
increasing the number of greentech firms and funders operating in Atlantis. To ensure alignment with
the ASEZ objectives, the “value” marketing activities should strive to attract both greentech tenants
and funding to support rollout of infrastructure and services within the SEZ.

In the marketing plan developed for the Atlantis SEZ which can be found in the Atlantis Greentech
SEZ strategy document, six marketing segments were identified, these include:

 International greentech firms

 Local greentech firms
 Greentech small and medium enterprises
 Foreign donors
 South African development finance institutions
 Public entities
Individual marketing strategies have been developed per customer segment indicating targeting and
positioning guidelines. These were designed to cater to the customers’ needs based on the market
outlook, operating model, interests and concerns of the individual customer segments.

While it is recommended that marketing services and to some extent activities be outsourced as much
as possible due to the small scale of the ASEZ some activities will need to be undertaken by the SEZ
entity or operator. Market research to inform marketing activity will include identifying potential
international investors, developing technologies and identifying sector opportunities/challenges.

Figure 17 illustrates some of the marketing activities and research the ASEZ entity will need to
conduct.

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Figure 17 Marketing roles and responsibilities

Marketing Market intelligence

 Brand management  Market research of greentech products and SEZ
 ASEZ newsletter and brochure development practices and trends. This includes identifying
 Website content development and production potential investors and institutions that the ASEZ
entity could collaborate with to attract
 Case study writing
international investors and improve SEZ
 Investor reference programme management competitiveness
 Direct marketing campaigns of priority target  Develop SEZ status reports for general public
investors reading
 International above the line advertising  Review of and participation in local greentech
 Corporate presentations and videos market reports and studies
 Develop sales content for potential investors  Research into local and global SEZs which may
 Identifying and managing hospitality for visiting be competing for similar tenants (competitor
investors analysis)
 Emerging greentech research

Marketing activities could include brand development awareness and management, ASEZ newsletter
and brochure development, development of website content and platforms, direct marketing
campaigns, above-the-line advertising, corporate videos and presentations, development of sales
content, hospitality for visiting investors.

It is expected that above the line advertising will be outsourced while direct marketing and promotion
will be conducted by the ASEZ entity and\or the SEZ operator and affiliated organisations. Market
research will most likely be conducted by existing greentech industry associations and/or research
institutions such as GreenCape. For more detail regarding marketing activities and strategies please
refer to the Atlantis SEZ marketing plan within the Atlantis SEZ strategy document

8.3.2. Property development and management

One of the core activities of the SEZ Operator will be managing, developing and facilitating the lease
of land and buildings to qualifying enterprises. It is envisaged that the SEZ entity will lease rather than
purchase land and buildings from existing property owners. Three types of lease have been
proposed:

 Lease of greenfield land – SEZ entity leases greenfield sites from the CoCT and leases it on to
SEZ tenants who require greenfield (undeveloped sites) such the wind tower and wind blade
manufacturers
 “Back-to-back leases”– the SEZ entity will lease developed property (buildings) from existing
Atlantis Industria property owners and will lease the buildings onto SEZ tenants with the same
terms and lease period (e.g. 10 years)
 Anchor tenant lease – SEZ entity leases property from Atlantis Industria property owners (e.g. 10
to 20 years), undertakes refurbishment of the property(ies) at its own expense (or dti funded) and
makes space available to SEZ tenants on a shorter term leases (and at higher rentals)
We have also explored an option where the SEZ entity would lease land from the CoCT in order to
develop a portion or portions of the greenfield sites:

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 Greenfield property development - In this arrangement the ASEZ entity leases the required
amount of land from one of the two CoCT greenfield sites for a period of at least 30 years. The
ASEZ entity then leases the land to the property developer (public or private) for construction of a
new facility. The property developer then independently secures finance for the construction of its
property or facility. The SEZ entity can also act as the property developer, however, due to the
relatively small amount of anticipated revenue income the SEZ entity would have to utilise a
combination of funding sources, including dti grant funding, development finance institution low
interest loans or commercial loans

8.3.3. One-stop-shop investor services

8.3.3.1. Requirements under the SEZ Act

The SEZ Act requires the SEZ operator to “facilitate a single point of contact or one stop shop that
delivers the required government services to businesses operating in the Special Economic Zone in
order to provide simplified procedures for the development and operation of that Special Economic
Zone and for setting up and conducting business in that Special Economic Zone.”

The Advisory Board is tasked in the Act with advising the Minister of Trade and Industry on the
minimum norms and standards required for the provision of a one stop shop.

8.3.3.2. Approach envisaged by the dti

The dti provided some details in respect of the envisaged OSS model as part of its May 2013
response to the Parliamentary Portfolio Committee. The following functions of the OSS were identified
as part of the response:

 Planning – assist investors to plan the development of the zones in terms of land assessment and
logistics;
 Licencing – simplify the process of obtaining business licences by integrating licencing authorities
into one department or providing access to different agencies;
 Utilities - Facilitate a signal point of access to basic utilities required for setting up and operating an
industrial zone;
 Financing – Facilitate access for investors to direct or indirect financial assistance; and
 Environmental compliance – assist in maintaining environmental standards and obtaining
environmental approvals.
The dti presented the World Bank’s OSS models, described in detail in the funding model and
sources report to the Parliamentary Portfolio Committee and concluded that an Account Managers
model was the preferred solution. The model appears to be a rebranded one stop shop model. The
model will require Account Managers to be appointed at each SEZ to streamline approval processes.
The investor would benefits from dealing with a single point of contact; however, it is unclear how any
time savings or efficiencies will be created.

The flow diagram below summarises the process envisaged under the Account Managers Model.

The dti has indicated that it has appointed an advisor to formulate an OSS approach that will be
implemented across all the SEZs. A trial is about to commence at two of the former IDZs to pilot the
proposed model.

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Figure 18 Process under account manager’s model

The dti is likely to cover the budget in respect of the OSS’s employees and will fund the facility that
houses the OSS and other SEZ administrative functions.

Deloitte understands that a single OSS structure will rolled out across all the envisaged SEZs. Some
of the sector departments and institutions that are expected to be located within the OSS include the
following:

 OSS staff (SEZ and the dti)

This will consist of an OSS manager together with supporting staff that will be responsible for day to
day management of OSS activities within the zone. They will be responsible for coordination of all the
entities and institutions that are required to provide support to companies that are operating within the
SEZ.

 City of Cape Town

Staff representing the CoCT will be responsible for planning and utilities. Essentially the City will be
responsible for assisting investors in development planning with the zone in terms of land
assessment, various council approvals, etc.

 SARS
SARS representatives will be responsible for customs related activities which tenants may require
when importing or exporting intermediate inputs and final products.

8.3.4. Provision and upgrading of public infrastructure and services

In keeping with the ASEZ objectives of revitalising Atlantis as a key industrial node in the region, it is
envisaged that the ASEZ operator would provide an agreed range of public services that would
benefit both qualifying and non-qualifying enterprises.

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Based on interviews with the Voortrekker road improvement district and Riverhorse Valley Park we
established that basic services typically provided in a ‘un-gated’ industrial and commercial area
include services such as area security, street cleansing, landscaping and environmental upgrading.

Firms operating in the area are typically ask to vote on the range of services to be provided by the
area improvement office and costs are services are provided and costs recovered through a
compulsory levy once consensus has been obtained.

While it is unclear at this point, what services firms in the area will agree to contribute towards, it is
envisaged that at minimum the SEZ will provide some environmental upgrading and security services
throughout Atlantis Industria.

8.3.4.1. SEZ security

On-site security is typically provided by individual Atlantis property owners and tenants and this would
include access control, security guards and equipment on premises. It is envisaged that the SEZ
operator could contract a service provider to offer increased monitoring in public areas.

Replicating the type of service currently provided at Riverhorse Valley industrial park in Durban,
security infrastructure and services may include CCTV cameras, 24/7 monitoring, and dedicated
response services. Area-wide security services provision will only be viable if a levy can be recovered
from both qualifying and non-qualifying enterprises.

8.3.5. Development of a green identify for the ASEZ through provision of

green infrastructure and services
As noted in the prefeasibility study, greentech SEZs focus on activities that produce products and
services used to limit or reduce harm to the natural environment (such as renewable energy plant
components or energy-efficient equipment). They often also aim to serve as examples of how these
technologies are used to promote resource-efficient low-carbon industrial production.

The ‘demonstration effects’ typically include clearly visible examples such as the use of renewable
technologies in public infrastructure such as street lighting and billboards. Typically these initiatives
are supported through government grants, incentives and other sources of funding.

Globally there has also been a notable trend towards the ‘greening’ of SEZs and industrial zones in
general. Official guidelines such as the Institute for Sustainable Communities’ (ISC) ‘Guide for Low
Carbon Industrial Development Zones in China’ and the World Bank group’s recently issued ‘Low-
carbon Zones: A Practitioner’s Handbook, 2014’ provide practical guidelines on how to promote more
resource-efficient low-carbon industrial parks. The ISC guide suggests the main focus should be on
energy-use with the category ‘energy use greenhouse gas management’ receiving a 60% weighting.
Other measures include recycling economy and environmental protection (15%), zone management
and protection mechanisms (15%) and planning and land use (10%). These are further broken-down
into 23 sub-indices.

Since the proposed ASEZ would be a relatively small-scale greentech SEZ, our recommendation is
that the SEZ provide a practical example or ‘demonstration’ of the use of greentech in the context of
South African industrial park without imposing overly ambitious requirement on firms to meet
resource-efficient low-carbon targets. Moreover, the initiatives should not be seen as a means of
generating demand for the greentech products (since the initiative is not on a city-wide scale), but
assist in the development of its green identity. Potential initiatives could include examples such as:

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 Encourage the adoption of clean manufacturing processes
 Energy efficient or solar powered street lighting
 Promotion of self-generation (e.g. installation of PV panels on factory rooftops)
 Green public transport
 Recycling and waste minimisation services.
In the draft SEZ regulations the dti noted that the SEZ fund would contribute towards ‘environmental
impact improvement initiatives including green building compliance, emission control, water
preservation, waste management and control, waste-to-energy initiatives and energy co-generation
initiatives”. We have proposed that the SEZ entity will install rooftop PV on new build and refurbished
facilities where it is the anchor tenant and would provide solar-powered street lighting for new build
property.

8.3.5.1. Waste minimisation or waste-to-energy initiatives

The CoCT does not provide a waste collection service to industries. Industrial and health care entities
must have a contract with a legitimate private sector service provider that is able to provide a service
according to the nature of the waste that must be collected, treated, recycled, and/or disposed. The
minimum service level requirement for collection by external entities is once per week.

The CoCT offers no waste minimisation services to industries. Although in general terms removal of
recyclable waste by the City from the source is part of the municipal service, the waste enters the
“waste beneficiation stream” once removed from the waste stream and from that point forms no
longer part of the municipal service. The City has elected to control and regulate, rather than provide
these services. For example, the City developed and maintains a recycler’s database to facilitate
market exposure of those involved in providing the public and/or businesses with recycling or waste
minimisation related services.

At this point our waste management and minimisation specialists believe that the waste minimisation
and management services that the ASEZ entity could offer would include:

 Ensuring that its own participants minimise waste and recycle as far as possible (in line with the
“green manufacturing” theme
 Assist waste contractors and potential users of waste in accessing products from the ASEZ
conglomeration of industries (also contributing to job creation in this way)
 Education related to waste minimisation
 Assuming that the whole of Atlantis Industrial be declared an SEZ (subject to conditions), the
ASEZ entity can play a role in the coordination/ maximising of waste reduction/ recycling initiatives
in the area
It is unlikely however that waste minimisation activities would provide a revenue stream for the ASEZ
entity, rather the primary benefit would be to contributing to responsible resource use and job creation
and to enhance the green demonstration effect.

8.3.5.2. Implementation of green supply chain practices

The high-level Logistics Plan for the Atlantis SEZ which can be found in the Atlantis greentech SEZ
strategy document identified an opportunity to implement green supply chain practices that would also
result in cost reductions.

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The logistic cost reduction strategy is based on the assumption that the small users will cooperate in
order to share logistic costs where possible. Not all consignments will qualify for load consolidation as
it is dependent on the size, volume, type and frequency. Load consolidation, or co-loading, allows a
firm or multiple firms to consolidate shipments, cutting the number of trucks needed for last-mile
shipping. The efficiencies afforded by co-loading are elements of comprehensive, long-term urban
freight efficiency that is mainly dependent on the cooperation of businesses and suppliers and could
benefit both freight operators and receiving businesses.

Green supply chain practices represent actions and programmes – spanning across firms – that
improve environmental performance, remediate problems and minimize environmental burden. The
challenge often lies in the inter-firm cooperation and integration of supply chain management and
technology required to effectively implement such practices.

Practice has shown that the more mature/integrated a supply chain is the more enabled it becomes to
leverage complex green supply chain practices. In this instance the planned Atlantis SEZ is in its early
developmental stage and as such complex green supply chain practices are difficult to leverage.
Companies will be typically restricted to programmes that involve little cooperation from up- or
downstream parties, such as recycling and environmental certification.

8.3.6. Provision of range of value-adding services

8.3.6.1. Facilitation of skills development and upgrading in the area

Because the greentech industry is a relatively new industry globally with prominent international
organisations such as the International Renewable Energy Agency (IRENA), REN 21 and affiliates
only having been established within the last ten years, the skillset required to service the industry is
niched, concentrated in geographically dispersed centres of excellence globally and not easily
attainable. The development of the local greentech industry therefore requires that the greentech
specific skillset is either imported or developed locally.

We envisage that as part of its activities the SEZ entity will play a role in facilitating greentech and
general skills development in Atlantis. The specific initiatives to be undertaken are described in
greater detail in the Human Capital Plan in the Atlantis SEZ Strategy Document but key interventions
are summarised as follows:

 Perform a skills audit of the local Atlantis and the greater Cape Town labour force to assess the
availability of the requisite skills.
 Form partnerships with CPUT's South African Renewable Energy Technology Centre (SARETEC),
Stellenbosch University's Centre for Renewable and Sustainable Energy Studies (CRSES) and the
University of Cape Town's Energy Research Centre (ERC). These tertiary institutions specialise in
greentech research and the training of highly skilled greentech specific engineers and technicians.
 Form a partnership with West Coast FET College and similar FETs. These institutions specialise in
the training of skilled and semi-skilled labour. Often these skills are easily transferrable to the
greentech industry provided that minor adjustments are made to the methodologies employed.
These skills are also more readily available in the local Atlantis labour force given the industrial
background.

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 8.3.6.2. Facilitating the collaboration of greentech firms
International experience has shown that collaboration between businesses in a focused science or
technology park type SEZ can assist in driving growth and innovation. While these types of parks are
typically close to or within existing research and development centres like universities the proposed
greentech SEZ could still make use of some similar initiatives to provide a space for collaboration to
unlock opportunities in the sector, to engage collectively with stakeholders in government and thereby
facilitate its success. Initiatives that have proven to be valuable internationally can be relatively simple
and include the likes of:

 High-end coffee-shops, sport facilities, parks, green spaces and water-features, making the SEZ a
“community of choice” or “space to think” for young talent
 Free or subsidised work and collaboration space for SME start-ups
 The presence, on-site, of academic and applied research, learning and training institutes as well
as programs linking universities to the SEZ
 Office planning and coordinating including events, forums, innovation competitions, awards
programs, networking, site-visits by visiting trade delegations and chambers of commerce and
industry. This could even include regular subsidised “pizza nights” and ”wine and cheese” events
Coordinating events, forums and competitions and subsidised ‘pizza nights’ could be hosted on-site to
foster informal collaboration between firms in the area.

8.3.6.3. Small and medium enterprise incubation and development through

SAREBI
The SEZ entity or operator could work with anchor tenants and SAREBI to facilitate SMME
support/establishment by leveraging SAREBI services.

SAREBI is a small business incubator located in Atlantis with the goal of growing and nurturing small
and medium enterprises operating within the “Green Economy”. SAREBI provides business support,
facilitation of access to markets and access to finance as well as technology transfer and joint
ventures.

SAREBI is in the process of identifying candidates for incubation - it is envisaged that successful
applicants will be established in the incubator facilities which include recently refurbished factory floor
space and will receive full support from incubator staff and enjoy shared services and resources. This
will enable companies to focus on their core activities.

It is envisaged that SAREBI will be a feeder for both upstream and downstream opportunities in the
Atlantis Greentech Industrial Park. SAREBI is funded by the CoCT and dti.

8.3.7. Information and telecommunication infrastructure and services

Currently there are no high speed broadband services available to Atlantis Industria businesses. The
CoCT is however currently reviewing its 2014/15 broadband investment priorities and is considering
funding the following projects in Atlantis:

 Constructing seven Atlantis fibre rings (R12m).

 Provide a “redundant” connection to Atlantis, meaning that there are two separate and
independent routes for connectivity to ensure service continuity if the one would malfunction
(R11m).

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The reviewed expenditure plan is awaiting approval. Given a limited broadband budget, the CoCT has
welcomed the possibility of a possible funding contribution from the dti. However, it is unlikely that the
SEZ entity will be operational in time to effect these immediate budget allocations.

It has been mooted that the SEZ entity could possibly obtain income from providing broadband
services to the whole of Atlantis Industria. However, the Atlantis SEZ will not necessarily have the
economies of scale to undertake this function. Also, it is unlikely the CoCT will change its policy
position in relation to ownership and management of broadband assets and capacity until the SEZ
entity exists. That said to have a small amount of fibre assets sitting in the SEZ entity is suboptimal as
well, and the rationale would really only be to be able to take advantage of national government
funding available and perhaps to bring fast broadband to the area faster than what is planned in city
budgets. For more information please refer to the Technology Plan in the Atlantis SEZ Strategy
Document.

8.4. Revenue model and sources

The dti will not fund the operations of the SEZ and it is envisaged that operational expenditure will be
fully or substantially recovered by the SEZ entity through revenue from services and activities
provided to firms in the SEZ.

It is envisaged that the SEZ entity and\or operator will be able to earn revenue chiefly through the
rental of properties and the collection of a levy for the provision of public infrastructure and services.
Table 12 provides an overview of the services that could be provided to firms in Atlantis Industria both
by the SEZ entity/operator and other parties, and highlights the potential revenue sources for the
ASEZ entity/operator and the potential revenue base. In some cases services can only be provided to
enterprises that qualify for SEZ incentives while in other cases all firms in the Atlantis Industrial area
could benefit and therefore contribute.

We have assumed that all firms in Atlantis would be willing to contribute to broader area
improvements which may include top-up security services, street cleansing and environmental
upgrading. These types of ‘top-up’ services would typically be provided elsewhere in the City of Cape
Town under the auspices of the Special Ratings Area policy and levies would be collected by the city
in the form of additional property rates.

One possible is that the CoCT collect revenues on behalf of the SEZ entity\operator to provide these
area wide services within the existing SRA framework. Alternatively the SEZ entity\operator would
need to collect and administer levies itself but this may be more difficult to enforce outside of existing
SRA frameworks.

Non-qualifying firms in the Atlantis area cannot be expected to contribute to SEZ specific services
which may include investment promotion and market of SEZ incentives and benefits, greentech
collaboration activities and greentech skills development etc. Additional fees may need to be levied on
qualifying enterprises to cover the costs of these services or alternatively they will need to funded out
of provincial government grants initially and over time out of general revenues.

Table 12 Services provided in Atlantis and potential revenue streams for the SEZ entity
Services\Activities Potential Revenue base Recovery mechanism
revenue
source?

Greenfield land lease income (margin only)  Qualifying enterprises Lease agreement

Property rental income  Qualifying enterprises Lease agreement

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Property and land facilities management fees ? Qualifying enterprises Specific fees

Security services, street cleansing and  All enterprises in SEZ Levy or additional property rates
environmental upgrading area

Marketing, investment promotion, OSS, skills ? Qualifying enterprises Additional levy or fees charged to
development, facilitating collaboration, SMME qualifying enterprises for SEZ services
development

Waste recovery and recycling ? All enterprises in SEZ Expected profits are minimal at this
area stage

Hospitality and travel X All enterprises in SEZ Already provided

area

Broadband and other ICT ? All enterprises in SEZ Budgeted by CoCT

area

Public services (health, policing, etc.) X All enterprises in SEZ Already provided
area

Electricity (power) X All enterprises in SEZ Already provided by CoCT

area

Water X All enterprises in SEZ Already provided by CoCT

area

Source: Deloitte analysis

8.4.1. Income from rental of land and property

One of the key sources of income for the SEZ entity will be income generated from the lease of land
and existing, refurbished and\or newly developed industrial property in the Atlantis Industria Area. The
four lease\property development models that we feel are most appropriate for the ASEZ are, lease of
greenfield land, back-to-back leases, anchor tenant lease, greenfield property development. These
are described in the sections that follow.

8.4.1.1. Lease of greenfield land

In this arrangement the ASEZ entity leases the required amount of land from one of the two CoCT
greenfield sites for a period of at least 30 years with the option to renew. The ASEZ entity then leases
the land to the ASEZ tenant who then independently secures finance for the construction of its
property or facility. In this arrangement the SEZ entity will only earn a margin on the lease of the
greenfield land and no sub-lease income. This arrangement will suit tenants who are capable of
funding their own facilities and interested in owning these facilities. This arrangement whereby
tenants fund and develop their own facilities places minimal financing burden on the SEZ entity or
other public financing institutions, including the dti. Most high potential investors that we interviewed
during the prefeasibility study noted that they would prefer leasing properties as opposed to
purchasing or developing properties, thus the probability of such arrangements is limited to firms with
specific building requirements.

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Figure 19 Greenfield only property development model

Owner of Land
(greenfield)

Lease: 30 years +
30 years renewal

SEZ Entity

Greenfield land sub-lease

only (30 years + renewal

Loan
Tenant Commercial lender

8.4.1.1. Back-to-back lease

This model focuses on the development of brownfield properties which require upgrades or
refurbishments. In this arrangement the Atlantis SEZ entity will back-to-back lease properties by
leasing brownfield properties from owners and then leasing these on to ASEZ tenants. We assume
that some refurbishment or renovations will need to take place for these brownfield properties. The
cost of refurbishment will be covered by the owner of the facility or the SEZ tenant. This arrangement
will suit the SEZ entity and SEZ tenants who are not able to construct new facilities and who have
short-term or uncertain business horizons and cannot commit to leasing properties for periods longer
than 30 years.

Figure 20 Back-to-back lease model

Owner of Land + Loan for refurbishment Commercial lender

buildings (brownfield)

Lease: < 30 years

SEZ Entity

Back to back
lease < 30 years

Loan for refurbishment

Tenant Commercial lender

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 8.4.1.2. Anchor tenant model

In this arrangement the SEZ entity leases brownfield properties from existing Atlantis Industria
property owners and refurbishes these properties itself, through grant funding or commercial loans.
This arrangement is different from that of the back-to-back lease model in that the SEZ entity takes on
more risk and financial burden in the hope to attract more SEZ tenants. The leases which the SEZ
entity takes out with brownfield property owners are of a longer term to ensure minimal lease costs
per month.

Figure 21 Brownfield anchor tenant development model

Owner of Land +
buildings (brownfield)

Lease: > 30 years

Loan for refurbishment

SEZ Entity Commercial lender

Sub-lease < 30
years

Tenant

8.4.1.1. Greenfield property development model (anchor tenant)

In this arrangement the ASEZ entity leases the required amount of land from one of the two CoCT
greenfield sites for a period of at least 30 years. The ASEZ entity then leases the land to the property
developer (public or private) for construction of a new facility. The property developer then
independently secures finance for the construction of its property or facility. The SEZ entity can also
act as the property developer, however, due to the relatively small amount of anticipated revenue
income the SEZ entity would have to utilise a combination of funding sources, including dti grant
funding, development finance institution low interest loans or commercial loans.

Once the building has been constructed the ASEZ entity will lease the building from the developer (if it
is not the developer itself) for a period of at least 30 years and then sub-let the property to SEZ
tenants at market rates for a period of 10 years or less, depending on the requirements of the tenant.
This arrangement provides the SEZ entity with income from the lease of the land and on the sub-
leases to additional (possibly smaller) SEZ tenants.

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Figure 22 Large anchor tenant model including a property developer

Owner of Land
(greenfield)

Lease: 30 years +
30 years renewal

SEZ Entity
Sub-lease: years TBD
on case by case basis

Lease: 30 years Anchor tenant

+ renewal lease

Loan
Tenant Developer Commercial lender

Arrows represent contract flows

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 9. Financial model

9.1. Introduction
Deloitte assessed the financial viability of the proposed Atlantis SEZ on the basis of four different
options. All four options are based on the conservative demand scenario for the ASEZ described in
section 5.5.2 in which 20 greentech firms are expected to establish themselves in the Atlantis SEZ
over the period 2014 to 2030.

The main objectives of the financial model are to:

 Determine on a net present value (NPV) basis the cost of each of the four options.
 Assess the sustainability of each of the options i.e. assess on an annual basis whether the cash
flows generated by each of the options is sufficient or whether additional financing (in the form of
provincial government grants) will be required to meet the shortfall.
 Determine the quantum of government funding required.

9.2. Overview of four options modelled

The key difference between the “Low road” and “High road” options is that in the “Low road” none of
the 10 small users establish themselves in the SEZ because of a lack of immediate, suitable and
marketable space. In the “High road” options, additional capital to develop marketable space to attract
the small users is required.

The options also differ in terms of the decision whether to refurbish existing industrial property in
Atlantis or whether to build new facilities. The cost of refurbishing brownfield sites at R2 818/m 2 is
estimated to be approximately half of the cost to develop greenfield sites at R5 636/m 2 excluding the
provision of additional on-site bulk infrastructure associated with new developments at R1 305/m 2.

An overview of the four options is provided in Table 13. A more detailed description of these four
options is provided in the section below.

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Table 13 Overview of demand and property assumptions for four options modelled

Low Road High Road

Refurbishment New Build Refurbishment New Build

10 larger firms • 10 larger firms 20 large and small firms 20 large and small firms
Demand
(no. of
firms)

 SEZ entity leases  SEZ build s new OSS  SEZ entity leases  SEZ build s new OSS
existing property SEZ head office (500m2) existing property for OSS SEZ head office (500m2)
for OSS SEZ head  SEZ tenants lease SEZ head office (500m2)  SEZ entity constructs a
office (500m2) 30500m2 through back-  SEZ entity leases new green rated
 SEZ tenants lease to-back leases. brownfield properties (on industrial park on CoCT
Property leased/developed

30500m2 through a long term basis) and greenfield land. A total

back-to-back refurbished these floor space of 39 100 m2
leases. properties (using 50% dti is constructed and
grant funding). A total leased to tenants before
floor space of 39 100 m2 2018.
is leased and refurbished  A 31 500 m2 facility
by the SEZ entity (which is constructed on
 A 31 500 m2 facility 90 000 m2 of greenfield
(which is constructed on land) is constructed
Key Assumptions

90 000 m2 of greenfield using funds from dti grant

land) is constructed funding and DBSA and
using funds from dti grant commercial loans.
funding and DBSA and
commercial loans.

 90000m2 leased to  SEZ entity leases land to  90000m2 leased to large  SEZ entity leases land to
large wind blade build OSS SEZ head wind blade manufacturer build OSS SEZ head
manufacturer or office (500m2) office (500m2)
Land leased

similar who funds it  90000m2 leased to large  The land space required
own facility wind blade manufacturer for the entire 40 100 m2
or similar who funds its industrial park facility is
own facility 80 200 m2 which will be
leased from the CoCT
 90000m2 leased to large
wind blade manufacturer.

 dti grants (60%)  dti grants (60%)  dti grants (54%)  dti grants (54%)
Funding sources

 SEZ cash flow  SEZ cash flow (40%)  SEZ cash flow (27%)  SEZ cash flow (33%)
(40%)  Commercial lender  Commercial lender
(19%) (12%)

Source: Deloitte analysis

9.2.1. Low road - refurbishment

Very few small users establish themselves in the SEZ because of a lack of immediate, suitable and
marketable space. For these small firms, the effort and cost involved in finding suitable brownfield
properties outweighs the SEZ benefits. There are ten such small firms who we have assumed will not
be attracted to the SEZ, including SMMEs associated with the larger tenants (such as Gestamp), two
small solar water heater assembling firms and an energy efficient lighting manufacturer.

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Larger and firms who are more credit-worthy are able to take out long-term leases and refurbish their
own facilities, such as manufacturers of solar water heaters, PV modules, low-iron glass, inverters
and steel structures, still establish themselves in the SEZ, mostly in the second period between 2018
and 2030. These firms occupy a total estimated floor space of 30 500 m2 through back –to-back
leases with the SEZ entity. The SEZ entity will also lease a brownfield property for the One Stop Shop
(OSS) SEZ office, adding an additional 500 m 2 to the total leased floor space. All properties leased to
SEZ tenants in this option are assumed to be refurbished by the tenants themselves or by the
property owners.

The large wind blade manufacturer (or another large tenant) is assumed to be able to fund the
construction of their own facility on SEZ greenfield land made available to them. We therefore
anticipate that 90 000 m2 of greenfield land will be leased to such a large tenant from 2015 onwards.
We also assume that the dti will grant fund site preparation, offsite-bulk infrastructure and any other
approved capital costs associated with the establishment of such a large tenant in the SEZ according
to the SEZ act and (to be finalised) SEZ regulations.

9.2.2. Low road – new build

In this option the SEZ constructs the OSS building on greenfield CoCT land rather than leasing a
property from an existing Atlantis property owner. All other assumptions regarding SEZ tenants
remain the same as in the “Low road – refurbish” option. This results in 500 m 2 less being leased by
the SEZ entity but an additional 500 m 2 of office space being constructed and 750 m 2 more greenfield
land being leased, totalling 90 750 m2 if we include the land leased by the large wind blade
manufacturer.

9.2.3. High road – refurbish

In this option we assume that all the anticipated greentech firms identified in the prefeasibility
conservative scenario establish themselves in the SEZ. Both large and small firms are able to secure
suitable properties for their operations because the SEZ entity in this option acts as the anchor tenant.
To perform the ‘anchor tenant’ function the SEZ entity leases brownfield properties (on a long term
basis) and refurbished these properties (using dti grant funding). In the first period (2015 – 2018) a
total floor space of 12 100 m2 is leased by the SEZ entity which earns income relative to the spread
between what it charges tenants and what it is charged by property owners. In the second period
(2018 – 2030) an additional 27 000 m2 is leased in the same manner.

The large wind blade manufacturer is not assumed to fund its own facility in this option. The
31 500 m2 facility (which is constructed on 90 000 m2 of greenfield land) is constructed using funds
accumulated from dti and DBSA grant funding as well as a commercial loan by the SEZ entity.

The SEZ entity will also lease a brownfield property for the OSS office.

9.2.4. High road – new build

In this option we assume that all the anticipated greentech firms identified in the prefeasibility
conservative scenario establish themselves in the SEZ. Both large and small firms are able to secure
suitable properties for their operations because the SEZ entity acts as the anchor tenant. To perform
the ‘anchor tenant’ function the SEZ entity constructs a new green rated industrial park on CoCT
greenfield land. In the first period (2015 – 2018) a total floor space of 12 600 m2 is constructed and
completely leased out to tenants before 2018. The 12 600 m2 includes 500 m2 for the OSS office. In
the second period (2018 – 2030) an additional 27 000 m2 is constructed and leased to tenants. The

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total land space required for the entire 40 100 m2 industrial park facility is 80 200 m2 which will be
leased from the CoCT.

The large wind blade manufacturer is not assumed to fund its own facility in this option. The
31 500 m2 facility (which is constructed on 90 000 m2 of greenfield land) is constructed using funds
accumulated from dti and DBSA grant funding as well as a commercial loan by the SEZ entity.

9.3. Key model assumptions

There are a number of key assumptions used in each of the options modelled which have an impact
on the outputs produced by each option in the model.

9.3.1. Capital expenditure assumptions

The key capital assumptions used for each of the options in the model are set out in the table below.

Table 14 Overview of the capital expenditure required for each option

Low road - Low road – new High road - High road – new
refurbishment build refurbishment build
“One stop shop” – build or    
refurbish
Buildings x x  

Greenfield buildings x x  

Onsite Bulk infrastructure    

investment
PV rooftop x x  

Street lights    

Off-site bulk infrastructure x x x 

Grid connection fee x   

Palisade fencing x x x 

9.3.1.1. Infrastructure funding assumptions

We have assumed that the dti will fund 60% of all basic and green infrastructure and 50% of
refurbishment/new build of top structures in the high road scenarios out of the SEZ fund. A summary
of the grant funding to be provided by the dti for capital expenditure is shown in Table 15.

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Table 15 Summary of infrastructure items to be funded by dti and assumed grant value
dti Funding

Capital Grant funded Value of Grant

One stop shop – building Yes 60%

Building Yes 50%

Greenfield Buildings Yes 50%

Bulk infrastructure investment Yes 60%

Photovoltaic (PV) rooftop Yes 60%

Street lights Yes 60%

Off-site bulk infrastructure No -

Grid connection fee No -

Palisade fencing Yes 60%

9.3.2. Operating expenditure assumptions

The operating costs used in the model are the same for each option and are based on the figures
provided by the Voortrekker Road Corridor Improvement District (VRCID). The VRCID is of a similar
size to that of the Atlantis area however, the VRCID is used more intensely for residential purposes
and therefore the operating costs for the SEZ entity have been reallocated to reflect the difference in
use for the two areas. In addition, almost R7 million was spent on security services in the VRCID of
the total of R11 092 651. But since the emphasis of the ASEZ is not on security alone, security
services were reduced to R1.75 million which is what spent annually in the Riverhorse Valley Park in
Durban. Other items, in particular advertising were increased in its place.

Table 16 Overview of the operating cost assumptions used for each option in the model.
Description Cost (ZAR per annum) % of Total
Three types of lease have been identified for the rental properties. The table below sets
Salaries 4 372 470 37.4%
out the rate at which the SEZ entity will lease the properties.
Bonuses 166 789 1.4%
Description Rate per a M2 per month
Cleansing services 566 240 4.8%

Legal and contracts management 1 000 000

R0.20 8.6%
Lease of greenfield land
Law enforcement officers 185 000 1.6%
R18
Back toservices
Security back lease 1 750 000 15.0%

Social upliftment 50 000 0.4%

Anchor tenant lease R10
Advertising 2 250 000 19.3%
Table 2.6: Rates at which the SEZ entity will16lease
Accounting fees 050
the properties 0.1%
Both the “High road” options have an additional greenfield building development which
Audit fees 41 602 0.4%
will be 50% grant funded by the dti and a commercial lender. The table below sets out the
Bank chargesdebt assumptions used in the model
commercial 6 500 for both the “High road” options.
0.1%

IT expenses 7 000 0.1%

Insurance 35 000 0.3%

Marketing & promotions 60 000 0.5%

Meeting expenses 36 000 0.3%

Printing & stationery 35 000 0.3%

96
 Telephone & fax 40 000 0.3%

Reporting 125 000 1.1%

Consultant fees 350 000 3.0%

Opex contingency 583 824 5.0%

9.3.3. Revenue assumptions

9.3.3.1. Property and Land rental

There are four models under which the SEZ entity will provide land and buildings to SEZ tenants and
earn revenue, these are described as follows:

 Lease of greenfield land – SEZ entity leases greenfield land from CoCT and leases it on to SEZ
tenants with a preference for greenfield sites (e.g. wind tower and wind blade manufacturers) at
slightly higher rental.
 “Back-to-back leases” (Brownfields) – the SEZ entity will lease developed property from existing
Atlantis Industria property owners and lease building on to one SEZ tenant at a small mark-up
(10%) with the same terms and lease period (e.g. 10 years).
 Anchor tenant lease – SEZ entity leases property(ies) from Atlantis Industria property owners
(e.g. 10 to 20 years), undertakes refurbishment of the property(ies) at its own expense (or dti
funded) and makes space available to SEZ tenants on a shorter term leases (and at higher
rentals)
 Anchor tenant greenfield developer – SEZ build new property(ies) on CoCT land and makes
space available to SEZ tenants on a shorter term leases (and at higher rentals)
The table below sets out the rate at which the SEZ entity will lease the properties from the landowner
and the tenants will lease the property from the SEZ entity. Rentals for land are based on rates at
which the CoCT currently makes the two sites in Atlantis available for lease. According to Atlantis
Realtors the average rental rates for industrial property in Atlantis are between R15m2 and R18m2.
Average industrial property rental rates in the Western Cape are in the region of R30m2. For the
anchor tenant leases we assume the SEZ entity is able to realise premium rental of R35m2 for
premium quality industrial space within the SEZ. A sensitivity test with rentals set at 50m2 was also
conducted to test the impact on cash flow although it is unlikely the market will bear that price.

Table 17 Summary of rental rates assumed

SEZ will lease Tenant will lease
2
Description Rate per a m per month Rate per a m2 per month

Lease of greenfield land (Low road options) R0.20 R0.50

Lease of greenfield land (High road options) R0.20 R0.00

Back to back lease R18 10% mark-up

Anchor tenant lease R10 R35 to R50

Anchor tenant lease (greenfield developer) N/A R35 to R50

97
 9.3.3.1.1. Management fees
We assume that management fees for operating expenses associated with services like security,
street cleansing and environmental upgrades will be collected firms within the SEZ. If we assume that
40% of the ASEZ total operating costs of R11 092 651 would be recouped from enterprises in the
SEZ – both qualifying tenants (those qualifying for SEZ incentives) and non-qualifying enterprises
located in the SEZ, the levy per square meter will be R 8.30 (Table 18).

Table 18 Levy to recoup SEZ operating expenses

Existing Non- Qualifying SEZ tenants in Comments
qualifying tenants Atlantis
in Atlantis

Total industrial floor space in Atlantis (m2) 500 000 80 000

Industrial Floor space (ha) 50 8

Occupied Industrial floor space (m2) 450 000 80000 10% vacancy assumed for existing
floor space in Atlantis

Percentage of total floor space 85% 15%

R 3 771 500 R 665 560

2
Additional annual levies per m R 8.38 R 8.32

Total operating costs for ASEZ improvement district per annum R 11 092 651

Total operating cost to be recouped through area levy (40%) R 4 437 060

Sense checking the Levy assumptions

Most of the Community Improvement District initiatives in the Western Cape for commercial properties
charge additional annual rates of R0.002 per rand of property value (or 0.2% of the property value) to
fund improved security, cleaning and other area upgrades. For example, in 2012/13 the additional
rates for commercial property in the Cape Town Central CID was R0.01878 per rand of property (or
0.19%) while for the Wynberg CID it was R0.003187 (0.3%) of the property’s value.

In Atlantis industrial property in good condition sells for roughly R2000m2. A 1000m2 property would
be valued at R2 000 000. Assuming an annual charge of 0.2% of the property value the additional
annual rates this property would pay in a typical CID for improved cleanliness, security etc. would be
R4000 which translates as roughly R4 per m2 per annum. It is clear on this basis that the SEZ entity
cannot expect to recover more than 40% of its operating expenses via a similar levy.

Table 19 Typical additional rates for a CID

Typical additional rates for commercial property in a CID Additional rates assumed
(% of property value)

0.2% 0.3%

Property size (m2) R 1 000 R 1 000

Property Value (R2000/m2) R 2 000 000 R 2 000 000

Additional annual property rates (additional rates of 0.2% of property value) R 4 000 R 6 000

Additional annual rates per m2 R 4.00 R 6.00

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 9.4. Summary of model outputs
The dti will provide the SEZ entity with grant funding for capital expenditure. Figure 23 quantifies the
total capital expenditure required for each option, in both nominal and a net present value basis
(NPV).

Figure 23 Overview of the capital costs required for each option, excluding any capital
contingencies

Significantly lower capital expenditure is required for the low road options than for the high road
options (Figure 23). The difference between the two “Low road” options however is insignificant. The
difference in capital expenditure for the “High road” options is mainly due to the capital spend on the
additional infrastructure requirements under the “High road-new build” option and that the capital
costs of the “High road new build option are approximately double that of the “Refurbishment option”.

No capital contingencies have been modelled under any of the scenarios; it has been assumed that
the dti will fund 100% of any capital contingencies which may arise under any of the options.

The dti will provide government grants for the capital expenditure incurred under each option. It has
been assumed that the dti will provide 60% grants for the “One stop shop “and the “below ground
infrastructure” and 50% grants for top structures. Under both the “Low road” options the percentage of
government grants to total capital expenditure is much higher than under the “High road” options as
there are no top structures developed under the “Low road” options.

Table 20 Overview of the total government grants for capital expenditure under each option

Low road – Low road – High road – High road –

Refurbishment Refurbishment
New Build New Build

Nominal NPV Nominal NPV Nominal NPV Nominal NPV (ZAR)

(ZAR) (ZAR) (ZAR) (ZAR) (ZAR) (ZAR) (ZAR) millions
millions millions millions millions millions millions millions

Government Grant 94.5 87.0 96.7 88.0 257.5 227.3 401.4 335.5

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 The table below provides an overview of the sources of funds for the capital expenditure required
under each of the options. All four of the options require capital funding from both the dti and cash
flows generated by the SEZ. In addition to this funding, both the “High road” options require
commercial funding for their top structures as the dti will only provide 50% government grant funding
for top structures.

Table 21 Overview of the sources of funds

Low road – Low road – High road – High road –

Refurbishment Refurbishment
New Build New Build

Nominal NPV Nominal NPV Nominal NPV Nominal NPV (ZAR)

(ZAR) (ZAR) (ZAR) (ZAR) (ZAR) (ZAR) (ZAR) millions
millions millions millions millions millions millions millions

Government Grant 94.5 87.0 96.7 88.0 257.5 227.3 401.4 335.5

SEZ cash flow 63.0 58.0 65.2 59.4 135.0 115.0 257.9 207.5

Commercial lender - - - - 87.4 80.4 87.9 80.2

Total 157.5 145.0 161.9 147.4 479.9 422.7 747.2 623.2

A summary of the capital expenditure required under each option in the first 3 years is summarised in
Table 22. The flows over this period have been highlighted as government budgeting takes place over
a 3-year medium term expenditure framework (MTEF) horizon.

Table 22 Capital Expenditure in the first 3 year period by source

2015 2016 2017 Total

Nominal (ZAR millions)

Low road - refurbish Government grants 36.9 57.6 - 94.5

Atlantis cash flows 24.6 38.4 - 63

Commercial loan - - - 0

Total 61.5 96 - 157.5

Low road - new build Government grant 37.5 59.2 - 96.7

Atlantis cash flows 25 40.3 - 65.3

Commercial loan - - - 0

Total 62.5 99.5 - 162

High road - Government grant 80.8 126.2 - 207

refurbishment
Atlantis cash flows 33.4 52.9 - 86.3

Commercial loan 34.1 53.8 - 87.9

Total 148.4 232.4 - 380.8

High road - new build Government grant 96.6 152.2 - 248.8

Atlantis cash flows 46.2 73.6 - 119.8

Commercial loan 34.1 53.8 - 87.9

Total 176.9 279.6 - 456.5

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Revenue is earned through the rental of properties and the collection of management fees. Four
different types of lease have been identified. Where the lease is relevant to an option, rental income
has been earned from the lease.

Figure 24 provides a summary of the total revenue earned and operating expenditure disbursed under
each option over the 20 year period, in both nominal and a net present value basis (NPV). The
revenues generated by both the “Low road” are significantly lower than the revenues generated under
the “High road” options as they do not receive any revenue from anchor tenants.

Figure 24 Summary of total revenue and operating expenditure over 20 year period

9.4.1.1. Affordability of the options

It is clear that none of the four options are able to generate sufficient cash flows at the beginning of
the project and will require additional funding to support the SEZ during this period. The low road
options requires the least capital expenditure and grant funding in order to setup the SEZ and
produce the lowest annual shortfall in funding at the outset. The low road options are only
encumbered by funding shortfalls in the first two years at an average of R39.5 million for both years.
This represents the total amount the province would need to provide in grant funding to support the
SEZ under these options. Thereafter, the SEZ entity under the low road scenario generates sufficient
income to generate a funding surplus.

The least affordable option is the high-road new build option as it requires both significant capital
expenditure and grant funding in order to setup the SEZ. The cash flows generated from the rental of
the properties and collection of management fees for the first 6 years is insufficient for the project to
be self-sustaining. This option does however eventually achieve cash break even in its 13 th year of
operation. A total of R 243 million in additional provincial grant funding would be required to plug the
shortfall in the first 6 years.

The high-road refurbishment option represents a reasonable middle ground. It also generates a
funding shortfall in the first 6 years however at a value of R 123 million this is recouped in the 10 th
year of operation.

During the first five years of the project the province will provide R10 million per year in the form of an
operating grant for each of the options.

101
 Figure 25 Annual funding shortfall\surplus under different options

60

40

20
Annual funding shortfall
(ZAR Nominal millions)

0
Low road - refurb
-20
Low road - new build
-40 High road - refurb
-60 High road - new build
-80

-100
2016

2018

2027

2029

2031

2033
2015

2017

2019
2020
2021
2022
2023
2024
2025
2026

2028

2030

2032

2034
The net present value for each of the options has been calculated based on the cash flows generated
by the project. From the table below is clear that all the options except for the “High road – new build”
options are viable based on their cash flow projections. The analysis suggests that of the three viable
options the “Low road – new build” option is the least attractive option with a NPV of R39.3 million and
that the “High road –refurbishment option is the most attractive option as it produce as NPV of R77.1
million. A discounted of 8.965% has been applied which is based on the South Africa R209 bond
(maturity date 31/03/2036)

Table 23 NPV of the cash flow over the 20 year period

Low road – Low road – New High road – High road – New
Refurbishment build Refurbishment build

NPV (ZAR) millions NPV (ZAR) millions NPV (ZAR) millions NPV (ZAR) millions

Project return 39.4 39.3 77.1 -10.1

Rental price sensitivity under ‘anchor tenant lease’ model

A sensitivity analysis has been performed on the rate that that SEZ tenants will pay to the SEZ entity
under the ‘anchor tenant lease’ model. The rate was increased from R35m 2 to R50m2, the value of
R50m2 was chosen as this is the current rental rate for premium industrial property in Montague
Gardens in Cape Town. The results of the sensitivity are shown in the table below. If the SEZ entity
was able to realise average rental rate of R50m 2, the “High road – new build” option would also
produce a positive project return in terms of the cumulative cash flow

Table 24 Project returns – greenfield anchor tenant sensitivity

High road – Refurbishment High road – New build

NPV (ZAR) millions NPV (ZAR) millions NPV (ZAR) millions NPV (ZAR) millions
– rate at R35m2 – rate at R50m2 – rate at R35m2 – rate at R50m2

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Project return 77.1 138.4 -10.1 53.2

Refurbishment cost sensitivity

We have also performed sensitivity on the cost of refurbishment. Refurbishment costs in the base
case scenarios are assumed at R 2 818m2. The refurbishment costs estimated by AECOM, are high
as they have assumed that much of the industrial property in the area is built with out of date
materials such as asbestos and it would be costly to bring the building from present condition to ‘new
green star’ standards. Some buildings however are likely to be in much better condition than others
and it may not be necessary to upgrade to ‘green star’ building standards to attract tenants. As such
we have tested the sensitivity of project returns to the assumption of a lower cost - R1 400m2 under
both the “Low road” and “High road” refurbishment options. There is little impact on the low-road
scenario where refurbishment costs incurred by SEZ entity are limited but it does increase project
returns by roughly R20 million in the high-road.

Table 25 Project returns – refurbishment sensitivity

Low road – Refurbishment High road – Refurbishment

NPV (ZAR) millions NPV (ZAR) millions NPV (ZAR) millions NPV (ZAR) millions
– rate at R2 818 – rate at R50m2 – rate at R2 818 – rate at R50m2

Project return 39.4 39.6 77.1 98.0

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 10. Economic impact assessment

Initial estimates of the number and nature of firms that were likely to establish themselves in the
proposed Atlantis SEZ were provided in the prefeasibility report. Two scenarios - ‘conservative’ and
‘moderate’ were developed, outlining the number of green technology firms that would be likely to
setup in the proposed SEZ based on assumptions informed by extensive market research and
stakeholder interviews.

This economic impact is based on inputs from the financial model and therefore only considers uptake
under variations of the ‘conservative’ greentech demand scenario.

The magnitude of impact of the SEZ activities and investment on socio-economic variable such as
employment and GDP is related to the amount of initial infrastructure investment takes place and on
how many firms decide to establish themselves within the SEZ. These new investors (local and
foreign) will positively impact the local and national economy through the following activities:

 The construction of new fixed structures

 The refurbishment of existing structures
 Employment of local labour (job creation, revitalisation)
 Employment of international labour (skills transfers)
 Procurement of operations and maintenance inputs and services
 Establishment of new training curriculums and activities
 The establishment of new small, micro and medium enterprises
 Importation of new technologies and processes
We conducted the economic impact analysis using a Western Cape social accounting matrix (SAM)
developed by Quantec Research. We have separated the impacts into two periods to distinguish
between the short-term construction related impacts and the more permanent operations and
maintenance (O&M) impacts.

10.1. Summary of key findings

Table 26 illustrates the total capital costs per option for the period 2015 to 2030. Around 720 full-time
permanent jobs are created in the ‘low road’ scenario and 1060 permanent jobs in the ‘high road’.
The overall capital expenditure incurred per permanent job created is between roughly R200 000 in
the ‘low road’ scenarios and R590 000 in the ‘high road new build’ scenario.

While the ‘low road’ options are more capital efficient in term of jobs created they do result in lower
overall jobs because we have assumed it would not be possible to attract smaller firms to the area if
the SEZ doesn’t act as an anchor tenant and provide suitable facilities.

The ‘high road’ options are less capital efficient - using more capital per job created but result in a
higher overall number of jobs being created. The ‘high road refurbishment’ option is significantly more
capital efficient than ‘high road new build’ but results in the same number of overall jobs – in other
words the same employment outcomes can potentially be achieved with less capital investment going
the refurbishment rather than new build route.

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Table 26 Summary of key economic impact findings
Low Road – Low Road – High Road – High Road –
Refurbishm New Build Refurbishme New Build
ent nt

Total capital investment, R R 145 R 147 R 423 R 623

million

Number of firms that 10 10 20 20

setup in SEZ

Total direct jobs created 720 720 1 060 1 060

(permanent)

Total annual construction 76 77 221 325

jobs (direct, indirect and
induced)

Capital invested in R 201 389 R 204 167 R 399 057 R 587 763
infrastructure for each
direct permanent job
created

Annual GDP impact 21 21 60 88

(construction, during 8
year period), R million

Annual GDP impact 8.7 8.7 8.7 8.7

(operations), R million

Total GDP impact 168 168 480 704

(construction) over 8
years

Roughly R145 million is invested in infrastructure under the ‘low road’ scenarios, while R423 million is
required under the ‘high road refurbish’ option and R623million under the ‘high road new build’. The
total potential impact on GDP of capital invested is therefore greatest under the high-road new build
option where a total of R704million is created over an 8 year construction period for the R623 million
originally spent.

10.2. Construction related impacts

All refurbishment and construction activities are expected to be completed before the beginning of
2023. This implies a period of eight years throughout which construction and refurbishment activities
take place. Figure 26 illustrates the economy wide annual GDP impacts per option, separated by the
impact that remains within the Western Cape and the impact that flows to the rest of South Africa.

It is not surprising that the greatest annual GDP impact over the construction period is achieved in
the ‘High Road – New build’ option where we have included the construction of a new industrial park
to house SEZ tenants. Also, refurbishments costs are almost half the cost of new build per square
meter which further reduces the relative GDP impacts. In terms of the distribution of impacts, the
majority of subsequent spending remains with the Western Cape Province and therefore so do the
subsequent GDP impacts.

105
Figure 26 The economy-wide GDP impacts per year due to construction and refurbishment
activities

Directly related to the magnitude of refurbishment and construction costs are job impact estimates.
The time and manpower required to construct new facilities as well as the upstream industry linkages
results in the ‘High Road – New build’ option sustaining more jobs per year than the other three
options (Figure 27). Employment impacts related to the construction phase cannot be considered as
“new” employment opportunities because of the nature of the construction sector. This does not,
however, imply that no new jobs are created due to the refurbishment and construction activities
taking place in the proposed Atlantis SEZ. For the full employment impact results per skill level please
refer to the proposed Atlantis SEZ strategy document.

106
Figure 27 Construction jobs per option per year (construction period)

10.3. Operations and maintenance phase

10.3.1. Employment and income effects (ASEZ tenants)

The potential number of jobs created during each time period in each scenario was completed across
the following categories:

 number of employees;
 employees per skill level;
 earnings per skill level; and
 expected personal income tax revenues
Under the ‘Low Road’ options 720 direct jobs are expected to be created over the period 2015 –
2030. Under the ‘High Road’ options 1 060 direct permanent jobs are expected to be created during
the period 2015 – 2030 (Table 27). The difference between the options in terms of total employment
is due to the underlying assumptions regarding uptake by potential tenants. In the two ‘Low Road’
options we have assumed a lower interest in the SEZ by potential tenants due to a lack of available
properties. The bulk of the jobs estimated here can be attributed to the “anchor tenants” Gestamp and
a wind blade manufacturer. The majority of these jobs are expected to be of a semi-unskilled nature.
The overall expected employment impact of the Atlantis SEZ can be considered significant when
compared to the current labour force of 5500 people.

107
Table 27 Permanent jobs per year per option
Low road – Low road – New High road – High road –
Refurbishment Build Refurbishment New Build
Highly Skilled 139 139 197 197

Skilled 234 234 359 359

Semi-Unskilled 347 347 504 504

Total 720 720 1 060 1 060

Under the ‘Low Road’ options a total of R109 million per annum of personal income is expected to be
generated with R8 million in associated tax revenue accruing to the government. In the ‘High Road”
options R128 million in personal income is expected to be generated with R9 million in associated
income tax revenue. It is important to note that the expected tax revenue will be partially offset by the
allowance under the employee incentive scheme which will relate to semi-unskilled workers. The
degree to which the Atlantis area benefits from this increase in wealth creation will depend on how
many local residents are employed who are currently unemployed.

Figure 28 Annual wealth and income tax generated per option, 2015 - 2030
Low road – Low road – New High road – High road –
Refurbishment Build Refurbishment New Build

Income R 109 285 384 R 109 285 384 R 128 356 729 R 128 356 729

Income Tax R 7 934 337 R 7 934 337 R 9 445 133 R 9 445 133

10.3.2. Operations and maintenance expenditure impacts (ASEZ entity only)

Using operations and management expenditure we can “shock” the SAM to unpack the annual GDP
impact that the SEZ entity itself has on the province and country. The results show that the SEZ entity
will not impact the Atlantis area significantly and that most expenditure remains within the Western
Cape (Figure 29).

108
Figure 29 GDP impacts associated with the management of the SEZ entity, per annum

10.3.3. Other socio-economic impacts

In addition to the employment and GDP impacts discussed above, the proposed ASEZ could also be
associated with a number of other socio-economic benefits. While these are more difficult to quantify
they may include:

 The creation of greentech manufacturing and services cluster in the Western Cape - the
establishment of the greentech SEZ in Atlantis is expected to attract a mix of foreign and domestic
investors in the greentech sector. While some of these firms may have set up in the absence in
the SEZ and its incentives, the SEZ will facilitate clustering of firms in this sector and generate the
positive agglomeration effects typically associated with clustering. Some firms that would not
otherwise have considered investing in South Africa may also be attracted to South Africa because
of the clear support for the development of a local greentech sector.
 Support the renewable energy generation build - The ASEZ is a good location for
manufacturers who intend to supply goods and services to REIPPP programme renewable energy
generation projects in the Northern and Western Cape.
 Attracting FDI and domestic private investment - FDI by multinational corporations provide
more than just flows of finance into a region. When MNCs enter a new market, they bring with
them technology transfers, new employment opportunities, transfers of best practices or
competencies, entrepreneurship, access to markets and an increase in demand for goods and
services produced by local firms. These impacts brought about by FDI activities of MNCs can lead
to positive spill over effects for other industries, especially in the case of upgrades to shared
infrastructure such as roads, ports and rail. Atlantis could receive between R600 million and
R650 million in foreign direct investment in the period 2014 to 2017, including the investment
already committed by Gestamp (roughly R300 million).Other potential sources of FDI include a
wind blade manufacturer and international PV module manufacturer. The provision of SEZ
infrastructure, activities and incentives will also assist domestic private sector investors to
participate in the greentech sector.

109
 Potentially increase the utilisation of existing infrastructure in Atlantis and promoting urban
renewal - Increased activity may make better use of existing infrastructure, especially in the case
of refurbished brownfield properties. Although costs are “sunk” the increased use of some
infrastructure may increase the amount of revenue generated to replace such assets in the future
or may even prolong the life span of the asset. Where roads might need to be upgraded or new
shared infrastructure built, the catalytic benefits may be significant, especially in terms of improved
living standards if health and security levels are improved.
 Positive impact on trade balance through import substitution opportunities and exports -
An increase in local manufacturers supplying goods and services to the local and export market
will have a positive impact on the trade balance. The local production of greentech provides
consumers with an opportunity to substitute imports with locally made goods and services. Indeed,
this is what the localisation policies of the dti aims to achieve with regards to the REIPPP
programme. Import substitution (provided the products aren’t sold at unreasonable additional cost
to the SA consumer) will increase the amount of income and wealth generated within the South
African economy which may otherwise have been lost to other markets.

110
 11. Impact on transport and spatial
development

11.1. Transportation impacts of the proposed concept layout of Atlantis

SEZ
As indicated in section 6.4.7 Atlantis is:

 One of the key industrial freight centres within the Cape Town Metropolitan area.
 Located central to the area’s regional freight movement network.
 Although traditionally dislocated from the rest of the city, ideally located for manufacturing activities
sensitive to “urban” transport movements.
Klein Dassenberg Road, the R304, and Dassenberg Road are primary arterials which provide access
between Atlantis and the western and eastern freeways. Investigations to ascertain the extent of local
road improvements which could be required as a result of large users and the industrial park
envisaged to comprise the SEZ were undertaken. These include:

 Improvements to intersections.
 Improvements to turning radii.
The potential transportation impacts are detailed below. It is suggested that the SEZ entity budget
approximately R8 million for associated improvements.

11.1.1. Access to site 1

Site 1 is bounded by Dassenberg Road on the north, Charl Uys Drive on the west, Neil Hare Road on
the south and John van Niekerk Street of the east. In terms of the CoCT road classification
Dassenberg Road is a Class 2 route, Charl Uys Drive a Class 3, Neil Hare Road a Class 4 and John
van Niekerk Street a Class 5 industrial road.

In terms of the site planning process the site has been divided into three areas:

 Gestamp on the eastern boundary (7.8 hectares),

 Small industries on the southwest portion of the site (8 hectares), and
 A site for a future large land user (potentially a wind blade manufacturer) on the northwest portion
of the site (14.1 hectares).
Gestamp is an approved development and access has been granted of John van Niekerk Street. The
balance of the site is green fields and access to the site will need to be carefully considered.
Historical planning for the two greenfield areas identified access for the small industries on Neil Hare
Road and on Charl Uys Drive (midway between Neil Hare Road and Dassenberg Road) and for the
large portion (wind blade manufacturer) an access onto Dassenberg Road.

111
 11.1.2. Small industries access
On Neil Hare Road the access will be approximately 235 metres from the closest intersection, Charl
Uys Drive, and is therefore within the required access spacing for all land use environment semi-rural
to urban. The access onto Charl Uys Drive, being midway, will be approximately 300 metres from
either Dassenberg Road or Neil Hare Road. It is considered that an access at this location is
acceptable and in keeping with the approved access of De Korte Street, on Charl Uys Drive, located
310 metres to the southeast of the Charl Uys Drive/Neil Hare Road intersection.

11.1.3. Large portion access (wind blade manufacture)

In terms of the road access guidelines supported by both the CoCTand the WCG an access onto
Dassenberg Road can only be supported if the built environment surrounding the road is classified as
Intermediate (3 000 m² to 10 000 m2 Gross Floor Area/ha) or higher. The distance between existing
intersections on Dassenberg Road range between 960 metres and 2 000 metres and all intersections
are either Class 3 routes or Class 4 collector routes. The access is proposed at 600 metres from the
Charl Uys Drive intersection. Should the City and/or the WCG not support the access onto
Dassenberg Road then this portion of the site will need to share the access provided for the small
industries portion, i.e. access onto Charl Uys Drive.

11.1.4. Impact of abnormal loads on local road network

The typical trips, both the volume and the vehicle classification of the trips that are expected to be
generated due to the small industries are considered to be typical of industrial developments and the
design standard of the existing road network caters for these trips.

However, the manufacture of wind blades will result in the need for abnormal load trips due to the
length of the blades. The blades are manufactured in standard lengths with the shortest length 36
metres and the longest 55 metres. The movement of these loads requires an application for a permit
and each load/group of loads will need to be escorted by the traffic department as, particularly at
intersection, the roads will need to be closed while the intersection is negotiated.

The route from Site 1 to the external road network will be via Charl Uys Drive and then Dassenberg
Road to the R27. For the purposes of this report the two intersections of Charl Uys Drive/Dassenberg
Road and Dassenberg Road/R27 have been evaluated to determine the impact that abnormal loads
will have on the intersections and to identify the typical mitigation measures that should be
implemented.

Charl Uys Drive/Dassenberg Road intersection

The software AutoTURN has been used to evaluate the geometric impact on the intersections. The
impact of the 36m blade and 55m blade configurations are shown in Figure 30 and Figure 31
respectively. It can be seen that the existing intersection layout is adequate for the 36m load provided
that no other vehicles are allowed to travel through the intersection.

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Figure 30 Impact of 36 m blade on Charl Uys Drive/Dassenberg Road intersection

Source: AECOM

Figure 31 Impact of 55m blade on Charl Uys Drive/Dassenberg Road intersection

Source: AECOM

From Figure 31 it is clear that in order to negotiate the existing intersection the vehicle transporting
the blades will need to use areas outside of the existing surfaced road to negotiate the intersection.

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Given that these trips will happen regularly for the duration that blades are manufactured, it is
recommended that the Charl Uys intersection be upgraded to accommodate the sweep of the vehicle.
The widening proposed at this intersection will incorporate a new left turn lane on the approach to the
stop line and a wider exit taper leading out of the intersection in the direction of Neil Hare Road
allowing the sweep of the vehicle to remain within the surfaced road area. It is however, at this stage,
unknown when a manufacturer will establish on the site and also what size the blade(s) will be. It is
therefore recommended that the design and upgrading of this intersection be made a condition of the
approval for the development of the larger portion of the site should a blade manufacturer establish
there.

Dassenberg Road/R27 intersection

The impact of the 36m blade load and the 55m load is shown in Figure 32 and Figure 33 respectively.
For the vehicle transporting the 36m long blade the existing kerbing will be crossed. However, there
will be very little sweep out of the existing surfaced area. On Figure 4 the increased length of the
blade clearly requires the vehicle transporting the blade to use large parts of the untreated area
outside of the surfaced road. It is therefore recommended that the median island be upgraded with
the provision of mountable kerbs (replacing the existing barrier kerbs) and the raised island paved to
provide a rideable area. This will allow the transport vehicle to select alternative approach lines that
will allow the vehicle to remain within the outside kerbs of the intersection.

Figure 32 Impact of 36 m blade on Dassenberg Road/R27 intersection

Source: AECOM

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Figure 33 Impact of 55m blade on Dassenberg Road/R27 intersection
Source: AECOM

11.1.5. Impact of abnormal loads on intersection further afield.

At the Dassenberg Road/R27 intersection there is an option to turn either south towards Cape Town
or north towards Saldanha (a potential port for the export or trans-location of blades).

Travelling south

The route to travel south will be via the R27, MR199 (Melkbos Road) and onto the N7. This route is
considered difficult as the signalised intersection of R27/MT199 will need to be redesigned to
accommodate the sweep of the vehicles and all road furniture (traffic signal poles, stubbies, etc.) will
need to be installed in a manner that will allow these obstacles to be removed while the transport
vehicles negotiates the intersection and then reinstated. Given that this will be a regular occurrence it
is considered impractical to do this. The possibility of constructing a large radius slip lane for the
specific use of these vehicles will need to be investigated and negotiated with both the road
authorities and the adjacent land owners.

Once the vehicle has negotiated this intersection the new interchange onto the N7 will impose
constraints on transport vehicles travelling further south on the N7. The overhead power lines have
made it impossible for these vehicles to travel under the N7 freeway and then use the loop ramp onto
the N7. These vehicles will be forced to use the northbound off-ramp to get onto the N7 and then a
median crossing will need to be provided to allow the vehicle to enter the southbound carriageway of
the N7.

Travelling north

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The R27 north provides the greatest opportunity for abnormal loads to exit the Atlantis area safely.
The route to be followed would take these vehicles to Saldanha where they can either travel to the
port or access the R45 to continue a journey eastwards into the hinterland or access the N7 and
continue travelling north.

11.2. Spatial Development Framework

11.2.1. Spatial planning context

As the proposed Atlantis SEZ forms part of an existing serviced industrial area, most of the
overarching spatial requirements for the initiative are already in place.

A broad range of Provincial and CoCT sectoral, integrated, and/ or spatial policy and planning
frameworks inform or impact on the development of the proposed Atlantis SEZ for greentech
manufacturing enterprises. A summary of these and their implications for the proposed SEZ is
attached as Annexure 1:

Core conclusions are that:

 Both WCG and CoCT sectoral, integrated, and/ or spatial policy and planning frameworks support
the focus and spatial location of the proposed Atlantis SEZ.
 Specifically, spatial policy and planning frameworks support:
− Infrastructure-led growth in the province and city; and specifically resource efficient
infrastructure growth.
− Optimising green economic opportunities in the province and city.
− Growing the Western Cape’s contribution in the construction of new energy infrastructure, and
specifically servicing the green infrastructure industry.
− The consolidation, improvement and revitalisation of existing residential, commercial and
industrial areas in the province and city (as opposed to green field urban expansion).
− The significant role of Atlantis as an industrial node in the city and regional spatial economy;
and the need to stem long-term and revitalise the area, including its better integration with the
rest of the city through enhanced public transport.
− Directing future city growth in a structured manner along the western corridor (of which Atlantis
forms a part) and north-eastern corridor.
− Establishing Atlantis as a focal point for green manufacturing and service enterprises.
− The rapid release of vacant city land in Atlantis to facilitate economic development and create a
more vibrant urban environment that will attract further development and create job
opportunities.
− The need to rationalise the public open space system and selectively upgrade open spaces
and facilities in Atlantis in order to improve the quality of the public environment.
− The revitalisation of Atlantis – though this requires a partnership approach that actively draws
on the resources of government, business, industry, labour, and civil society.
− Maintaining dedicated institutional arrangements to support the revitalisation of Atlantis and
establish the area as a focal point for green manufacturing and service enterprises (including
an intergovernmental task team representing line function departments from the CoCT and the
WCG who have existing and planned initiatives for the Atlantis area have been established to
ensure coordinated delivery).

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 Atlantis, and the north-western corridor of which it forms a part, are critical elements in planning for
the long-term growth of Cape Town. A detailed exploration of growth options (and the potential
yield of opportunities) for the north-western and north-eastern development corridors of the city,
including in-depth understanding of “infrastructure triggers” enabling/ inhibiting human settlement,
have revealed that these two corridors could accommodate some 430 000 housing opportunities
(more than half the anticipated 30-year future need). Therefore, although currently still dislocated
from the rest of Cape Town – despite its recent connection to the rest of the city via the MyCity
Bus Rapid Transit service – it is clear that Atlantis in future will increasingly be integrated with the
rest of the city as new growth is accommodated on the growth corridor between Blaauwberg and
Atlantis.
Table 28 summarises key aspects of what could constitute a spatial framework or plan for the
proposed SEZ, recognising its unique situation as part of an established industrial area. The most
important spatial planning decision in relation to the proposed Atlantis SEZ appears to be where and
in what form to develop.

Gestamp and a wind blade manufacturer both require very large custom designed manufacturing
spaces. The two sites made available by the CoCT are ideal for their purposes. However, as indicated
earlier in this report interviews with a range of existing greentech firms revealed that most firms would
prefer to lease sites within an already developed and serviced industrial park. This finding was
supported by GreenCape who noted that while a number of other greentech firms considered the
vacant sites at Atlantis over the past few years they had chosen to locate within already developed
industrial parks in the broader Cape Town metropolitan area.

The issue is how to provide for these potential users. One option is to build a new industrial park;
another is to refurbish existing vacant or underutilised space. Building a new industrial park (with
flexible, modular spaces which can readily accommodate a range of space requirements and phased
as demand grows) provides the opportunity to consolidate all SEZ activities in close proximity. For
example, it would be possible to accommodate an industrial park meeting longer term demands as
well as a wind blade manufacturer on the remainder of site 1 (adjacent to Gestamp).

Refurbishing existing industrial space within Atlantis to accommodate smaller users seeking already
developed space may, however, prove a cheaper strategy. Perhaps the ideal is a first phase SEZ
which prepares purpose built accommodation – also complying with green building standards – and
then on the basis of its success, to seek expansion incorporating existing buildings converted to SEZ
standards.

Table 28 Key aspects of a spatial framework

Spatial Attribute Comment

Location  The Atlantis area is one of the key industrial freight centres within the Cape Town
Metropolitan area and well integrated with regional freight movement networks.

Development history  Atlantis was developed in the 1970s as a decentralised industrial area and
settlement for Coloured residents and has deteriorated following the withdrawal of
original development incentives.
 A concerted attempt to integrate Atlantis with the broader City space economy is
supportive of National settlement restructuring and integrative objectives.

Existing land use  As a planned industrial estate, the distribution of land uses and provision of
infrastructure in the area support industrial development.
 The area is clearly identifiable as a defined area of industrial activity

Layout  Internally, the industrial area provides for a range of erf sizes, accommodating the
needs of different manufacturing activities.
 Larger sites intended for large space users and users associated with abnormal
transport loads, are located along the western and southern parts of the industrial
area, providing ready access to connector routes which links Atlantis to the regional
freight movement network.

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Land availability or ownership  The CoCT has made sufficient land available to accommodate expected demand.
 Sufficient further City owned and private land and built space is available to
accommodate considerable future growth of the SEZ if needed.
 Public and private land and building costs in the Atlantis Industria are considered
inexpensive relative to the rest of the city.

Site attributes or conditions  In terms of physical attributes, both sites identified by the CoCT can accommodate
a range of users with different and perhaps unique space requirements, can be
“parcelled” easily to accommodate different users and a very large range of building
configurations, and is flat in slope enabling easy provisioning of manufacturing
space (requiring large flat surfaces).

Land use and building rights  IN terms of the CoCT zoning and land use provision, both sites have the ts in place
to permit green industry enterprises.
 As part of the City;s incentives packages for the Atlantis SEZ rapid turn-around
times are assured for applications for building development.

Policy context  A broad range of Provincial and CoCT sectoral integrated and/or spatial policy and
planning frameworks supply the focus and spatial location of the proposed Atlantis
SEZ.

Access to labour  A large source of labour for manufacturing industries resides in close proximity to
the Atlantis Industrial area.

Services  Overall bulk water availability should be adequate to provide for both the
conservative and moderate development scenarios.
 Regional landfill facilities catering for different waste classifications are situated in
the vicinity of Atlantis and should have sufficient capacity to accommodate both the
conservative and moderate demand scenarios.
 The 4MVA electricity available to the two sties identified by the CoCT should be
sufficient accommodate demand over the 2014-2017 period. The expected 2018-
2030 uptake on the two sites could require and additional +- 1 MVA, but planned
improvements to the electricity supply in Atlantis should accommodate longer term
needs.

11.2.2. Site development plan

Prior to the development of individual buildings (whether green field refurbishment) for the SEZ,
building plans full have to be submitted for approval by the CoCT containing detailed specifications as
required by the National Building Act. In some circumstances, the CoCT requires the submission of
site development plans for approval prior to the building plan stage. A site development plan is
defined as “a scaled and dimensioned plan which shows development details such as (but not limited
to) site layout, positioning of buildings and structures, property access, building designs and
landscaping of the proposed development.” A site development plan shall not be refused if it is
consistent with the development rules of a base zone. In essence, it becomes the detailed spatial
development framework for the site.

The CoCT’s requirement is indicated for some zones. This excludes land zoned General Industry
Subzone Gl 1. However, the zoning scheme specifies that in addition to the zones that specifically
require a site development plan, Council may require a site development plan in respect of the
specific types of developments, including industrial parks.

A site development plan would indicate, inter alia:

 The layout of the property, indicating the use of different portions thereof.
 The massing, position, use and extent of buildings.
 Sketch plans, elevations, and cross-sections of proposed structures, including information about
external finishes.
 The alignment and general specification of vehicle access, roads, parking areas, loading areas,
pedestrian flow and footpaths.
 The position and extent of private, public and communal space.

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 Typical details of fencing or walls around the perimeter of the land unit and within the property.
 Electricity supply and external lighting proposals.
 Provisions for the supply of water, management of stormwater, and disposal of sewage and
refuse.
 External signage details.
 General landscaping proposals, including vegetation to be preserved, removed or to be planted,
external paving, and measures for stabilising outdoor areas where applicable.
 The phasing of a development.
 If Council considers it necessary, a transport or traffic impact statement or assessment.
 If Council considers it necessary, a stormwater impact assessment and/ or stormwater
management plan.
The concept site lay-out and design (discussed in section 6.5.2) prepared for an industrial park
accommodating the anticipated 10-year demand for smaller Atlantis SEZ users begins to address the
needs of a site development plan. Such a plan can, however, only be finalised once greater clarity
exists on specific SEZ users, planned phasing of the development, and so on.

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 12. Risk analysis

12.1. Disaster risk assessment and plan

12.1.1. Introduction

According to the Department of Co-operative Governance and Traditional Affairs (COGTA, 2005) the
term “disaster risk management” refers to integrated multi-sectoral and multidisciplinary
administrative, organisational and operational processes and capacities aimed at lessening the
impacts of natural hazards and related environmental, technological and biological disasters.

However, natural hazards are often not the primary cause for concern. Both man-made and natural
hazards only pose a significant impact or threat due to the existence of a vulnerability of some kind.
Thus, if the hazard can be controlled and the vulnerability reduced (or alternately, resilience
increased), the impact of the disaster may be lessened. Disaster risk reduction therefore refers to all
the elements that are necessary to minimise vulnerabilities and disaster risks throughout a society or
area. It includes the core risk reduction principles of prevention, mitigation and preparedness. In this
report, the terms “disaster management” and “disaster risk management” are used interchangeably
but they are intended to have the same meaning.

The key to understanding the difference between an emergency and a disaster lies in the scale
thereof. Based on the International Strategy for Disaster Reduction (ISDR) definition of a disaster, and
the South African Disaster Management Act (Act 57 of 2002), a disaster can be classified as an
immediate or a slow-onset event which is beyond the capacity of local resources to handle. An
emergency therefore encompasses an event that can be managed using locally and readily available
(on-site or in-community) resources, and is usually of short duration (some hours at most).

The key to effective development - including development of the Atlantis SEZ - is to prevent, minimise
and mitigate disasters to reduce the diversion of resources from other urgently needed services. If
disasters are avoided or the impacts thereof reduced, the response need is reduced, thereby freeing
up resources for improvement of conditions that support sustainable development. A key concern in
regards to areas such as the Atlantis SEZ is the effect that compound disasters may have – i.e. where
one disaster lead to another or where two disaster occur at or near to the same time.

Resources to address emergencies may be available on-site or in the vicinity of the SEZ through
trained staff or via agreements with local inhabitants, the municipality or organisations, and would fall
within the ambit of the daily operating environment of a development such as the SEZ. Events that
occur outside of this ambit, and which exceeds the capacity of the local industry, operators, and
communities to cope with this event – thereby necessitating external assistance or the use of external
resources (including manpower, equipment or financial assistance) – would constitute a disaster. In
the context of this report, disaster risk encompasses environmental, infrastructural, socio-cultural and
economic risks.

This is a summary of the report that focuses on disaster risk in particular and the early identification
thereof in terms of the Atlantis SEZ as a means to highlight such opportunities. The full report can be
found in Annexure 5.

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 The opportunities include risk reduction and increased resilience to withstand disaster impacts as
well as recommendations to implement multiple positive outcomes (e.g. the implementation of
measures and infrastructure that could not only benefit disaster risk reduction, early warning and
response, as well as recovery, but at the same time serve to enhance the quality of life of the
community that depends on or resides in the vicinity of the SEZ).

The implied actions and responsibilities of operators and staff working in the SEZ associated with
disaster risk requirements necessitate a specific state of affairs to remain constant throughout the
operation of the facility. For example, the following should be guaranteed in order to avoid disasters:

 Effective operation and maintenance at site level as well as at SEZ level, meaning that even if the
economic viability of the SEZ or any of the individual operators in the SEZ is stressed,
maintenance and disaster risk reduction planning should not be limited or reduced. To this end,
disaster risk management training should be provided to selected staff, while all staff should
receive basic training in risk reduction on a site and SEZ level.
 All staff operating in the SEZ should be knowledgeable regarding operational issues (e.g. early
warning and actions related to possible disaster events at the Koeberg Nuclear Power Station).
Selected staff should be trained in selected disaster risk elements. For example media liaison and
media communication protocols and message construction should be defined, and in cases of
severe weather staff should not only be knowledgeable and consider real-time weather, but be
able to read, understand and interpret severe weather warnings hours or even days ahead of time,
from reputable sources or through on-site meteorological stations that could serve the entire SEZ.
This being an example only (i.e. this may be applied to say violent service protests or to fire risk)
requires a specific skills set, and arrangements with weather services, fire and emergency
services, or public safety/protection services (with potential associated financial implication) as
well as specific training arrangements.

12.1.2. Levels of hazard

In the Disaster Risk Assessment and Plan a hazard level is indicated for each hazard, considering its
impact, should it not be mitigated. The levels that are presented are:

 Potential fatal flaw: A reality if the status quo remains.

 Critical consideration: Unless this element of disaster risk is addressed, the sustainability of the
SEZ could be in jeopardy.
 General consideration: This element is manageable and has to be attended to during
design/planning and operation of the SEZ.
 Insignificant: Although the hazard exists, its management would form part of the design and
development of the SEZ, as well as day-to-day operations, and is therefore not considered to pose
a significant risk towards a disaster.

Table 29 below represents a listing and consideration of hazards addressed in the Disaster Risk
Assessment and Plan in terms of the levels of hazard.

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Table 29 Ranking and mitigation measures for natural hazards

Natural Hazards

Specific Level Mitigation/management measures

hazard

Lightning Insignificant
strikes

Wind direction, Critical consideration Such wind speeds require significant

High Winds South African design standards require all permanent consideration when structures are
and Gust structures to withstand a maximum wind speed of around designed, especially roofing, so as to
factor 40m/s. Wind speeds in the area vary mostly between 8 and reduce the potential for building
12m/s but can reach up to 20 m/s in summer months. Atlantis materials and on-site infrastructure to be
and surroundings often experience significantly gusty winds blown apart, causing damages and
during the months of December and January. During summer, having an impact on safety of workers
a high percentage (approximately 30%) of the velocities is in and residents in the area.
the range from 25-50 km/hr (13.5-27 knots). Winds are
frequently strong and can attain gale force, in excess of
70km/h at times especially in the afternoons. Velocities
exceeding 100km/h have been recorded.

Floods General consideration As part of SEZ operational management,

Floods present a relatively low risk to the effective operation alternative routes should be identified for
and economic viability of the Atlantis SEZ. The reason for this the transport of goods during flooding
is that floods are not site-related, but that floods may cut off emergencies.
certain transport routes to and from the SEZ.

Hail storms General consideration As is the case with high winds and
In the Risk and Development Annual Review of the Western gusts, consideration should be given to
Cape (RADAR, 2010:2), mention is made of one significant factory building materials/covering when
disaster that occurred in the area near Atlantis. Between 2003 it is being constructed, at an individual
and 2008, a hail storm occurred in Haarlem in the Western site level.
Cape, damaging 389 hectares of fruit trees, impacting on 35
small traders, and resulting in loss of employment for 194
permanent workers and 160 temporary workers.

Fire Critical consideration These elements can be managed via

Fires are prevalent in the Atlantis area although not as much effective SEZ operational management
as in other areas of Southern Africa. Although flash-over fires and monitoring, as well as SEZ-wide fire
could occur especially in areas where high voltage powerlines safety procedures and drills.
run, the servitudes underneath the powerlines seem to be well- A Fire Emergency Service should
maintained and the predominant wind direction would possibly be established within the SEZ,
generally direct fires away from the SEZ, towards the south- with adequate capacity and knowledge
west. The primary concern regarding fire in Atlantis is related regarding industrial fire and emergency
to the potential for small, insignificant fires to turn into management. This service could also
disastrous events, due to wind strength. In addition, large open function as a communication channel in
spaces (especially during the early stages of development), as case of other emergencies, such as
well as the proliferation of dumping/storage of flammable weather-related events, or nuclear
materials in the industrial area is of concern. disasters.

HUMAN INITIATED HAZARDS

Specific Level Mitigation/management measures

hazard

Condition of Critical consideration The SEZ entity should be in on-going

access roads Although not directly related to the sites that form part of the discussion with the relevant authorities
SEZ, the condition of regional roads and facilities that would to ensure that the surrounding road
serve the SEZ and its operators/workforce signal a potential network is maintained and used in terms
decline in road transport effectiveness. When comparing the of appropriate standards and
condition of access roads, entry points to Atlantis industrial prescriptions, including repair, upgrade,
area and safety on some of these roads, there is visible and designated route enforcement and
dramatic decline in maintenance visible. This is a critical introduction of traffic calming zones.
consideration in the sustainability of the SEZ, since if the
condition of the road access cannot be by-passed with
alternative modes of transport (such as rail). The R304 is not
noted in the freight movement network. However, during site
visits it was observed that a significant amount of heavy

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Natural Hazards

Specific Level Mitigation/management measures

hazard
vehicle traffic, including construction, freight and fuel was
transported on this road, with some vehicles travelling at
significant speed. There are signs at the entrance to the R304,
approximately 15 km south of Atlantis, from the turnoff of the
N7, stating that only local residents should use the road.
However, despite the signs and the clearly unsuitably narrow,
step drop-off at places on the side of the road, and poorly
paved condition/potholes on the particular road, a number of
heavy vehicles were observed using the route during different
times of the day and on different days during the week.

Social cultural Critical consideration: The Atlantis resident community should

As indicated in the Pre-feasibility and Feasibility Reports, not be regarded in separation from the
socio-economic conditions in Atlantis, although challenging, is SEZ – they function as an integrated unit
a reflection of similar areas elsewhere in the Western Cape as and thus the communities in and
well as in South Africa Nationally. Critical considerations are alongside the SEZ should form part of
therefore not unique to Atlantis and would not deter the the SEZ planning and discussion
development and operation of the SEZ as an entity. However, process on an on-going process.
the Western Cape was reported in June 2012 to be the most Public participation processes including
protest-afflicted province (University of KwaZulu Natal Centre engagement with education, health and
for Civil Society. Even though community stakeholders may other public service and facility providers
have an understanding of the level of engineering expertise to be considered, to gain the trust and
that would be required to operate some green economy support of the community
industries, as is envisaged for the Atlantis SEZ, the How local communities will benefit
expectation would still exist that significant direct local during different phases of the SEZ life-
engagement (i.e. job creation) would be made possible via e.g. cycle, and in its processes and services,
basic construction and operational services. These should receive specific attention from the
expectations should be managed from the start of the SEZ entity.
development of the SEZ, via community engagement
processes, including any potential suggestions that
communities may have in regards to their potential
involvement and before and during the SEZ development
process.

Aerial and General consideration

aviation- When considering the Atlantis SEZ, there are currently no
related aviation related hazards that would present a significant
hazards impact. There is a remote controlled aircraft field
approximately 5 km from the SEZ presenting no hazard to the
SEZ, and an unmanned airstrip south of Atlantis, accessible
from the R 27. The latter is used for pilot training and skydiving
operations. Usually, a 1 nautical mile buffer is considered the
most important zone of hazard – this zone falls towards the
south of the Atlantis industrial area and SEZ and therefore
would not have a significant impact on the SEZ.

Electricity Critical consideration: Consideration should be given by

supply failure Power outages of the local electricity supply grid, as with any individual operators in the SEZ to
business in South Africa can impact the Atlantis SEZ. Of provide their own back-up power
greater concern than power outages is the expected increase generators to run their operations to
in cost of electricity over the next decade, with figures of up to keep the individual facilities operational
20% year on year increases expected. Potential investors during power outages.
should be made aware of the arrangements which the Atlantis Green energy provision should be
SEZ may be considering to ensure affordable and considered as “standard” in the
uninterrupted power supply. development of the industrial park.

Power station Critical consideration: Early warning procedures need to be

The SEZ area is situated between the 5-10km Urgent included in SEZ operations and all
Protective Action Planning Zone (UPZ) boundary of the industries in the SEZ should be made
Koeberg Nuclear Power Station. The Disaster Risk aware of SEZ-wide early warning
Management Department of the CoCT supported the SEZ procedures and evacuation plans.
application for environmental authority owing to the limited
intended increase in population and vehicular traffic and the
fact that the area is situated within the industrial area of
Atlantis and therefore close to the Northern Evacuation

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Natural Hazards

Specific Level Mitigation/management measures

hazard
direction/route.

Earthquake Critical consideration: It is important that industries are made

The national Seismic Hazard Map showing peak ground aware of the need to ensure building
acceleration indicates relative high risk for the Western Cape. construction comply to higher potential
Even though an earthquake event and associated damage will levels of peak ground acceleration.
not directly impact the SEZ significantly, a community-wide Industries have to ensure that their staff
disastrous impact will have a secondary indirect impact on the knows what to do during and after an
effectiveness of the SEZ (e.g. expenditure for recovery, and earth tremor.
social and emotional impacts on workforce). The SEZ as a whole should have an
earthquake emergency plan to ensure
that all industries involved in the SEZ
comply with the SEZ’s
guidelines/requirements.

Fire and Potential Fatal flaw:

rescue See information in earlier Section regarding Fire hazard.
emergency Unless there is a service centre in the Atlantis area that was
services not identified during the course of the disaster risk
assessment, it is critical that Fire and Rescue Emergency
Management Services are provided to the SEZ, even if it is
initially in a mobile form. This is since the existing available
services are located too far away from the Atlantis area to
provide speedy and effective industrial-related disaster
response

Public No data was available at the time of this report being compiled.
protection Additional research is required to determine the capacity and
services ability of the South African Police Force (SAPS) and military
services that may be engaged in case of a major disaster in
the Atlantis SEZ.

Health General consideration: To ensure that services are suitable for

services There are four medical facilities in vicinity of Atlantis. industrial purposes, the Atlantis SEZ
Unfortunately, only services provided at the one closest to the should invest in either its own medical
SEZ could be established at the time that this report was facility, or one or more of the existing
compiled – that of the Wesfleur Private Clinic. The other facilities in the vicinity of Atlantis should
clinics/facilities may be able to provide additional services and be upgraded to cater for industrial
there is a drive to update existing health services incidents such as cut and pressure-
wounds, burn wounds and the like.

12.1.3. Disaster Management Recommendations

Census 2011 statistics indicate that cell phone connectivity, television and radio broadcasts would be
the most effective way of reaching Atlantis SEZ workers and residents for purposes of early warning
in case of an industrial or other disaster. The SEZ should ensure that adequate communication
channels are established with each industry or operator in the SEZ to enable a communication
network that allow fast and efficient early warning for especially disasters related to fire and power
plant malfunctions (the latter at Koeberg or Ankerlig). In particular, it is necessary that health facilities,
SAPS, schools and educational facilities (and potential future fire and rescue emergency services) in
the Atlantis area be connected to the early warning network. The schooling system and health care
units in the area can also be used to establish disaster related communication channels.

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The operating agency that manages the Atlantis SEZ should consider inclusion of guidelines for
industries that form part of the SEZ, to include training and skills development modules as part of their
operational processes. Such options could upskill local residents (who seem to have at least matric
graduation) and allow the local community to fill positions where possible, as opposed to transporting
workers from externally into the area. Such a process will stabilise the community as well as reduce
the potential for violent service delivery protests that are related to job security and a view of outsiders
“taking” local jobs away from residents.

Considering the interventions presented, both for hazard-specific disaster prevention, mitigation, early
warning and response situations as well as in general, the following is recommended as an overall
disaster management strategy for the Atlantis SEZ:

 Considering the initial relatively small start-up situation which the SEZ faces, sufficient early
guidelines should be put into existence to ensure that operators and industries adhere to disaster
management requirements from the start. It will be easier to establish the SEZ with recording
processes and requirements in place, than to try and introduce it in retrospect.
 Consider provision of area-based disaster risk and operational maps, guidelines and planning
services, as opposed to relying on site-specific risk management and disaster response. Thus,
where industries are served as an agglomerate, as opposed to each having its own (potentially
contradicting), plans, the SEZ would be better served as a whole. Such a process should span the
entire disaster risk management continuum: from prevention and mitigation, to early warning,
response and recovery.
 Establish a SEZ Disaster Risk Management Technical Task Team, of which the Health and Safety
representative or suitable senior competent person of every industry in the SEZ is a member.
 Provide basic disaster risk reduction and management training for staff who are involved in
managing and operating the SEZ.
 Provide induction training for disaster risk management for representatives of new industries, and
any specific new staff.
 Provide guidelines to regulate, and monitor that the above training/induction is transferred to on-
site staff within each industry/operator.
 Monitor small scale incidents across the entire SEZ as well as in the community (e.g. re: violent
protests). This is an extension of the usual health and safety monitoring, which is done at site level
– it refers to a SEZ-wide incident monitoring system.
 Collaborate with the health centres in and around Atlantis: establish whether it is feasible to extend
some of the services that are being provided, to cater for industrial incidents and accidents, or
investigate the possibility of providing a SEZ-specific facility to cater for industrial accidents.
 Establish a fire emergency services facility for Atlantis SEZ, or even as part of one of the larger
operators in the area, allowing them to extend services wider than their own operating entity. This
will require collaboration and negotiation depending on the type of operation and services
involved.
 Monitor and check that health and safety, fire and related regulations, and disaster management
planning requirements are implemented by operators/industries in the SEZ, via a regular recording
and checking mechanism.
 Implement traffic calming zones, restrictive zones and heavy/hazard vehicle routes and implement
measures to record and curb ignorance of reasons for such elements to be implemented.
 Consider road transport upgrades in the vicinity of Atlantis – especially the R 304 and the R 27.
 Make the disaster risk assessment report/subsequent plan available to all industries in and around
the Atlantis SEZ, and consider sharing information with the community at large.
 Give particular guidance on building/design details considering heavy winds and gust factor, as
well as earthquake potential.

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 12.1.4. Disaster Risk Plan Performance Criteria

The following Key Performance Areas (KPAs) should form part of a final disaster management plan,
to be prepared by the SEZ entity.

 KPA 1: Establishing the necessary institutional arrangements for implementing disaster risk
management within the SEZ as a whole. This would specifically address the application of the
principle of co-operative governance for the entire SEZ as opposed to only implementing
regulations merely on an industry-level within the SEZ. It also emphasises the involvement of all
stakeholders in strengthening the capabilities of organs of state and the private sector alike to
reduce the likelihood and severity of disasters.
 KPA 2: Addressing the need for disaster risk assessment and monitoring to enabling the setting of
priorities, guide risk reduction action and monitor the effectiveness of related efforts. This requires
regional monitoring of non-disaster events which may point to hazard and vulnerability presence
and location. The focus would be in particular on implementation of monitoring and reduction
programmes within the SEZ related to external threats from and to structures, services,
communities and households.
 KPA 3: Introducing disaster risk management planning and implementation in the Atlantis and
other SEZ’s in a uniform manner, to inform sustainable development-oriented approaches, plans
and programmes within each SEZ and between SEZ’s that reduce disaster risk. This KPA requires
alignment of the Disaster Management Act and the NDMF with SEZ-specific requirements and
should give particular attention to the planning and integration of core risk reduction principles of
prevention, mitigation and early warning into daily SEZ-related initiatives.
 KPA 4: Implementing priorities concerned with disaster response, recovery and rehabilitation that
simultaneously address sustainable development objectives. This would lead to development of an
integrated and co-ordinated policy on the implementation of response and post-disaster recovery
in SEZ’s. When a significant event or pending disaster occurs or is threatening to occur, it is
imperative that there must be no confusion as to the roles and responsibilities and the necessary
procedures that need to be followed. These measures would ensure effective disaster response,
recovery and rehabilitation planning while at the same time providing enablers for community
stability and sustainable development in the vicinity of the SEZ.

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 12.2. Project Risk Register
Risk assessment
No Risk Description Risk Mitigation Measures
Probability of Magnitude of
Occurrence negative impact

Political, Legislative and Policy

1 Poor coordination between Medium Medium Ensure support of WC and national

government departments within government departments by creating a
and between spheres in Project Steering Committee that
administering SEZs and associated includes most of the principals
policies, infrastructure and
incentives. Clearly delineate responsibilities in
infrastructure provision and ensure
regular and accurate communications
with all the supporting departments

2 A lack of support for the SEZ from Low Medium Ensure that the SEZ and the SEZ's
local ward councillors and implementation activities present
community leaders, disrupting the genuine value for the local community,
SEZ's implementation through engaging local workers,
contractors and professionals in its
implementation and through genuine
integration with the local economy

Communicate regularly on the value

that the SEZ implementation activities
and the completed SEZ will provide to
the local community

Include local leaders on a Project

Steering Committee

3 Changes in priorities on the part of Low High Ensure support of WCG departments
the WCG which may lead to and the legislature by creating a
reduced support for SEZs and the Project Steering Committee that
Atlantis SEZ in particular includes most of the principals

4 Changes in the regulatory regime Low High Assign responsibility for constantly
and in the national strategy and reviewing the legislative and policy
level of support for SEZs environment to the project manager
responsible for the SEZ
Implementation and carry out regular
reviews to keep abreast of
developments

5 Changes in South African energy Medium High Assign responsibility for constantly
policy objectives, the Integrated reviewing the South African energy
Energy Plan (IEP) or the Integrated policy and legislative environment to
Resource Plan (IRP) allocations the project manager responsible for
and REIPPP programme, the key the SEZ Implementation and carry out
drivers of demand regular reviews to keep abreast of
developments

Aim for a diverse mix of manufacturers

catering to different markets and
products (public/ private markets,
wind/ solar/ biogas, etc.)

6 Changes in South African Low Medium Assign responsibility for constantly

government support for local reviewing the South African energy
manufacturers or reduction in policy and legislative environment to
implementation and enforcement of the project manager responsible for

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 Risk assessment

No Risk Description Risk Mitigation Measures

Probability of Magnitude of
Occurrence negative impact

local content requirements the SEZ Implementation and carry out

regular reviews to keep abreast of
developments

7 Anti-protectionism measures Low Medium Assign responsibility for constantly

forcing the South African market to reviewing the South African energy
consider increased imports of SEZ policy and legislative environment to
products the project manager responsible for
the SEZ Implementation and carry out
regular reviews to keep abreast of
developments

Aim for a diverse mix of manufacturers

catering to different markets and
products (public/ private markets,
wind/ solar/ biogas, etc.)

8 Bureaucracy in government which Low Medium Assign a SEZ representative (e.g. the
could discourage the Commercial Manager) with specific
establishment of prospective responsibility to interact with potential
investors/tenants manufacturers and identify
bottlenecks; then coordinate with other
government agencies and
departments to reduce bureaucracy

Financial

9 Insufficient project funds or poor Medium High Carry out rigorous cost management
cash flows affecting the to accurately determine costs and
implementation of the SEZ manage them while keeping the SEZ
sponsors aware of budget implications
at all times

Ring-fence funds for the SEZ as far in

advance as possible and as part of the
MTEF cycle

10 Incentives for manufacturers to Medium High Develop and constantly review the
locate to the SEZ are insufficient marketing strategy and commercial
framework to identify the effectiveness
of incentives

11 Over-investment in infrastructure to Low Medium Implement a phased approach to the

attract potential manufacturers infrastructure development

Designed the SEZ to make use of

existing industrial property and
infrastructure

Operational

12 Risk that insufficiently skilled Medium High Carry out an internal skills audit and
personnel are assigned by the WC survey of required skills and based on
government to manage the this proactively implement training or
operations of the SEZ sourcing of necessary talent

13 Insufficient knowledge transfer Low Medium Develop knowledge transfer strategy

skills to the WC government to for each contracting private party and
manage the operations of the SEZ write them into the terms of reference
from any private party

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 Risk assessment

No Risk Description Risk Mitigation Measures

Probability of Magnitude of
Occurrence negative impact

14 Insecurity in the operating Low Medium Appoint a Security Manager to identify

environment from criminal activity and manage security risks within the
and gangs SEZ and proactively engage with
SAPS and the WC Safety
MEC/Department

15 Lack of sufficient skills amongst the Medium Medium Carry out an external skills audit of the
local labour market to meet the area and of required skills for typical
requirements of SEZ tenants manufacturers within the SEZ, and
cooperate with local higher education
institutions to develop courses to fill
any gaps

16 Not enough suppliers providing Medium Medium Carry out an external skills audit of
inputs of sufficient quality for suppliers the area and of required
manufacturing firms in the SEZ skills for typical manufacturers within
the SEZ, and cooperate with the dti,
local branches of SETA's and local
higher education institutions to
develop training courses to fill any
gaps

Economic

17 The economic benefits of the SEZ Low Medium Implement the SEZ in phases and
may not be sufficient to outweigh conduct a cost-benefit analysis at
the investment or overcome any each phase
resulting micro-economic
disruptions Leverage existing public and private
institutions who are able to provide
services at minimum cost

Sub-contract operations and

maintenance to the private sector with
appropriately defined service-level
agreements to reduce operational
costs

18 Declining economic activity in Medium Medium Aim for a diverse mix of manufacturers
South Africa depressing domestic catering to different markets and
demand especially amongst products (public/ private markets,
households wind/ solar/ biogas, etc.)

19 A disadvantageous rand exchange High Medium Create support amongst

rate making imports of components manufacturers for integration with local
prohibitively expensive, or South economies to insulate them from
African exports uncompetitive external shocks
globally

20 Global recession or a slowdown in Low Medium Aim for a diverse mix of manufacturers
economic activity depressing catering to different markets and
demand in export markets products (public/ private markets,
wind/ solar/ biogas, etc.)

21 Inflation, price escalations during Medium Medium Carry out rigorous cost management
the establishment of the SEZ to accurately determine costs and
manage them while keeping the SEZ
sponsors aware of budget implications
at all times

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 Risk assessment

No Risk Description Risk Mitigation Measures

Probability of Magnitude of
Occurrence negative impact

Labour

22 Labour instability and industrial Medium Medium Assign responsibility for industrial
action affecting production and relations to an experienced
supplies, or affecting South Africa's practitioner and implement proactive
reputation as an investment labour relations, borrowing best
destination practice from project labour
agreements such a Eskom's

Marketing

23 Competition from other SEZs in Low Medium Include competitor analysis in the
South Africa (Upington also has a Marketing Strategy to identify focus
renewable energyfocus) areas and developments in other
SEZs and differentiate Atlantis
accordingly out

24 Increased competition from other Medium Medium Include competitor analysis in the
countries with strong Green Marketing Strategy to identify focus
Technology manufacturing sectors areas and developments in other
countries and differentiate Atlantis
accordingly out

Infrastructure

25 Insufficient infrastructure Medium Medium Coordinate the provision of necessary

discouraging existing and potential infrastructure through an inclusive
tenants and investors, especially Project Steering Committee that
bulk electricity and broadband includes most of the providing
infrastructure departments and agencies

26 Poor public transport between Low Medium Coordinate the provision of transport
Atlantis and Cape Town leading to infrastructure through an inclusive
disinvestment in the SEZ Project Steering Committee that
includes most of the providing
departments and agencies

Explore private partnerships with

transport companies, taxi owners in
the provision of transport to the area

Spatial and Land

27 Lack of tenants and investors due Medium Medium Carry out a rigorous marketing
to the SEZ's remoteness from campaign to emphasise the
urban centres, logistics gateways, advantages the SEZ's location offers,
skilled workers, suppliers and and countervailing incentives to any
customers disadvantages

Environmental

28 Environmental impact Low Medium Provide requirements as far in

assessments or environmental advance as possible to the relevant
concerns delay the establishment environmental authorities for EIAs
of the SEZ
Provide for time buffers in the public
participation process and
communicate deadlines

Technological

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 Risk assessment

No Risk Description Risk Mitigation Measures

Probability of Magnitude of
Occurrence negative impact

29 Rapid development and fall in cost Medium Medium (in the Aim to attract a diverse mix of
of greentech products short to medium manufacturers (local and MNCs)
internationally which may render term) catering to different markets and
South African products products (public/ private markets,
uncompetitive wind/ solar/ biogas, etc.)

Include advisors from CSIR/ Mintek or

other research agencies on the board
of the SEZ

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 13. Conclusions

In this document we have provided an assessment of the technical and economic feasibility of
establishing a greentech SEZ at Atlantis. The primary objectives of establishing the proposed Atlantis
SEZ are to grow the greentech sector in the Western Cape and to further the CoCT’s objective of
revitalising Atlantis as a key industrial node in the region. In achieving these objectives, CoCT and
WCG would aim to create employment, enable smart green economic growth, to revitalise the area
and attract foreign direct investment and domestic investment.

13.1. Demand for greentech in Atlantis

After an extensive analysis of the greentech market in South Africa and the potential of Atlantis to
attract a share of the firms that will serve that market, we concluded that demand would be sufficient
to support the development of a small-scale greentech SEZ.

Atlantis is better suited to manufacturing of green technologies and materials than provision of
greentech services (e.g. research and development, installations, waste services etc.). This is partly
because it was originally established as an industrial node and still has ample existing industrial
infrastructure and land zoned for industrial use. It is also because Atlantis is still relatively far from the
city centre and tertiary education institutions is not particularly well located to serve the commercial
and residential market for greentech services in the suburbs of Cape Town.

The demand for local manufacturing of green technologies is largely contingent on government
support – this includes direct government procurement of greentech, enabling policy and regulation,
programmes and standards and localisation requirements. The increasing focus on and clear support
for the green economy in national, provincial and local government policy - including NDP, Climate
change white paper, carbon tax policy paper, Western Cape “green is smart’ green economy strategy
framework and CoCT Economic Growth Strategy provide a good foundation for the creation of a
greentech SEZ.

The demand for locally manufactured components for utility-scale renewable energy in South Africa is
driven by the REIPPP programme which sets out the allocations for renewable energy generation
technologies and provides opportunities for investment through a competitive bidding process. Local
content thresholds and targets stipulated within the REIPPP bidding process are generating demand
for locally manufactured components and related services.

For the commercial, industrial and residential market key government programmes include the Eskom
IDM programme, the DoE solar water heater roll-out plan, the SANS building standards and the 12L
income tax allowance. Uncertainty around the status and support available via these programmes has
negatively affected suppliers and manufacturers in CFL, LED, heat pump, SWH and other greentech
industries. It is envisaged that the SEZ entity would work with other stakeholders in government to
ensure better continuity in types of support provided. In the commercial, industrial and residential
market the rising cost of electricity and falling relative cost of green technologies will continue to play
a role in driving uptake independent of government support.

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The immediate (next 3 years) high-potential opportunities for Atlantis include the manufacturing of
selected PV module components, wind turbine blades and towers, solar water heaters and basic
components of CFL and LED lights. These activities, with the exception of lighting components are all
directly supported through targeted government initiatives and would likely have setup without SEZ
incentives. The purpose of the SEZ therefore would be to attract these activities to a relatively under-
utilised industrial node and to promote the ‘clustering’ of these activities to foster greater collaboration
and development of greentech activities in future.

The opportunity for the ASEZ is likely to improve over the medium-to-long term (beyond 2018)
because of increased IRP allocations and movements in demand drivers, such as rising electricity
prices or falling technology costs.

13.2. Spatial Planning and technical considerations

A broad range of Provincial and CoCT sectoral, integrated, and/ or spatial policy and planning
frameworks support the focus and spatial location of the proposed Atlantis SEZ.

Because the proposed Atlantis SEZ forms part of an existing serviced industrial area, most of the
overarching spatial requirements for the initiative are already in place. New layout, infrastructure
design, and township establishment activities are therefore not required. The area was originally
planned as an industrial estate and the distribution of land uses and provision of infrastructure in the
area support industrial development. The area identified for the SEZ is clearly identifiable as a defined
area of industrial activity.

The CoCT has already made sufficient land available to the SEZ entity to accommodate expected
demand. There is also ample city and privately owned land available to accommodate considerable
future growth of the SEZ if needed. Atlantis is somewhat unique in that there is also ample existing
industrial property (some 632 195m 2) and much of this is currently underutilised.

The most important spatial planning decision in relation to the proposed Atlantis SEZ appears to be
where and in what form to develop. Gestamp and a wind blade manufacturer both require very large
custom designed manufacturing spaces. The two sites made available by the CoCT are ideal for their
purposes. The majority of firms indicated they would prefer to lease sites within an already developed
and serviced industrial park. The issue is how to provide for these firms and particularly smaller users
who don’t have the ability to lease space on a long-term basis and customise it.

One option is to build a new industrial park; another is to refurbish existing vacant or underutilised
space. Building a new industrial park (with flexible, modular spaces which can readily accommodate a
range of space requirements and phased as demand grows) provides the opportunity to consolidate
all SEZ activities in close proximity with the industrial area and provide for a clearly “identifiable” SEZ.
It appears that from the financial modelling that refurbishing existing industrial space within Atlantis to
accommodate smaller users seeking already developed space may however provide a cheaper
alternative. Refurbishment would also contribute to upgrading of existing industrial property in the
area.

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It is recommended that smaller users and the OSS (at least during initial years in the life cycle of the
SEZ) be clustered together in a purpose built industrial park. Both shorter and longer term expected
user demand for a future large user and the smaller users could be accommodated on site 1. In this
way, a clearly identifiable SEZ facility is provided and the SEZ entity is assured full flexibility to
negotiate user agreements related to site 2 in future. Site 2 is large in extent and very few, if any,
development-ready industrial sites of a similar extent remain in the CoCT’s ownership. Ideally, this
site should not be “parcelled” into smaller land units but rather be kept in reserve should a major
manufacturer (and employer) in future require such a land holding in Cape Town. The proposed
concept lay-out for site 1 requires minimal changes to the local road network.

Pursuing a 4-Green Star rating (as determined by the Green Building Council of SA) for buildings in
the Atlantis SEZ can result in a dramatic reduction in building heating, cooling, ventilation and lighting
costs, both capital and operational. As part of the ‘green demonstration’ effect, it would be desirable if
buildings built and refurbished by the SEZ entity and its tenants strive to meet some minimum green
building standards.

In terms of the greenfield sites identified by the CoCT, both can accommodate a range of users with
different and perhaps unique space requirements and can be “parcelled” easily to accommodate
different users and a very large range of building configurations. Both are flat in slope, enabling easy
provision of manufacturing space (requiring large flat surfaces). In terms of the CoCT zoning/ land use
provisions, both sites have the necessary land use rights in place to permit green industry enterprises
and environmental authorisation is in place to undertake the activities envisaged for the proposed
SEZ.

Most of the required bulk infrastructure is also in place. Overall bulk water availability on the
greenfield sites identified by the CoCT should be adequate to provide for both conservative and
moderate development scenarios. Bulk waste water and storm water infrastructure should also be
adequate. Regional landfill facilities catering for different waste classifications are situated in the
vicinity of the Atlantis and have sufficient capacity to accommodate demand under both scenarios.

The Atlantis area is one of the key industrial freight centres within the Cape Town Metropolitan area
and well integrated with regional freight movement networks. Investigations to ascertain the extent of
local road improvements which could be required as a result of large users and the industrial park
envisaged to comprise the SEZ were undertaken. These include, minor improvements to
intersections and turning radii to cater for large users such a wind blade manufacturer. It is suggested
that the SEZ entity budget approximately R8 million for associated improvements.

The 4 MVA electricity available to the two sites identified by the CoCT should be sufficient to
accommodate demand over the 2014-2017 period. The expected 2018-2030 up-take on the two sites
could require an additional ±1 MVA, but planned improvements to electricity supply in Atlantis.
Roughly R80 million has already allocated by the CoCT to bulk electricity upgrades and this should be
sufficient to accommodate longer term needs.

The Disaster Risk Assessment focusing on elements of disaster risk that not covered by existing
research and reports and covering “potential fatal flaws”, “critical consideration”, “general
considerations”, and “insignificant” elements recommends that SEZ-wide area-based disaster risk and
operational planning (across the entire disaster risk management continuum from prevention and
mitigation, to early warning, response and recovery) should be considered as opposed to site-specific
risk management.

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The gap analysis undertaken as part of the preparation of a high-level logistics plan for the SEZ
identified two core logistics strategies for further work: cost reduction/minimisation (specifically smaller
users cooperating in order to share logistic costs), and the implementation of green supply chain
practices.

There are currently no high speed broadband services available to Atlantis Industria businesses. The
CoCT is however currently reviewing its 2014/15 broadband investment priorities and is considering
funding a project to constructing seven Atlantis fibre rings (R12m) and\or to provide a “redundant”
connection to Atlantis, meaning that there are two separate and independent routes for connectivity to
ensure service continuity if the one would malfunction (R11m). The reviewed expenditure plan is
awaiting approval.

13.1. Commercial model

The key principles for the design of the Atlantis SEZ commercial model are:

 Size and extent of the Atlantis SEZ - The Atlantis SEZ is envisaged as a relatively small-scale
greentech SEZ when compared to existing IDZs such as Dube Tradeport and Coega or city-wide
greentech SEZs Boading in China or Masdar City in the United Arab Emirates
 Sector focus and eligibility for SEZ incentives - The WCG proposes that all greentech firms
and their direct suppliers that locate within the boundaries of the ASEZ will qualify for fiscal and
other SEZ incentives. Non-qualifying enterprises located within the SEZ will still benefit from a
range of public infrastructure improvements and services.
 Delivering SEZ services cost-effectively - We have estimated that 20 greentech firms will be
operating before the end of 2030. Given the relatively small-scale of the proposed Atlantis SEZ
one of the key principles will be to provide infrastructure and services in a cost-effective manner by
making use of existing infrastructure in the area.
The rationale for the extended demarcation is to provide the SEZ with a broader reach and enable it
to act as a catalyst for the upliftment of the entire Atlantis industrial area. As such, not all companies
within the Atlantis SEZ boundaries will qualify for SEZ incentives. But both non-qualifying enterprises
(which include all the existing firms in Atlantis Industria) and qualifying enterprises will be able to co-
locate within the SEZ.

In addition to leveraging existing institutions and infrastructure, we have also proposed that the ASEZ
provide selected services to both qualifying and non-qualifying enterprises within Atlantis Industria in
order to increase both the impact and beneficiaries of the ASEZ and to realise economies of scale in
service delivery.

The dti will not fund the operations of the SEZ and it is envisaged that after initial support from
Provincial Government operational expenditure will be fully or substantially recovered by the SEZ
entity through revenue from services and activities provided to firms in the SEZ.

It is envisaged that the SEZ entity and\or operator will be able to earn revenue chiefly through:

 the rental of properties

 the collection of a levy for the provision of public infrastructure and services.

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 13.1. Financial viability
The financial viability of the SEZ was considered in terms of four different development options:

 Low road, refurbishment

 Low road, new build
 High road, refurbishment
 High road, new build
The key difference between the “Low road” and “High road” options is that in the “Low road” none of
the 10 small users establish themselves in the SEZ because of a lack of immediate, suitable and
marketable space. In the “High road” options, additional capital to develop marketable space to attract
the small users is required.

The options also differ in terms of the decision whether to refurbish existing industrial property in
Atlantis or whether to build new facilities. The cost of refurbishing brownfield sites at R2 818/m 2 is
estimated to be approximately half of the cost to develop greenfield sites at R5 636/m 2 excluding the
provision of additional on-site bulk infrastructure associated with new developments at R1 305/m 2.

Capital expenditure required for establishment of SEZ

Only R145 million in infrastructure investment would be required to establish the SEZ under the low
road options. But the under these scenarios the SEZ is also able to attract fewer tenants because it is
not able to provide readily marketable space to smaller tenants seeking brownfield property. In terms
of the two high road options, the difference between the cost of refurbishment and new build is
roughly R200 million. The high-road refurbishment option can therefore be viewed as a less capital
intensive way to provide suitable accommodation for tenants seeking brownfield property.

Financial viability of the options - project return over 20 year period

All options with the exception of ‘high-road new build’ are financially viable based on their cumulative
discounted future cashflows. The net present value for each of the options has been calculated
based on the cash flows generated by the project over a 20 year period. The ‘high road –
refurbishment’ option is the most attractive option as it has the potential to generate the most net
revenue over the period with an discounted net future cash flows of R77.1 million. The ‘high road-
new build’ option makes a net loss of R10 million over the period and would require additional grant
funding (or be able to realise higher rentals than what we have assumed) in order to achieve a
positive project return.

Affordability

Under the current assumption on grant funding available, none of the four options are able to
generate sufficient cash flows at the beginning of the project and will require additional funding to
support the SEZ during this period. The low road options are only experience funding shortfalls in the
first two years at an average of R39.5 million for both years. This represents the total amount the
province or dti would need to provide in additional grant funding to support the SEZ under these
options. Thereafter, the SEZ entity under the low road scenario generates sufficient income to
generate a funding surplus.

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The high-road new build option as it requires both significant capital expenditure and grant funding in
order to setup the SEZ. The cash flows generated from the rental of the properties and collection of
management fees for the first 6 years is insufficient for the project to be self-sustaining. This option
does however eventually achieve cash break even in its 13th year of operation. A total of R 243 million
in additional provincial grant funding would be required to plug the shortfall in the first 6 years.

The high-road refurbishment option represents a reasonable middle ground. It also generates a
funding shortfall in the first 6 years however at a value of R 123 million this is recouped in the 10th
year of operation.

13.2. Economic viability of the options

There are several potential economic benefits associated with the SEZ. Based on our conservative
greentech demand assumptions, around 720 full-time permanent jobs are created in the ‘low road’
scenarios and 1060 permanent jobs in the ‘high road’ scenarios. The overall capital expenditure
incurred per permanent job created is between roughly R200 000 in the ‘low road’ scenarios and
R590 000 in the ‘high road new build’ scenario which is low when compared with similar ratios for
existing IDZs.

While the ‘low road’ options are more capital efficient in term of jobs created they do result in lower
overall jobs because we have assumed it would not be possible to attract smaller firms to the area if
the SEZ doesn’t act as an anchor tenant and provide suitable facilities.

The ‘high road refurbishment’ option is significantly more capital efficient than ‘high road new build’
but results in the same number of overall jobs – in other words the same employment outcomes can
potentially be achieved with less capital investment going the refurbishment rather than new build
route.

The cost-effectiveness of refurbishment will need to be weighed against the benefits of building a new
green-star rated industrial park (with flexible, modular spaces which can readily accommodate a
range of space requirements and phased as demand grows). The new industrial park will provide an
opportunity to consolidate all SEZ activities in close proximity with the industrial area and provide for a
clearly “identifiable” SEZ. Refurbishment would have the benefit of upgrading of existing industrial
property in the area but it may not be possible to consolidate all users in one space.

Activities relating to the construction and refurbishment of infrastructure will contribute between R168
million in the low road and R704 million in high road to GDP over the 8 year construction phase. The
higher the construction spending associated with the option, the higher the associated impact on
GDP. Activities relating to ongoing SEZ operations will contribute roughly R8.7 million annually
under all options to GDP.

The establishment of the SEZ will also be associated with a number of additional economic benefits
including:

 The creation of greentech manufacturing and services cluster in the Western Cape - while
some greentech firms may have setup in the absence in the SEZ and its incentives, the SEZ will
facilitate clustering of firms in this sector and efficiencies and benefits of collaboration typically
associated with clustering. Some firms that would not otherwise have considered investing in
South Africa may also be attracted to South Africa because of the clear support for the
development of a local greentech sector.

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 Support the renewable energy generation build - The ASEZ is a good location for
manufacturers who intend to supply goods and services to REIPPP programme renewable energy
generation projects in the Northern and Western Cape.
 Attracting FDI and domestic private investment - When multi-national companies enter a new
market, they bring with them technology transfers, new employment opportunities, transfers of
best practices or competencies, entrepreneurship, access to markets and an increase in demand
for goods and services produced by local firms. Atlantis could receive between R600 million and
R650 million in foreign direct investment in the period 2014 to 2017, including the investment
already committed by Gestamp (roughly R300 million). The provision of SEZ infrastructure,
activities and incentives will also assist domestic private sector investors to participate in the
greentech sector.
 Potentially increase the utilisation of existing infrastructure in Atlantis and promoting urban
renewal - Increased activity may make better use of existing infrastructure, especially in the case
of refurbished brownfield properties.
 Positive impact on trade balance through import substitution opportunities – the SEZ will
help to support locally produced greentech projects that will replace components that may
otherwise have been imported. Import substitution (provided the products aren’t sold at
unreasonable additional cost to the SA consumer) will increase the amount of income and wealth
generated within the South African economy which may otherwise have been lost to other
markets.

13.3. Key conclusions

Overall the results of this feasibility study suggest that it would be feasible to establish a small-scale
greentech SEZ at Atlantis All options with the exception of ‘high road new build’ are financially viable
based on their cumulative discounted future cashflows. Capital infrastructure require to establish the
SEZ could be limited to R145million under the low road scenarios, but we have assumed that the SEZ
is also able to attract fewer tenants because it does not provide readily marketable space to tenants
seeking brownfield property under these scenarios.

In the high road scenarios the difference between the cost of refurbishment and new build is roughly
R200 million. The high road refurbishment option can therefore be viewed as a less capital intensive
way to provide readily marketable accommodation for tenants seeking brownfield property and
increase the potential number of jobs created in the SEZ relative to the low road scenarios.

The cost-effectiveness of refurbishment will need to be weighed against the benefits of building a new
green-star rated industrial park (with flexible, modular spaces which can readily accommodate a
range of space requirements and phased as demand grows). The new industrial park will provide an
opportunity to consolidate all SEZ activities in close proximity with the industrial area and provide for a
clearly “identifiable” SEZ. Refurbishment would have the benefit of upgrading of existing industrial
property in the area but it may not be possible to consolidate all users in one space. Because of
these trade-offs, the preferred high road solution could in fact be to provide readily marketable
brownfield space through a combination of refurbishment and new build.

Around 720 full-time permanent jobs are created in the ‘low road’ scenarios and 1060 permanent jobs
in the ‘high road’ scenarios. The overall capital expenditure incurred per permanent job created is
between roughly R200 000 in the ‘low road’ scenarios and R590 000 in the ‘high road new build’
scenario which is low when compared with similar ratios for existing IDZs.

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The establishment of a greentech SEZ in Atlantis would also be associated with additional economic
benefits. These include the creation of greentech manufacturing and services cluster in the Western
Cape and support for the renewable energy generation build. The SEZ would also attract FDI and
domestic private investment into the Cape and greentech sector and potentially increase the
utilisation of existing infrastructure in Atlantis and promoting urban renewal and revitalisation of this
industrial and commercial node.

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Annexure 1: Schedule of Interviews

Interviewee Institution Date of the interview

Mr. Thando Gwintsa East London IDZ- Executive Manager: Office 29th July, 2014
of the CEO

Ayanda Tamncwan East London IDZ- Acting Finance Manager 29th July, 2014

Gift Matengambir East London IDZ- Marketing and Public 29th July, 2014
Relations Manager

Mr Sibusiso Sibandze Coega Development Corporation-Unit Head: 31st July, 2014

Trade Solutions

Doug Southgate Saldanha Bay IDZ- Acting Chief Executive 13th August 2014
Officer

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Annexure 2: Spatial policy and planning
context

A range of policy initiatives and planning frameworks – both sectoral and integrative in nature – have
a bearing on the Atlantis SEZ spatially. The table below summarises key aspects of these in terms of
focus and support for the Atlantis SEZ.

Policy/ plan Purpose Relevant focus/ support

Western Cape Both the WCG and the City of The WCIF recognises that areas of poor access to services
Infrastructure Cape have prioritised remain in the Western Cape, that much of the bulk infrastructure
Framework (2013). “infrastructure-led growth” as a has suffered from historic underinvestment in maintenance and
driver of growth and rehabilitation, that existing infrastructure systems (particularly
employment in the region. The those of energy and transport) are carbon intensive with high
Western Cape Infrastructure costs to the environment, and that some systems suffer from
Framework (WCIF) aims to align inefficient management and use of resources.
the planning, delivery and
management of infrastructure A future infrastructure investment approach of improved resource
provided by all stakeholders efficiency and less carbon intensive energy is favoured.
(national, provincial and local Specifically, the WCIF promotes the development of renewable
governments, state-owned energy plants and associated manufacturing capability. The
companies and the private University of Stellenbosch’s strong research capabilities in
sector) for the period to 2040. Concentrated Solar Power (CSP) is noted as well as opportunities
for commercialisation. While the best location of CSP plants is in
the Northern Cape, there is good manufacturing potential for the
Western Cape, particularly given that many CSP components
may be developed within existing production capabilities.

Green is Smart: Green is Smart aims to set Green is Smart recognises the important initial opportunities in the
Western Cape Green priorities for achieving the construction of new energy infrastructure, and the Western
Economy double dividend of optimising Cape’s past and growing contribution in this area. However, it
Framework (2013). green economic opportunities specifically notes the opportunity for long-term benefit in servicing
and enhancing the province’s the infrastructure/ industry through:
environmental performance.
Specifically it identifies where Positioning the Western Cape as a pioneer in green financial
the Western Cape has the innovation, investment finance and risk management for emerging
potential to be a pioneer and markets (leveraging off the province’s existing strength as a
early adopter of green financial centre in asset management).
technologies and economic Expanding the emergent green private equity presence in the
activity. Western Cape, servicing both the local market and other African
countries.

Creating green economy trading platforms. For example, Credible

Carbon is South Africa’s first voluntary market carbon registry.

Developing new forms of insurance and risk sharing to incentivise

more sustainable practices (leveraging off the province’s existing
strength in the insurance industry).

Becoming a leading “green governance” centre of expertise (the

province is a recognised centre of environmental legal expertise).

Attracting more social entrepreneurs and establishing the region

as a global social enterprise hub for emerging markets.

Positioning the region as a leader in smart systems for the green

economy (an agglomeration of systems developers differentiates
the Western Cape from the rest of South Africa).

Green is Smart argues that the Cape, given its location, access
and available skill sets – coupled with a concentration of
academic institutions that are all involved in research and
development – is an ideal spatial focus for the establishment of a

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 manufacturing hub with a green economy focus, and supports co-
locating or clustering of value chains in these sectors in a
dedicated industrial location in order for firms to benefit from direct
co-operation and sharing of resources. Green is Smart explicitly
supports the selection of Atlantis as a proposed SEZ with a focus
on renewable energy and advanced manufacturing, and notes the
CoCT and WCG’s significant progress in making available land at
competitive rates and with a relatively easy land occupation
process.

Western Cape The initiative, a partnership The R1.3 billion project will take 7-10 years to complete, with an
Broadband Initiative between the WCG and CoCT, initial focus on Khayelitsha, Mitchells Plain, Ndabeni, and the
aims to implement an expansive southern suburbs).
fibre-optic communication
network across the metro and The intent is to enter into agreements with private service
will provide high-speed internet providers to make spare data capacity available to disadvantaged
to 45 WGC and 130 CoCT areas at a reduced fee.
buildings/ facilities. By September 2014, the learners of Delft and Atlantis will receive
free Wi-Fi as part of the projects so that they can research their
school projects on the web.

Provincial Spatial The Provincial Spatial Support for the “green” sector (and the alternative energy sector
Development Development Framework specifically)
Framework, Public (PSDF) sets out to put in place
Draft for comment, a coherent framework for the The PSDF recognises that the Western Cape economy is based
October 2013. province’s urban and rural areas on its unique natural assets. These include farming resources that
that gives spatial expression to make it the country’s leading exporter of agricultural commodities
the national (i.e. NDP) and and whose value chains (e.g. agri-processing) underpin the
provincial development agendas province’s industrial sector; and its natural capital (i.e. biological
and communicates diversity) and varied scenic and cultural resources which are the
government’s spatial attraction that makes the Western Cape the country’s premier
development intentions to the tourism destination. Collectively these assets provide a unique
private sector and civil society. lifestyle offering which contribute to the relative strength of the
province’s tertiary sector and its comparative advantage as a so-
called knowledge economy. It is recognised that current resource
use patterns threatens the economic base of the province. For
example, energy is primarily drawn from unsustainable energy
sources, with a very small emergent sustainable energy sector in
the form of wind and solar energy locating in the more rural,
sparsely populated areas of the province.

With the above in mind, the PSDF supports:

The “Green Cape” initiative, striving for all households accessing

basic services that are delivered resource efficiently, the prudent
use of land and finite resources, and safeguarding of ecosystems.

Breaking the paradigm that economic growth implies the on-going

depletion of the province’s natural capital.

Seeking reductions/substitutions and/or replacements in the use

of limited resources, while avoiding negative environmental
impacts.

Energy diversification and energy efficiency to enable a transition

to a low carbon, sustainable energy future and to delink economic
growth from energy use.

Emergent IPPs and sustainable energy producers (wind, solar,

biomass and waste conversion initiatives).

Place specific support

Although the PSDF does not refer to Atlantis specifically – being

an over-arching, higher level policy document – it does support:

Developing the required bulk infrastructure capacity to serve the

connection and compaction of existing human settlements, over
developing bulk infrastructure to serve new outward growth of
settlements.

Reinforcing the Cape Metropolitan region (which includes Atlantis)

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 as the province’s economic engine.

Targeting existing economic assets (including CBDs, vacant and

under-utilised strategically located public land parcels, industrial
areas, etc.) as “levers” for the regeneration and revitalisation of
urban economies.

Facilitating private investment and individual enterprise by making

it easier to do business (e.g. by removing red-tape), by
incentivising investment in a particular place or economic sector,
and by using partnerships as a delivery model.

CoCT Integrated The Integrated Development Support for the “green” sector (and the alternative energy sector
Development Plan Plan (IDP) is the City’s key specifically)
(2013/ 14 Review). statutory medium term strategic
plan, also directing the budget. Establishing an “opportunity city” – an economically enabling
environment in which investment can grow and jobs can be
created – is a key strategic pillar of the IDP. The IDP identifies
three catalytic projects to support increased investment and jobs:

Investment in broadband infrastructure across the city.

The further roll-out of the MyCiTi service as part of the Bus Rapid
Transit (BRT) network, especially to the south-east of the city.

Area revitalisation and investment in renewable energy, including

the Atlantis revitalisation scheme and green-technology cluster.

In support of the Atlantis SEZ, the IDP specifically commits to:

Identifying and the rapid release of City land to manufacturers/

suppliers who qualify in terms of predetermined criteria.

Establishing institutional structures to manage the process of

land identification and land release (between the Property
Management; Planning and Building Management Development;
Water and Sanitation; Transport, Roads and Stormwater;
Environmental Resource Management; Electricity, and Fire and
Rescue departments).

The IDP acknowledges and commits to the City’s own pivotal role
in creating demand for “green” services through its programmes,
projects and procurement systems, as well as through the use of
renewable energy in its own operations. In this regard, the City:

Supports energy business investment in Cape Town and the rest

of the province, including developing a policy to facilitate
residential and commercial-led small-scale embedded generation,
and options for large-scale commercial and city-owned electricity
generation projects.

Has set a target of generating 10% renewable energy by 2020.

Is pursuing a range of opportunities to reduce energy

consumption in Council operations (including street and traffic
light retrofits, a City-owned building retrofit programme, and work
to green the fleet).

Established a Section 79 Committee on Energy and Climate

Change.

Atlantis related infrastructure/ public facility/ services investment

The IDP commits to the following infrastructure, public facility or

services investments and support:

Upgrading of Dassenberg Drive.

Atlantis substation 5 transformer replacement (high risk) and

Atlantis industrial main substation upgrade (moderate risk).

Support for the PRASA/ Metrorail investigation into the utilisation

of the Atlantis goods rail line as a passenger line.

A major upgrade to the Atlantis cemetery.

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 Final planning or completion of a number of housing projects.

CoCT Economic The principal objective of the The EGS identifies the green economy generally as a key growth
Growth Strategy Economic Growth Strategy area, both in terms of “eco-tourism” (developing a tourism sector
(2013) (EGS) is to grow the economy that is environmentally responsible and sustainable and geared to
and create jobs. Building a utilising Cape Town’s many natural assets to attract visitors) and
globally competitive city through with regard to facilitating the development of green industries and
institutional and regulatory sectors, particularly those with significant job creation potential.
changes.

Providing the right basic service, The EGS recognises that in a context of rising electricity prices
transport and ICT infrastructure. (expected to be as much as 400% between 2006 and 2016) it is
imperative that the City facilitates a shift towards greater energy
efficiency in the Cape Town economy while also investigating
options for diversifying the city’s power sources to ensure the
energy security needed to fuel economic growth in the future.

Utilising work and skills Strategy 3 of the EGS specifically commits to investigate options
programmes to promote growth for energy diversification and promote energy efficiency. To
that is inclusive. support the strategy, the City has established a green economy
working group that will develop a strategic agenda and work
programme that will outline implementable projects on behalf of
the organisation.

Leveraging trade and sector

development functions to
maximum advantage.

Ensuring that growth is

environmentally sustainable in
the long-term.

Cape Town Spatial The Cape Town Spatial Support for the “green” sector (and the alternative energy sector
Development Development Framework specifically)
Framework (CTSDF). (CTSDF) was approved in terms
of the Land Use Planning
Ordinance (No. 15 of 1985) and
Municipal Systems Act (Act 32
of 2000) in 2012. The CTSDF is
a long-term (± 20-year) plan to
manage growth and change in
Cape Town. It inter alia:

Provides a long-term vision of The CTSDF specifically supports the investigation of alternative
the desired spatial form and sources of energy, and encourages the use of green technology.
structure of Cape Town.

Directs private investment by Specific support for Atlantis

identifying areas that are
suitable for urban development,
areas where the impacts of
development need to be
managed, and areas that are
not suited for urban
development.

Provides policy guidance to The CTSDF specifically:

direct decision making on the
nature, form, scale and location Identifies Atlantis as part of the “western growth corridor” and an
of urban development, land use economic priority action area.
change, infrastructure Supports employment generating development – also through
development, disaster mitigation
public investment and public interventions to generate market
and environmental resource opportunities for investment and job creation – in locations
protection. accessible to areas such as the Metro South-east and Atlantis (in
an attempt to rectify spatial imbalances in opportunity).

Supports the design and implementation of local area economic

development programmes (initiated by the City, in partnership
with NGOs and the private sector), and the implementation of
approved urban renewal programmes in Atlantis.

Commits to lobbying for a new passenger service on the Atlantis

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 railway line (with services between Du Noon and Cape Town as
the first phase).

Supports the development of an integrated system of airports and

appropriate surrounding land uses in the city, entailing:

- The relocation of general aviation sites in the greater Cape

Town metropolitan area to a more suitable location, possibly the
proposed airport south of Atlantis.

- Managing land uses around the site identified for the potential
new/ additional airport south of Atlantis on the assumption that it
may be needed in the long term as a general and/ or national and
international civil aviation airport.

Supports the phased implementation of the MyCity BRT service

(Phase 1 of which stretches as far as Atlantis and Mamre).

Blaauwberg District The Blaauwberg District Plan is Atlantis’s location

Plan (Spatial one of eight plans prepared for
Development Plan specific districts of the city and
and Environmental is informed by the city-wide
Management CTSDF. The District Plan aims,
Framework). inter alia, to:

Perform as part of a package of he settlement of Atlantis is dislocated from the rest of the
decision support tools to assist Blaauwberg district (and the rest of the city), which has resulted in
in land use and environmental higher unemployment than generally in Cape Town and a lack of
decision making processes. access to social services and facilities.

Clearly giving direction to the Given inadequate work and other opportunity locally, the location
form and direction of areas for of Atlantis places a long and costly commuting burden on lower
new urban development in the income communities. The implementation of the MyCity BRT
district in a manner that is in line service will assist in addressing this issue.
with the principles and policies
of higher level planning The Atlantis Growth Corridor
frameworks. The Blaauwberg district is considered a significant growth corridor
of the city, with an important role to play in addressing housing
and economic development needs, and should therefore be
prioritised for infrastructure provision.

The Atlantis Corridor – comprising Koeberg Road and the Atlantis

rail line in the south and then extending north of the Diep River as
the N7, M12, Atlantis rail line and Parklands Main Road extension
– is the major “structuring element” in the district.

There is significant vacant land available for development along

the corridor (and within the urban edge) suitable for a range of
housing opportunities, commercial, and industrial development.

Development should respond to the significant north-south

transport infrastructure within the corridor, including the Atlantis
rail line, the proposed M12, proposed Parklands main road
extension, and the N7. Intensification of land uses should occur
particularly where these routes intersect with east-west linkages
and at transport interchanges.

Creating a system of continuous east-west linkages that connect

coastal areas to the Atlantis corridor in the east of the district is
critical to lessen dependence on oversubscribed north-south
routes and improve movement within the district. In the long term,
this would include the construction of the R300, which would
connect the metropolitan node of Bellville, and the south-east of
the city, with the district.

The Blaauwberg Conservation Area (part of the Cape West Coast

Biosphere Reserve) is an important biodiversity conservation area
and metropolitan park. As part of the broader conservation area,
the Atlantis dune fields and associated biodiversity areas
(including north south biodiversity corridors) should be protected.

The Atlantis town centre is considered to be underdeveloped.

Intensification of commercial development with possible

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 opportunities for mixed use development, particularly in relation to
BRT infrastructure, will assist in improving the urban environment.

Public open space and sports facilities in Atlantis are generally

poorly maintained, degraded, and oversubscribed. There is a
need and rationalise the public open space system selectively
upgrade open spaces and facilities.

Significant undeveloped public land holdings occur in Atlantis

residential, commercial, and industrial areas. Release of this land
is required to facilitate economic development and create a more
vibrant urban environment that will attract further development
and create job opportunities.

The Atlantis buffer strip (between the residential and industrial

areas) and hospital site has also been identified for publicly
assisted housing. Ideally, the buffer strip should also
accommodate public facilities, and service industrial uses (along
the southern edge).

Innovative ways of attracting investment to the outer lying towns

in the district, particularly Atlantis, should be explored. This could
include the rapid release of publicly-owned land for development.

CoCT Integrated The Integrated Transport Plan Atlantis is recognised as one of the most significant industrial
Transport Plan 2013- (ITP) seeks to establish an freight centres in the metropolitan area and is an important freight
2018 (2013). efficient and viable relationship rail destination.
between land use, supporting
infrastructure and transport for Atlantis is currently the City’s 7th most significant bus travel
the sustainable development of origination area in terms AM peak passengers.
the City region. It addresses The City is pursuing the increased responsibilities for the rail
transport infrastructure needs,
mode of public transport as provided for in the National Land
systems, and institutional Transport Act (NLTA). It includes the implications and
arrangements. development of a business case for the management of the
passenger rail operations subsidy, as well as corridor-based
SLA’s for the network.

The prioritisation of the rail corridors (current and new) is

addressed in the rail sector plan of the ITP. It includes the new
Blue Downs line, the incremental development of passenger rail
services to the Fisantekraal and Atlantis, and the modernisation
project of the Metro South East line.

Draft Atlantis The Atlantis Revitalisation It is acknowledged that Atlantis is a significant industrial node in
Revitalization Framework articulates a the city and regional spatial economy; its long-term economic
Framework (2012). constructive and meaningful decline reduces the impact that catalytic developments such as
working relationship where the Saldanha SEZ may have, reducing the region’s economic
responsibilities between the key competitiveness and long-term growth trajectory.
stakeholders – government,
business, and civil society – The revitalisation of Atlantis requires a partnership approach that
active in Atlantis are agreed and draws all parties from government, business, industry, labour, and
shared, so as to enable civil society together to engage actively in a multi-stakeholder
successful implementation of participation process as well addressing spatial dynamics in the
strategies and actions for the area.
revitalisation, growth and
An intergovernmental task team representing line function
development of Atlantis. departments from the CoCT and the WCG who have existing and
planned initiatives for the Atlantis area have been established to
ensure coordinated delivery.

Active participation of all stakeholders is critical to the successful

planning and implementation of inclusive strategies and action
plans for Atlantis. It is important that consultative structures and
processes are well managed with clear actions, time frames, and
measurable deliverables so that that there is concise feedback
into planning and implementation processes.

The current crisis in Atlantis necessitates a phased approach that

firstly stabilizes the situation, moving to implement a turn-around
strategy that places the area on a sustainable growth path.
Strategies and action plans should therefore focus on short,
medium and long term interventions, based on an incremental

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 and systematic approach.

Koeberg Emergency Aimed at responsible All urban development within the KNPS Precautionary Action
*Plan. development and risk/ disaster Zone (PAZ) (area within a 5 km radius of the Koeberg nuclear
management related to the reactors (X = -52727.4000, Y = -3727966.6500)) and Urgent
Koeberg Nuclear Power Station. Protective action planning Zone (UPZ) (area within a 5 km – 16km
radius of the Koeberg nuclear reactors (X = -52727.4000, Y = -
3727966.6500))32 must conform to the following restrictions
necessary to ensure the viability of the Koeberg Nuclear
Emergency Plan:

No new development is permissible within the PAZ (as defined

above) other than development that is directly related to the siting,
construction, operation and decommissioning of the Koeberg
Nuclear Power Station or that is as a result of the exercising of
existing zoning rights. On this basis, no application for enhanced
development rights (rezoning, subdivision, departure from land
use, or Council’s consent, including application for a guesthouse
or second dwelling) that will increase the transient or permanent
resident population, and that is not directly related to the siting,
construction, operation and decommissioning of the Koeberg
Nuclear Power Station, can be approved. Furthermore, the
projected population within the PAZ must be evacuated within four
hours from the time that an evacuation order is given, as
demonstrated by means of a traffic evacuation model approved by
Council and acceptable to the NNR.

New development within the UPZ (as defined above) may only be
approved subject to demonstration that the proposed
development will not compromise the adequacy of disaster
management infrastructure required to ensure the effective
implementation of the Koeberg Nuclear Emergency Plan (version
approved by the National Nuclear Regulator (NNR)). Specifically,
within the UPZ area, an evacuation time of 16 hours of the
projected population, within any 67,5° sector to designated mass
care centres (as appropriate), must be demonstrated by means of
a traffic (evacuation) model approved by Council and acceptable
to the NNR. The evacuation time must be measured from the time
that the evacuation order is given. These development controls
will be superseded by National ‘Regulations on Development in
the Formal Emergency Planning Zone of the KNPS to ensure
effective implementation of the Koeberg Nuclear Emergency Plan’
when approved.

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Annexure 3: Legal Opinion on entity

A. Introduction
1. This opinion is compiled on a basis of urgency and should be read in conjunction with all other
documents applicable to this matter.
2. The facts of the matter are set out in the opinion provided by Webber Wentzel Attorneys to
Western Cape Provincial Government on the establishment of the Saldahna Bbay IDZ.

B. Applicable legislation:

Special Economic Zones Act, 2014 (Act No. 16 of 2014) (SEZA)

 Sec 23(1): National government, a provincial government, a municipality, a public entity, a
municipal entity or a public-private partnership, acting alone or jointly, may apply to the
Minister in the form and manner prescribed for a specified area to be designated as a Special
Economic Zone.
 Sec 25(1): Upon designation of an area as a Special Economic Zone, the licensee must—
(a) establish an entity to manage the Special Economic Zone; and
(b) provide the entity with the resources and means necessary to manage and operate
the Special Economic Zone, including the transfer of ownership or control of the land
comprising the area designated as a Special Economic Zone.
 Sec 25(2): In the case of a national or provincial government or a public entity licensee, the entity
must be established as a national government business enterprise or a provincial
government business enterprise contemplated in section 1 of the Public Finance
Management Act.
 Sec 25(6)(a): The Special Economic Zone Board must manage that Special Economic Zone entity
in accordance with the Public Finance Management Act, if the licensee is national or
provincial government or a public entity ...

Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA)

 Sec 1:

“ownership control”, in relation to an entity, means the ability to exercise any of the following powers
to govern the financial and operating policies of the entity in order to obtain benefits from its activities:
(a) To appoint or remove all, or the majority of, the members of that entity’s board of
directors or equivalent governing body;
(b) to appoint or remove that entity’s chief executive officer;
(c) to cast all, or the majority of, the votes at meetings of that board of directors or
equivalent governing body; or
(d) to control all, or the majority of, the voting rights at a general meeting of that entity;

“Provincial government business enterprise” means an entity which—

148
 (a) is a juristic person under the ownership control of a provincial executive;
(b) has been assigned financial and operational authority to carry on a business activity;
(c) as its principal business, provides goods or services in accordance with ordinary
business principles; and
(d) is financed fully or substantially from sources other than—
(i) a Provincial Revenue Fund; or
(ii) by way of a tax, levy or other statutory money;

“provincial public entity” means—

(a) a provincial government business enterprise; or

(b) a board, commission, company, corporation, fund or other entity (other than a
provincial government business enterprise) which is—
(i) established in terms of legislation or a provincial constitution;
(ii) fully or substantially funded either from a Provincial Revenue Fund or by way
of a tax, levy or other money imposed in terms of legislation; and
(iii) accountable to a provincial legislature;

 Sec 38(1)(m): The accounting officer for a department, trading entity or constitutional institution
must promptly consult and seek the prior written consent of the National Treasury on any
new entity which the department or constitutional institution intends to establish or in the
establishment of which it took the initiative; and ...

 Sec 51(1)(g): An accounting authority for a public entity must promptly inform the National
Treasury on any new entity which that public entity intends to establish or in the
establishment of which it takes the initiative, and allow the National Treasury a reasonable
time to submit its decision prior to formal establishment; and ...

 Sec 54(2): Before a public entity concludes any of the following transactions, the accounting
authority for the public entity must promptly and in writing inform the relevant treasury of the
transaction and submit relevant particulars of the transaction to its executive authority for
approval of the transaction:
(a) establishment or participation in the establishment of a company;
...
(e) commencement or cessation of a significant business activity; ...

Companies Act, 2008 (Act No. 71 of 2008)

 Sec 8. Categories of companies.—(1) Two types of companies may be formed and

incorporated under this Act, namely profit companies and non-profit companies.
(2) A profit company is—
(a) a state-owned company; or
(b) a private company if—
(i) it is not a state-owned company; and
(ii) its Memorandum of Incorporation—

149
 (aa) prohibits it from offering any of its securities to the public; and
(bb) restricts the transferability of its securities;
(c) a personal liability company if—
(i) it meets the criteria for a private company; and
(ii) its Memorandum of Incorporation states that it is a personal liability
company; or
(d) a public company, in any other case.
...
 Sec 9: Modified application with respect to state-owned companies.—(1) Subject to section
5 (4) and (5), any provision of this Act that applies to a public company applies also to a state-
owned company, except to the extent that the Minister has granted an exemption in
terms of subsection (3).
 (2) The member of the Cabinet responsible for—
(a) state-owned companies may request the Minister to grant a total, partial
or conditional exemption from one or more provisions of this Act,
applicable to all state-owned companies, any class of state-owned
companies, or to one or more particular state-owned company; or
(b) local government matters may request the Minister to grant a total, partial
or conditional exemption from one or more provisions of this Act,
applicable to all state-owned companies owned by a municipality, any class
of such enterprises, or to one or more particular such enterprises,

 Sec 10. Modified application with respect to non-profit companies.—(1) Every provision
of this Act applies to a non-profit company, subject to the provisions, limitations,
alterations or extensions set out in this section, and in Schedule 1.
(2) The following provisions of this Act, and any regulations made in respect of any such
provisions, do not apply to a non-profit company—
....
(3) Sections 58 to 65, read with the changes required by the context—
(a) apply to a non-profit company only if the company has voting members; and
(b) when applied to a non-profit company, are subject to the provisions of item 4
of Schedule 1.

 Schedule 1 to the Act

Objects and policies.—(1) The Memorandum of Incorporation of a non-profit company must—

(a) set out at least one object of the company, and each such object must be either—
(i) a public benefit object; or
(ii) an object relating to one or more cultural or social activities, or communal or
group interests; and
(b) be consistent with the principles set out in sub-items (2) to (9).
(2) A non-profit company—
(a) must apply all of its assets and income, however derived, to advance its stated objects,
as set out in its Memorandum of Incorporation; and
...
(4) Despite any provision in any law or agreement to the contrary, upon the winding-up or
dissolution of a non-profit company—

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 (a) no past or present member or director of that company, or person appointing a
director of that company, is entitled to any part of the net value of the company after
its obligations and liabilities have been satisfied; and
(b) the entire net value of the company must be distributed to one or more non-profit
companies, registered external non-profit companies carrying on activities within the
Republic, voluntary associations or non-profit trusts—
(i) having objects similar to its main object; and
(ii) as determined—
(aa) in terms of the company’s Memorandum of Incorporation;
(bb) by its members, if any, or its directors, at or immediately before the
time of its dissolution; or
(cc) by the court, if the Memorandum of Incorporation, or the members or
directors fail to make such a determination...

2. Fundamental transactions.—(1) A non-profit company may not—

(a) amalgamate or merge with, or convert to, a profit company26; or
(b) dispose of any part of its assets, undertaking or business to a profit company, other
than for fair value, except to the extent that such a disposition of an asset occurs in
the ordinary course of the activities of the non-profit company.

C. Discussion:

1. In terms of sections 25 of SEZA, which as far as could be ascertained has not yet come into
operation, a licensee must upon designation of an area as a Special Economic Zone (SEZ)
establish an entity to manage it. In the case of a provincial government or a provincial public
entity licensee, the entity must be established as a provincial government business enterprise
contemplated in section 1 of the PFMA.

2. A provincial government business enterprise is defined as an entity which -

 is a juristic person under the ownership control of a provincial executive;
 has been assigned financial and operational authority to carry on a business activity;
 as its principal business, provides goods or services in accordance with ordinary business
principles; and
 is financed fully or substantially from sources other than a Provincial Revenue Fund or by
way of a tax, levy or other statutory money.

Such a government business enterprise can either be established by way of provincial

legislation, which is not desirable in the present matter, or by establishing a company, which
will provide the enterprise with the required juristic personality. (A provincial department or
provincial government component cannot be established, as these institutions are not juristic
persons.)

26 Which includes a SOC – see section 8(2)(a)

151
 It is assumed that the entity to be created will meet the requirement that it be substantially
funded from sources other than public money, and that the relevant provincial department or
Wesgro will exercise ownership control by appointing the majority of members of the board
or governing body, or being able to cast the majority of votes at meetings of that board or
governing body.

3. Given these requirements, as long as either the provincial government in terms of section
38(1)(m) of the PFMA or Wesgro, a Schedule 3C provincial public entity 27 in terms of section
51(1)(m) apply to the National Treasury (or if Wesgro establishes the entity, also the
provincial treasury’s approval in terms of section 54(2)(a) of the PFMA) for approval in
respect of establishing the entity BEFORE actually establishing it, no obstacle exists in
principle preventing the establishment of the required entity.

4. Indications have been given that the establishment of a non profit company (NPC) is the
preferred option. Again, as long as the requirements referred to above are met, there is no
reason not to follow this route. The other option, establishing a State-owned company (SOC),
is also possible within this scenario.
5. It should be cautioned that the terms “NPC”, “SOC” and “government business enterprise” should
not be confused. NPC’s and SOC’s are two types of companies, whereas “government
business enterprise” is a category of entities within the public administration for purposes of
the PFMA only, dealing with two separate albeit interrelated issues. NPC’s and SOC’s can be
government business enterprises, but are are not necessarily that – and a statutory entity can
be something another than a company (e.g. water boards) and still qualify as a government
business enterprise. The view that an NPC can be established and then “amalgamated into a
provincial government business entity” is, with respect, imprecise. If Wesgro, having met the
requirements of sections 51(1)(m) and 54(2)(a) of the PFMA, establishes an NPC (or SOC,
for that matter), and it meets the requirements set out in the definition of “provincial
government business enterprise”, it will automatically by operation of law be regarded as a
provincial government business enterprise, to be included in Schedule 3D to the PFMA 28, and
this qualifying for purposes of section 25 of SEZA.
6. If it is correct to assume that there is no time advantage in the registration and establishment of a
an NPC over an SOC, as seems to be suggested, it would be prudent to consider the
advantages and disadvantages of both before finally deciding on the preferred option, since
both will require prior notification of and approval by the National Treasury and the Western
Cape provincial treasury, and the MEC for Finance, before so being registered and
established. It should also be borne in mind that an NPC cannot be converted into or
amalgamated or merged with an SOC. Given that both could from the date of registration
qualify to be provincial government business enterprises, regardless of which option is
chosen - by operation of law and not because of application or approval to be so classified –

27 See Public Institutions Listed in PFMA Schedule 1, 2, 3A, 3B, 3C and 3D as at 23 May 2014,
published by the National Treasury
28 In terms of section 47(1)(a) of the PFMA

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 the long-term needs of the entity should be indicative of the choice to be made. If the NPC
option is chosen, it should be understood that it can never in the long run be turned into
another type of entity, and that its operations will always have to be conducted in accordance
with the Companies Act’s and corporate governance requirements pertaining to an NPC.
7. Although there are no immediate grounds to presume this, but the requirement for an NPC –
namely that it should have a public benefit object – should be perhaps be considered. Can
the establishment of a company which will be a government business enterprise (“as its
principal business, provides goods or services in accordance with ordinary business
principles”) have a public benefit object? Are NPC’s not specifically intended to operate
away from “business principles”, and should the “public benefit object” not be interpreted in
that way? It might be prudent to verify this matter with the Companies and Intellectual
Property Commission (CIPRO).
8. It is difficult to understand the reasoning why a licensee must in terms of section 25(1)(a) of SEZA
establish an entity to manage the SEZ and provide it with the resources and means
necessary to manage and operate the SEZ, when one of the requirements to qualify as a
government business enterprise in terms of section 1 of the PFMA is to be financed fully or
substantially from sources other than the relevant Provincial Revenue Fund or by way of a
tax, levy or other statutory money – these statements seem to be contradictory, and could
ostensibly create an obstacle. Why should a licensee be a business enterprise, when it is
mandated only to manage the SEZ (and in a conflict of legislative drafting, at the same time
also the mandate of the SEZ operator under section 32 of SEZA), to develop and implement
a strategic plan within the framework of dti’s Special Economic Zones strategy, to issue an
SEZ operator permit and to approve applications for locating businesses in the SEZ –
typically the functions of a non-business statutory regulator?

D. Conclusion

From a compliance legal point of view, there is no preference between an NPC and an SOC, as both
will if they meet the same requirements for registration, both in terms of the PFMA as well as the
Companies Act, in order to qualify to be a provincial government business enterprise for purposes of
sections 23 and 25 of SEZA.

WP KRULL

153
Annexure 4: Memo on operational and
governance framework

16 September 2014

Mr Alfred Tau

Department of Trade and Industry

77 Meintjies Street

Pretoria

0002

Per email: AlfredT@thedti.gov.za

Dear Mr Tau

RE: MEMORANDUM ON THE SPECIFIC OPERATIONAL AND GOVERNANCE FRAMEWORK

RELATED TO ATLANTIS SPECIAL ECONOMIC ZONE

1. Introduction

1.1 The Department of Trade and Industry (“ dti”) has sought further information regarding the
operational and governance framework of the proposed Atlantis Special Economic Zone
(“ASEZ”) and the different options available in terms of a establishing a Special Economic
Zones (“SEZ”) entity.

1.2 The Special Economic Zones Act 16 of 2014 (“SEZ Act”) makes provision for the following
overall governance framework regarding Special Economic Zones (“SEZ”)

 SEZ Advisory Board;

 Applicant who is awarded SEZ license;

 SEZ entity with SEZ Board; and

 SEZ Operator.

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1.3 The SEZ Advisory board is established in terms of section 7 of the SEZ Act and will consist of
15 member board appointed by the Minister of Trade and Industry. The board will be made up
of 7 members from different government departments and state owned entities, 3 members
representing organised business, labour and civil society and 5 independent members
appointed for their knowledge, experience and expertise.

1.4 An SEZ entity must be established by the holder of an SEZ license to manage a SEZ. The
licensee will appoint an SEZ board of directors for the efficient governance and management
of the business affairs of that SEZ. The constitution of the SEZ board will be discussed below.

1.5 The SEZ entity must appoint an operator to develop, operate and manage the SEZ. The SEZ
operator will be a company according to section 33 of the SEZ Act have its own distinct board
of directors. Only in the case of a SEZ entity established by a Public Private Partnership
(“PPP”) licensee, can that SEZ entity be allowed to also develop, operate and manage the
SEZ.

1.6 The above governance framework is summarised in a flow chart in Annexure A.

1.7 When assessing the operational and governance framework of a proposed SEZ entity, in
addition to assessing the type of entity that is established, all applicable legislation needs to
be considered. The primary pieces of legislation governing this will be the -

 Special Economic Zones Act 16 of 2014;

 Public Finance Management Act 1 of 1999 (“PFMA”);

 Municipal Finance Management Act 56 of 2003 (“MFMA”);

 Municipal Systems Act 32 of 2000 (“MSA”);

 Municipal Structures Act 117 of 1998; and

 Companies Act 71 of 2008 (“Companies Act”).

1.8 In terms of section 23 of the SEZ Act, the type of entity applying for the designation of a SEZ
will determine the type of entity SEZ to be established. The SEZ entity that may be
established and the enabling legislation are summarised in the table below -

Table 30 Type of SEZ entity

Applicant SEZ Entity Legislation establishing entity

National Government National Government Business Enterprise PFMA

Companies Act

Provincial Government Provincial Government Business Enterprise PFMA

Companies Act

Municipality Municipal Entity MSA

Companies Act

Public Entity National or Provincial Government Business PFMA

Enterprise Companies Act

155
 Municipal Entity Municipal Entity MSA
Companies Act

Public Private Partnership Company PFMA

Companies Act

1.9 When applying for the designation of an SEZ, certain governance aspects need to be included
in the feasibility study. According to regulation 9(1)(e)(ii) of the draft SEZ Regulations (“the
Regulations”), provided to Deloitte by the Department of Trade and Industry, the business
plan for the SEZ needs to include information and analysis on the following:

“Ownership structure of the Special Economic Zone including a shareholders’

agreement indicating nature and extent of shareholding, requirements for transfer of
shares and requirements for the distribution of assets upon liquidation or deregistration”

This requirement could, to a large extent, determine the type of entity to be established by a
future licensee.

2. National or Provincial Shareholders

2.1 Entities established in terms of the PFMA
2.1.1 The PFMA is applicable to public entities which include national government business
enterprises and provincial government business enterprises.
2.1.2 A public entity means “a national or provincial public entity”. Public entities can be grouped
into two broader categories, which are national or provincial government business enterprises
and national or provincial public entities. National and provincial public entities are established
in terms of national or provincial legislation, funded by national or provincial revenue funds,
taxes or levies. These are accountable to Parliament and the provincial legislature
respectively.
2.1.3 The definition of a National Government Business Enterprise is:

“an entity which—

(a) is a juristic person under the ownership control of the national executive;

(b) has been assigned financial and operational authority to carry on a business activity;

(c) as its principal business, provides goods or services in accordance with ordinary

business principles; and

(d) is financed fully or substantially from sources other than—

(i) the National Revenue Fund; or

(ii) by way of a tax, levy or other statutory money”

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2.1.4 A Provincial Government Business Enterprise is defined as follows:

“an entity which—

(a) is a juristic person under the ownership control of a provincial executive;

(b) has been assigned financial and operational authority to carry on a business activity;

(c) as its principal business, provides goods or services in accordance with ordinary
business principles; and

(d) is financed fully or substantially from sources other than—

(i) a Provincial Revenue Fund; or

(ii) by way of a tax, levy or other statutory money.”

2.1.5 A PPP is defined in Treasury Regulations for departments, trading entities, constitutional
institutions and public entities dated March 2005 (“PFMA regulations”) issued in terms of the
PFMA as:

“a commercial transaction between an institution and a private party in terms of which the
private party –

(a) performs an institutional function on behalf of the institution; and / or

(b) acquires the use of state property for its own commercial purposes; and

(c) assumes substantial financial, technical and operational risks in connection with the
performance of the institutional function and/or use of state property; and

(d) receives a benefit for performing the institutional function or from utilising the state
property, either by way of:

(i) consideration to be paid by the institution which derives from a revenue

fund or,where the institution is a national government business enterprise
or a provincial government business enterprise, from the revenues of such
institution; or

(ii) charges or fees to be collected by the private party from users or

customers of a service provided to them; or

(iii) a combination of such consideration and such charges or fees;

2.1.6 An important definition in determining what type of entity is under consideration is the
definition of ownership control. The PFMA defines ownership control in relation to an entity as

157
 “the ability to exercise any of the following powers to govern the financial and operating
policies of the entity in order to obtain benefits from its activities:

(a) to appoint or remove all, or the majority of, the members of that entity’s board of

directors or equivalent governing body;

(b) to appoint or remove that entity’s chief executive officer;

(c) to cast all, or the majority of, the votes at meetings of that board of directors or

equivalent governing body; or

(d) to control all, or the majority of, the voting rights at a general meeting of that entity;

2.1.7 While the SEZ Act makes provision for SEZ’s, this must be distinguished from the requirement
for a national or provincial public entity to be “established in terms of legislation”. A national or
provincial government business entity can be established to perform a range of different
functions and activities, a national or provincial public entity will only be established to perform
the function as set out in the legislation in which it is established in terms of.


2.1.8 Schedule 3 of the PFMA provides a list of entities that are considered “Other Public Entities”.
These are divided into four distinct categories which are listed under the following headings:
i. Part A: National Public Entities
ii. Part B: National Government Business Enterprises
iii. Part C: Provincial Public Entities
iv. Part D: Provincial Government Business Enterprises
2.1.9 The differentiating aspects of national and provincial public entities and national and provincial
business entities are:
i. The source of its funding:

 A schedule 3A and 3C entity, as mentioned in the definitions provided in paragraph

2.1.2 above, will receive almost all its funding from one or more of the sources of
income.

 Schedule 3B and 3D entities, as mentioned in the definitions provided in paragraphs

2.1.3 and 2.1.4 above, can be funded fully or substantially from sources other than a
national or provincial revenue fund or by way of a tax, levy or other statutory money.

ii. Restrictions

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  Section 66 (4) prohibits the borrowing of money, issuing of a guarantee, indemnity or
security, or entering into any other transaction that binds or may bind that entity to
any future financial commitments by provincial public entities not listed as a
provincial government business enterprise in schedule 3(d). The Minister may, in
writing, permit a public entity mentioned in subsection (3)(c) or (d) to borrow money
for bridging purposes up to a prescribed limit, including a temporary bank overdraft,
subject to such conditions as the Minister may impose.

 Section 66(3) (d) only places a prohibition on provincial government business

enterprise borrowing money, issuing a guarantee, indemnity or security, or entering
into any other transaction that binds or may bind that entity to any future financial
commitments. This needs to be authorised by notice in the Government Gazette by
the Minister: The MEC for finance in the province, acting with the concurrence of the
Minister, subject to conditions that the Minister may impose.

iii. Miscellaneous

 Schedule 3B and 3D entities need to submit a shareholders compact to their

shareholders setting out performance measures and indicators in terms of regulation
29.2 of the PFMA regulations

 Schedule 3A and 3C entities need to submit an annual strategic plan to the relevant
executive authority

The above considerations could influence both the capabilities and the powers of the different
entities.

2.1.10 A PPP is a contract between a public sector institution and a private party, in which the private
party assumes substantial financial, technical and operational risk in the design, financing,
building and operation of a project. Should a PPP wish to be utilised as the vehicle to for the
implementation of an SEZ, the National Treasury PPP Manual states that all projects need to
be registered with the relevant Treasury. After such registration an inception feasibility study
needs to be conducted, where after a procurement process needs to take place. This includes
preparation bid documents which includes a draft PPP agreement. There will still be a further
three Treasury Approvals before a PPP will be at an operational stage. Should a PPP be
granted an SEZ license, it must establish an SEZ entity in the form of a company.
2.1.11 In a conventional PPP there will usually be a representative from the public sector institution
and one from the private party. These two representatives will report to the accounting officer
of the public sector institution involved. The accounting officer will then report directly to
Parliament or the relevant Provincial Legislature. A flow chart, derived from National Treasury
PPP Manual Module 1: South African Regulations for PPPs, describing the parties involved in
a typical PPP structure has been attached here to as Annexure B.

159
2.1.12 In our experience dealing with PPP’s we have found that the time needed to progress from
registration of the project to the feasibility study stage is seldom achieved in a period less
than one year, depending on the complexity of the project. For this reason the viability of a
PPP as an implementation vehicle for the ASEZ has to be questioned.
2.2 Leasing Models and Other Business Activities under the PFMA

2.2.1 According to regulation 32 of the PFMA regulations, a lease is classified as “a finance lease if
it transfers substantially all the risks and rewards incidental to ownership of an asset. Title
may or may not eventually be transferred.” An operating lease is defined as “a lease other
than a finance lease”.
2.2.2 Regulation 32.2.2 of the PFMA regulations states that the accounting authority of a public
entity may, for the purposes of conducting the public entity’s business, enter into lease
transactions without any limitations provided that such transactions are limited to operating
lease transactions.
2.2.3 In the case of a national public entity listed in Schedule 3A, any finance lease needs to be
entered into by the Minister of Finance (“the Minister”)
2.2.4 A national and provincial government business enterprise listed in schedule 3B and 3D may
only enter into a finance lease if authorised by the Minister by notice in the national
Government Gazette. In the case of a schedule 3B enterprise the lease needs to be entered
into by the accounting authority of the entity, while the Member of the Executive Committee
responsible for Finance in the province, acting with the concurrence of the Minister, may enter
into finance leases in the case of a 3D entity. These leases will be subject to any conditions
that the Minister may impose.
2.2.5 The PFMA (section 66(4) read with regulation 32.2 of the PFMA Regulations) make no
mention of who may enter into a lease agreement on behalf of a schedule 3C entity or what
authority is needed.
2.2.6 The above authorisations and functionaries are excluded in the case of a PPP SEZ licensee.
2.2.7 When a public entity acquires or disposes of a significant asset or with the commencement or
cessation of a significant business activity, section 54(2) of the PFMA requires the prior
written approval from the relevant treasury and submission of relevant particulars of the
transaction to its executive authority for approval. The approval mentioned above may
however be exempt by the relevant executive authority.

2.2.8 In a practice note issued by the National Treasury on applications for approval, under section
54 of the PFMA, when determining the significance of the commencement or cessation of a
significant business activity, as stated in section 54(2)(e), a business activity that falls within a
public entity’s core business does not fall under the ambit of the stated definition. An activity
that falls outside the public entities core business should be regarded as significant if its rand
value falls within the parameters outlined in the table below:

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 Table 31 Significance to core business

Elements: % range to be applied against Rand value

Total Assets 1% - 2%

Total Revenue 0,5% - 1%

Profit after tax 2% - 5%

2.2.9 There is no limitation placed on public entities by the PFMA as to the types of business activity
that may be carried out by such a public entity. Any limitations placed on a public entity with
regard to business activity allowed will be listed in the entities constitutional documents.
2.2.10 Provincial government business enterprises and provincial public entities are summarised,
along municipal entities, in table 3 in Annexure C.

3. Entities established and governed by the MSA and the MFMA

3.1. Section 3 of the PFMA states that in the event of any inconsistency between the PFMA and other
legislation, the PFMA will prevail. Should the MSA or the MFMA contain any provision that is
inconsistent with the PFMA, the provision contained in the PFMA will apply.
3.2. The MSA provides for the following kinds of municipal entities:

 a private company;

 a service utility; and

 a multi-jurisdictional service utility established by two or more municipalities.

3.3. A municipality may also establish a PPP in terms of section 120 of the MFMA. Should it wish to
enter into a PPP, the conditions contained in section 120 need to be complied with.
3.4. A municipal entity can be established as private company by one or more municipalities or be a
private company in which one or more municipalities have acquired or hold an interest. If the
two or more municipalities collectively, have effective control of the private company then it
will be a municipal entity. Should a national or provincial organ of state have ownership
control (as defined in the PFMA in section 1) in the company, then it will be considered a
public entity to which the PFMA applies.
3.5. A municipal entity taking the form of a private company must restrict its activities to the purpose
for which it is used by its parent municipality. It also has no competence to perform any
activity which falls outside the functions and powers of its parent municipality. These functions
and powers will be those provided for section 8 of the MSA.

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3.6. Should a municipality wish to establish a municipal entity in the form of a service utility, it may
pass a by-law establishing a service utility. According to section 86I of the MSA, a service
utility is a juristic person and a municipal entity under the sole control of the municipality which
established it.
3.7. In terms of section 87 of the MSA, two or more municipalities can, by written agreement, establish
a multi-jurisdictional service utility. This can be in their municipal areas or in any designated
parts of their municipal areas.
3.8. The MFMA prohibits municipal entities from performing certain activities. These prohibited
activities are stated in section 164 and include, inter alia, the conducting of any commercial
activities outside the borders of the Republic or activities that would not form part of the
powers and functions assigned to that municipal entity in terms of the Constitution or national
or provincial legislation.
3.9. Section 1 of the MFMA provides the following definition of financing agreement:

“includes any loan agreement, lease, instalment purchase contract or hire purchase
arrangement under which a municipality undertakes to repay a long-term debt over a period
of time.”

3.10. Part of the definition of debt is “a monetary liability or obligation created by a financing
agreement, note, debenture, bond or overdraft, or by the issuance of municipal debt
instrument”.
3.11. The above definition would include any of the proposed leasing structures intended to be
utilised by the Atlantis SEZ. Section 45 and 46 of the MFMA allow a municipality to incur short
term and long term debt subject to certain conditions and approvals. The MFMA therefore will
not prohibit a municipal entity from entering into a long term or short term lease, however the
constitutional documents will need to allow, or at least not prohibit, the SEZ entity from
entering into the lease.
3.12. The operational and governance considerations relating to municipal entities mentioned above
are summarised in Table 3 of Annexure C, along with provincial public entities.

4. International Best Practice compared to the South African position

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4.1. International best practice regarding the governance of SEZ’s is to have private participation on
the board of the SEZ entity managing the SEZ. It has been stated29 that regardless of the
particular institutional structure adopted, the most successful programs in developing and
transition countries are those that maximize private sector participation, not just in development
and management, but also in the formulation of zone policies and governance.
4.2. The SEZ Act states, in section 25(5) that a licensee must appoint a SEZ Board which must be
responsible for the efficient governance and management of the business affairs of that SEZ.

Furthermore, in section 25(7) that the Minister must make regulations regarding governance
principles that must be complied with including, inter alia, the constitution of SEZ boards.

4.3. Regulation 15 of the draft SEZ regulations provided to Deloitte, provides that following with regard
founding documents that need to be provided in the feasibility study:

“The founding documents of the Special Economic Zone Board must provide for the
following matters:

a. Board role and responsibilities;

b. Board membership and term
c. Chairman of Board;
d. Board committees;
e. Board meetings;
f. Board performance;
g. Conflict of interest; and
h. Review of founding documents.”

4.4. The composition of the board of directors is not specified in the draft SEZ regulations, nor in the
SEZ Act.
4.5. In section 93E(1) of the MSA states that the board of directors of a municipal entity must have the
required range of expertise to effectively manage the activities of the entity, it must be
composed of at least one third non-executive directors and must have a non-executive
chairperson. No specifics are given to the exact composition of the board.

29 Pre-Feasibility Study for the Establishment of a Model Industrial Estates Program in Alexandria, Volume 1: Policy, Legal,
Regulatory and Institutional Framewoks, dated June 2007.

163
4.6. As the composition of the board of directors is not specified in the SEZ Act, the draft SEZ
regulations, the PFMA, the MFA or the MSA, the Companies Act will then regulate the number
of directors on the board of directors of the SEZ entity. This will allow for private representation
on the board, in line with international best practice.

164
Appendix A

Flow chart of SEZ governance framework

SEZ Advisory Board

SEZ Advisory Board  The SEZ Advisory Board is constituted in terms of

section 7 of the SEZ Act. The main function of the
Advisory Board is to advise on policy, monitor
The Advisory board is established implementation, consider applications for
in terms of the SEZ Act and designation and operator permits and liaise with
the SEZ Board.
reports to the Minister for
Trade and Industry  Advisory Board does not take part the operation
and governance of the SEZ. Can only advise the
Minister to end license

SEZ Licensee SEZ Licensee

 The applicant for designation may be any one of
the entities mentioned in section 23 of the SEZ
The applicant for the designation of Act.
a SEZ is granted a license to  Establishes SEZ Entity to manage and operate the
manage and develop the SEZ SEZ
 Appoints SEZ Board

SEZ Entity
SEZ Entity
 Established by SEZ Licensee depending on the
type of licensee
The SEZ entity is established by  Manages and operates the SEZ. This will include
the SEZ Licensee. The Board concluding lease agreements
of Directors of this entity is  Appoints SEZ Operator (unless SEZ entity is
appointed by the SEZ established by PPP licensee, the SEZ entity may
Licensee. also operate SEZ)

SEZ Operator
SEZ Operator
 Appointed by SEZ Board after tender process
 SEZ Operator is tasked to develop, operate and
An SEZ Operator is appointed by manage the SEZ
the SEZ Board

165
Appendix B

Below is a flow chart, derived from National Treasury PPP Manual Module 1: South African
Regulations for PPPs, describing the parties involved in a typical PPP structure:

166
 Appendix C

Table 32 Summary of Municipal, Provincial Government Business Enterprise and Provincial Public
Entity

Governance Jurisdiction Funding Borrowing\Leasing

Municipal  Board can be  Activities restricted to  Receives funding  Will only be able to
appointed and that of parent from parent conclude leases’
Entity removed by parent municipality, unless municipality which are not
municipality consent is obtained prohibited in terms of
from relevant municipal constitutional
 Accountable to council. documents and
parent municipality within the
 No competence to municipality’s
 Councillor and/or an perform activities
official of the parent jurisdiction.
falling outside of parent
municipality municipality’s functions
appointed as non- and powers.
participating observer
at meetings of the
board of directors,
shareholder meetings
and to exercise the
parent municipality's
rights and
responsibilities

Provincial  Board may be  Performs functions  Financed fully or  May only borrow if
elected by within the respective substantially from authorised by PFMA
Government shareholders in terms province sources other than and other legislation
Business of the Companies a tax, levy or
Act. provincial revenue  May only borrowing,
Entity - issue guarantees and
fund
Schedule 3D  Board elects other commitments if
Chairman and CEO  Is more commercial authorised in the
and self-sufficient in Government Gazette
 Management nature than by the Minister.
accountable to the provincial public
Board entity  Must submit a three
year borrowing
 Board accountable to programme to the
shareholders MEC for Finance in
(Minister) that province
 Must submit  Must submit quarterly
corporate plan for reports on the
three year period to approved borrowing
accounting officer for programme to the
a department MEC for Finance in
designated by the the province
executive authority
and to the relevant  May enter into
treasury operating leases
without limitations
 May only enter into
finance leases if
approved by Minister
in Government
Gazette

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Annexure 5: Disaster Risk Assessment

A. Introduction
Definition of a Disaster

According to the Department of Co-operative Governance and Traditional Affairs (COGTA, 2005), the
term “disaster risk management” refers to integrated multi-sectoral and multidisciplinary
administrative, organisational and operational processes and capacities aimed at lessening the
impacts of natural hazards and related environmental, technological and biological disasters.
However, natural hazards are often not the primary cause for concern. Both man-made and natural
hazards only pose a significant impact or threat due to the existence of a vulnerability of some kind.
Thus, if the hazard can be controlled and the vulnerability reduced (or alternately, resilience
increased), the impact of the disaster may be lessened. Disaster risk reduction therefore refers to all
the elements that are necessary to minimise vulnerabilities and disaster risks throughout a society or
area. It includes the core risk reduction principles of prevention, mitigation and preparedness (ibid). In
this report, the terms “disaster management” and “disaster risk management” are used
interchangeably but they are intended to have the same meaning.

The key to understanding the difference between an emergency and a disaster lies in the scale
thereof. Based on the International Strategy for Disaster Reduction (ISDR) definition of a disaster
(ISDR, 1998) and the South African Disaster Management Act (Act 57 of 2002) (hereinafter referred
to as The Act), a disaster can be classified as an immediate or a slow-onset event which is beyond
the capacity of local resources to handle. An emergency therefore encompasses an event that can be
managed using locally and readily available (on-site or in-community) resources, and is usually of
short duration (some hours at most). The key to effective development, including development of the
Atlantis Special Economic Zone (SEZ), is to prevent, minimise and mitigate disasters to reduce the
diversion of resources from other urgently needed services. If disasters are avoided or the impacts
thereof reduced, the response need is reduced, thereby freeing up resources for improvement of
conditions that support sustainable development.

A key concern in regards to areas such as the Atlantis SEZ is the effect that compound disasters may
have – i.e. where one disaster lead to another or where two disasters occur at or near to the same
time (RADAR, 2010). Compound disasters reduce the effectiveness of prevention and mitigation
measures, as well as response and recovery capacity.

Resources to address emergencies may be available on-site or in the vicinity of the SEZ through
trained staff or via agreements with local inhabitants, municipalities or organisations, and would fall
within the ambit of the daily operating environment of a development such as the SEZ. Events that
occur outside of this ambit, and which exceeds the capacity of the local
industry(ies)/operator(s)/community(ies) to cope with this event, thereby necessitating external
assistance or the use of external resources (including manpower, equipment or financial assistance)
would constitute a disaster. In the context of this report, disaster risk encompasses environmental,
infrastructural, socio-cultural and economic risks.

Disaster risk in relation to the Atlantis SEZ

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Risk is a burden but it may also present opportunity, and risk management can be a powerful
instrument for development (WDR, 2014). The median cost-benefit ratios across a range of studies
are shown in Figure 34. Above the dotted line which represents the break-even point, expected
benefits exceed expected costs – in all cases, even the 25th percentile of the ranges of estimates are
above the break-even point:

Figure 34 The benefits of risk management often outweigh the costs

Source:
Wethli, 2013 for the WDR (2014).

This report focuses on disaster risk in particular and the early identification thereof in terms of the
Atlantis SEZ as a means to highlight such opportunities. The opportunities include risk reduction and
increased resilience to withstand disaster impacts as well as recommendations to implement multiple
positive outcomes for example the implementation of measures and infrastructure that could not only
benefit disaster risk reduction, early warning and response, as well as recovery, but at the same time
serve a purpose to enhance the quality of life of the community that depends on or resides in the
vicinity of the SEZ.

The key principles that provide the backbone of this report are guided by the need for long term
physical and economic sustainability, and consider impacts on and from an area much wider than the
SEZ as well as events that may trigger multiple hazards being realised simultaneously or in a
compounded manner. These principles includes sustainability on the level of households (as the first
line of support to confront risk and pursue opportunity), the community (where cohesiveness and
connectedness create resilience), the enterprise sector (fostering resilience and prosperity), financial
drivers and tools, policy considerations (e.g. considering standard disaster risk management
policy/guidelines for SEZ’s region/countrywide), and the role of the international community (ibid) in
assisting to provide a stable environment in which the SEZ could function. Such international impacts
in particular relate to the perception of investors of a particular SEZ and its surroundings in relation to
disaster risk, which also consider the supporting services and recovery options in the event of
disasters occurring. The integration of the principles of sustainability requires collective action and
effective communication between institutions and the community.

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The disaster risk assessment and this associated report for the Atlantis SEZ follow the principles of
responsible development and sustainable design, considering that there would be a significantly
greater level of detail of investigation and implementation required once the site is being allocated to
specific functions, operators and/or businesses.

Disaster risk management is cost-effective, yet not always feasible (ibid). Therefore, priorities should
be considered and implemented based on criteria that have to be established by the key parties
involved in the establishment, development, management and operation of the SEZ. Such an
exercise is not part of this report and will have to be concluded once there are more certainties and
details available regarding the finer operational elements of the SEZ. In addition, a range of
communications and collaborations are necessary to ensure that the opportunities that are presented
by the risks identified in this report is pursued and realised where feasible.

The management of all these mentioned items requires a detailed disaster risk management plan,
which cannot yet be finalised at this early stage of the SEZ establishment. Thus, disaster risk
management options and impacts from elements outside of the SEZ as well as from the SEZ on the
region are considered in broad terms.

Responsibility for Disaster Risk Management

The Disaster Management Act is designed to define the roles and responsibilities of primarily
government role players before, during and in the aftermath of a disaster. To a large extent, disaster
risk prevention, mitigation and minimisation are implemented during planning and implementation
processes, where adequate planning and risk-averse behaviour gives rise to lower levels of risk.
Thus, when development is planned and disaster risk addressed early on, the overall number of man-
made and natural disaster risk frequencies, severities and probabilities can be reduced and/or
managed.

South Africa is ranked low on the worldwide disaster risk preparedness index, being in the second
quintile (i.e. between 20 – 40% prepared) (WDR, 2014). This is evident in the unbalanced
implementation of disaster risk management across society, as explained below:

Although the Disaster Management Act and the South African Disaster Management Policy
Framework (COGTA, 2005) is clear in regards to government and associated agent’s involvement
and the declaration of disasters, the role of the private sector is not addressed in significant detail.
This gap leads to significant differences in disaster risk perception and the addressing of disaster risk
in especially industrial areas.

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 Other Acts, including but not limited to the National Environmental Management Act (Act No 107 of
1998) (NEMA), National Water Act (Act No 36 of 1998), the Minerals and Petroleum Resources
Development Act (Act No 28 of 2002), the National Heritage Resources Act (Act No 25 of 1999), the
National Environment Management: Biodiversity Act (Act No 10 of 2004), the Constitution (Act No 108
of 1996), various Regulations related to development and building construction such as the
Environmental Impact Assessment (EIA) Regulations (Government Notice Nos R543, R544, R545
and R546 of 2010), promulgated in terms of Section 24 of the NEMA, as well as the Occupational
Health and Safety Act (Act No 85 of 1993), the Built Environment Act (Act No 43 of 2000), the Cape
Town Zone Scheme Regulations (November 2012), the Electrical Machinery Regulations (2011), the
Boundary and Fences Policy (2009), the Electrical Fence Legal Booklet (2013), the General Electrical
Specifications (2004), the Guidance for Drainage and Stormwater (2000), and national standards
including but not limited to the Energy in Buildings Standards (SANS 10400) are expected to fulfil the
role of defining the responsibilities of private role players and guiding responsible implementation and
sustainable development in regards to specific disaster risk.

For example: the EIA process is considered to guide environmental disaster risk based on greenfield
or in this case brownfield development, and does so according to clear regulations and standards.
However, such a singular process often approaches multi-disciplinary disaster risk from a singular
lens, and cross-cutting as well as multiple hazards potential (i.e. multiple hazards realising place at
the same time) is not generally considered.

The guidelines and regulations that focus on a singular discipline are not specifically aimed at disaster
risk reduction, thus leaving a gap between the implementation of existing regulations and the need for
cross-cutting considerations, which inevitably leads to inconsistent and unbalanced implementation of
disaster risk reduction. In addition, and due to the Disaster Management Act being non-specific
regarding disasters outside of government spheres, a significant difference exists in site/zone-specific
disaster risk assessment, where practitioners develop ad hoc standards where few currently exist.

Aim and Objectives of this Report

The aim of this report is to provide feedback on a high-level/first order disaster risk assessment for the
Atlantis SEZ sites and surrounding areas. However, based on the above explained conundrum, this
report has a few specific objectives, which are to:

 Conduct a regional disaster risk screening/overview (covering an approximately 25 km radius

around the site) to identify relevant man-made and natural hazards that may have an impact on
the SEZ and vice versa, and assess the main related obstacles and opportunities.
 Identify vulnerable elements and locations in terms of the identified hazards (i.e. with the SEZ
being the vulnerable element as well as where regional items may be the vulnerable elements);
 Introduce the potential role of groups and collective action at different levels of government and
society to overcome the obstacles that may be encountered to manage the disaster risk that is
related to the Atlantis SEZ;
 Consider hazards in terms of potential impact on the vulnerable elements/areas;
 Identify existing and required future manageability and capacity in regards to the priority disaster
risks; and
 Propose details to be contained in the Disaster Risk Plan for the SEZ, focussing on considerations
to address key risks identified during this assessment.

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A secondary aim of this report is to highlight the need for similar assessments to be done for other
development options, and in particular to move towards establishing a benchmark for disaster risk
assessments for site development and SEZs in particular, in South Africa.

This assessment engages with disaster risk where it does not intend to overlap with any existing or
earlier work undertaken regarding for example an EIA/Environmental Management Planning (EMP),
Economic Assessment/Business Risk Strategy, or any other applicable regulations and reporting that
is related to the SEZ which as a business hub is considered a brownfield development.

Assumptions of Report

This report assumes that the SEZ will be earmarked for predominantly sustainability focussed/”green”
industries, of sizes as reported in associated documentation. This disaster risk assessment (and
associated report) assumes that health and safety, as well as emergency management and
emergency event contingency planning would form part of the SEZ planning, design, operational
procedures, maintenance, and resource allocation based on day-to-day operations. Therefore,
parameters related to safety and security as well as health and safety, including location and
allocation of for example fire hydrants, medical response equipment, restrictions regarding movement
of hazardous materials or objects are expected to be put in place as part of the operational
procedures of the SEZ, and are thus not addressed herewith.

A range of documents were reviewed and considered and information contained therein will not be
repeated in this assessment. These include existing reports and Atlantis SEZ-related studies that
provide supporting knowledge for the assessment but will not be repeated/duplicated during the
Disaster Risk assessment, such as:

 Risk and Development Annual Review of the Western Cape (RADAR, 2010);
 Western Cape Infrastructure Framework (2013);
 Provincial Spatial Developm3ent Framework (2013);
 City of Cape Town (CoCT) Integrated Development Plan (IDP) (2013/2014 review);
 Green is Smart: Western Cape Green Economic Framework (2013);
 CoCT Economic Growth Strategy (2013);
 Western Cape Broadband Initiative
 Cape Town Spatial Development Framework (CTSDF);
 Blaauwberg District Plan;
 CoCT Integrated Transport Plan (2013 – 2018) (2013);
 Draft Atlantis Revitilisation Framework (2012);
 Spatial Development Framework for the Atlantis SEZ;
 Geotechnical investigations in and around the Atlantis SEZ;
 Koeberg Emergency Plan;
 Environmental authorisation information (EMP, Water Use License, Waste License, Water
Resources Management, Demand Side Management, Heritage Resource Management,
Conservation permits, etc); and
 Any other resources accessed as listed in the References section of this report.

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Although information from studies already done will not be repeated, reference will be made where
needed to potential disaster risks, considering that incidents and emergencies that may occur on a
small scale or within a specific sector (for example low impact but frequent power outages) are
generally an indication of potential larger scale disasters. Where applicable, mention will be made of
what can be considered short-term or day-duration events or impacts that are identified that relate
directly to operational disaster risk, to enable consideration, prevention and minimisation of potential
larger scale disasters. In addition, where short-term events may lead to significant operational
impacts, for example where a disaster event or incident may lead to long-term economic disaster
where the SEZ may not be able to operate for weeks or months at a time, this will be highlighted.

Where financial data are quoted in this report these refer to tangible direct damages to properties,
sustained primarily by sector and private entities (RADAR, 2010). These terms are defined as follows
(ibid):

 Tangible effects refer to losses which can be assigned a monetary value; and
 Direct effects include damage or destruction to physical assets, or even loss of life. This category
represents damage to assets that occurred at the time of the actual disaster. The main items in
this category include the total or partial destruction of physical infrastructure, buildings,
installations, machinery, equipment, means of transportation and storage, furniture, damage to
land, and the like.
Although these abovementioned effects can be quantified in a monetary manner, the intangible and
secondary effects of disasters are often much more severe and long-lasting. In particular, disasters
that have a social impact or that can be caused by indirect or underlying social risks are particularly
difficult to quantify. Thus, these risks should be considered in a serious light and should be addressed
wherever feasible.

Elements of Disaster Risk

Disaster risk is based on the confluence between a hazard(s) and vulnerable persons or
environments, which may be countered by a capacity to manage the hazard(s) and/or vulnerabilities.

(R=[H x V]/[M x C])

Where:

 Hazard (H) is the cause of an event (consisting of probability, frequency, etc.);

 Vulnerability (V) relate to an environment, economy, community or infrastructure exposed to the
risk (no vulnerability = no risk);
 Manageability (M) relate to the functional/operational options which are available at
municipal/provincial/national level to cope with the risk; and
 Capacity (C) is the ability of the available intrinsic resources and resilience of the community,
economy and environment to absorb the risk.
In this report, the hazards and vulnerabilities are listed and associated management practices or
known capacities noted for individuals or combinations of elements posing risk. In addition to the risk
equation, disaster risk has to consider the entire sphere of options that are available to manage the
risk, including:

 Assessment;
 Promoting prevention;
 Ensuring mitigation/contingency planning;

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 Early warning / readiness;
 Response; and
 Recovery-reconstruction.
These concepts have significant implications for the proposed SEZ and its long-term viability, as
briefly described below. Only number one of five listed elements is covered in detail in this report. A
complete disaster risk assessment and emergency planning protocol is called for, regarding individual
future operations or functions within the SEZ, and also for the SEZ as a whole.

This assessment takes the form of an initial disaster risk screening. Once detailed land use and
industrial operations have been defined/decided on, detailed disaster risk assessments would be
required for each operation as well as for the SEZ as a whole, as and when needed (for example
when a significant change in operations in the SEZ take place or when a large new factory/operator is
intended to operate in the area).

If a hazard and/or vulnerable element in the risk equation do not exist, there is no disaster risk.
Therefore, the prevention and reduction/minimisation of disaster risk via the reduction of exposure to
hazards and reduction of vulnerability of affected persons or environments are key requirements for a
safe and disaster-free SEZ. With prevention being the key method to reduce risk, the SEZ itself (and
thus its owner/operator/management and staff) as well as individual industries, that form part of or
operate in the SEZ, have to ensure that the overall disaster risk parameters are adhered to. Although
natural disasters or mechanical failures are often attributed to engineering and design or resource
factors, too often it is the human element of decision making and risk-taking that exposes vulnerable
elements to hazard. The implied actions and responsibilities of operators and staff working in the SEZ
associated with disaster risk requirements necessitate a specific state of affairs to remain constant
throughout the operation of the facility. For example, the following should be guaranteed in order to
avoid disasters:

 Effective operation and maintenance at site level as well as at SEZ level, meaning that even where
the economic viability of the SEZ or any of the individual operators in the SEZ is stressed,
maintenance and disaster risk reduction planning should not be limited or reduced. To this end,
disaster risk management training should be provided to selected staff, while all staff should
receive basic training in risk reduction on a site and SEZ level.
 All staff operating in the SEZ should be knowledgeable regarding operational issues (for example
early warning and actions related to possible disaster events at the Koeberg Nuclear Power
Station). Selected staff should be trained in selected disaster risk elements. For example media
liaison and media communication protocols and message construction should be defined, and in
cases of severe weather staff should not only be knowledgeable and consider real-time weather,
but be able to read, understand and interpret severe weather warnings hours or even days ahead
of time, from reputable sources or through on-site meteorological stations that could serve the
entire SEZ. This being an example only (i.e. this may be applied to say violent service protests or
to fire risk) requires a specific skills set, and arrangements with weather services, fire and
emergency services, or public safety/protection services (with potential associated financial
implication) as well as specific training arrangements.

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Disaster mitigation can be implemented via acceptable and effective management and the
implementation of operational instruments that counter unavoidable hazards or vulnerabilities: when
the potential exists for malfunction or unforeseeable disruption in the operation of the SEZ, disasters
may in fact not need to occur, since forethought and effective planning can reduce potential disasters
to “emergencies” only. The capacity of staff who work in the SEZ and the community that resides in
the vicinity of the SEZ to engage in active and timeous response to emergencies, thereby minimising
disaster risk is crucial to the mitigation process. This implies regular training and practice, which form
part of the operational functions of the SEZ.

Considerations for Future Disaster Management Planning at the SEZ

Should anything go wrong and disaster does strike, key elements to ensure effective response and
reduced down-time or physical impact are:

a. How timely the response,

b. Emotional care for affected persons and bystanders, and
c. Media relations during and after the event.
Too often the neglect of these three elements leads to secondary and long-term impacts that could
have been avoided. Thus, when the SEZ is finally established and operational, the SEZ as a whole, in
collaboration with all the industries operating in it and communities involved in the area should have a
disaster management plan that incorporates all these elements.

The disaster management plan should not only address the physical structure that has to be regained
or repaired, but the marketed image of the SEZ as well. These include keeping record of all events at
SEZ level, enabling the correct information to be made available when needed, and enabling
confirmation of existing disaster risk management standards within the SEZ, customised to the
Atlantis SEZ. Not all events are necessarily a disaster, however, the frequency of smaller events give
an indication of what type of larger events and potential disasters could occur. Thus, record keeping
and monitoring of small events across the SEZ is critical.

B. Background

a) SEZ-related emergencies and disasters

To date, no adequate information could be identified and secured to indicate events and emergencies
of an industrial operation nature within Atlantis. Such information should in future be collated and
maintained as part of the SEZ operational documentation.

If the SEZ is operated within allowable risk management limits, with adequate early warning systems
in place, media communication procedures and fire and emergency services appropriate to the SEZ
specific requirements, there should be no cause for concern regarding disaster risk. Thus, these
systems should be prioritised based on the development plans for the SEZ, and implemented as soon
as possible.

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Internationally, industrial disasters show a high level of human error involved in the root cause. This
means that not only could such disasters have been anticipated or prevented, but the cost related to
its immediate and long-term impacts it could be either managed or planned/insured against, or
reduced. This reduction in cost does not only relate to the response costs when an incident or
disaster occurs, but has far-reaching societal impacts. The perception by society (both local and
international) of unsafe or unreliable operations have a significant impact on the economic viability
and sustainability of operations, since “bad news” spreads much faster and remains on the forefront
longer than “good news”.

Therefore, the most important action that can be taken in regard to disaster risk is to prevent and
mitigate potential disasters as best as possible, thereby ensuring long term sustainability of the SEZ
and associated development in the region of the SEZ. Some incidents or emergencies that take place
in the SEZ or at operations within the SEZ may not seem critical or of concern to the SEZ as a whole;
however, the real economic and social disasters are hidden in the aftermath of accidents. It is the
economic and social loss that the SEZ may face which is of greater concern often than claims against
single operating companies or agents from for example environmental non-compliance or health and
safety related injuries.

b) Methodology
South Africa’s National Disaster Management Framework (NDMF) specify guidelines for Levels 1, 2
and 3 disaster risk assessments, which are applicable to provincial and municipal disaster
management planning. However, neither the Disaster Management Act nor the NDMF is specific
regarding infrastructure developments including SEZs, and assumes the developmental and
operational functions of the SEZ to cover potential disaster risks. Even though the design and
operation parameters of individual industries may be strictly governed from a manufacturing and
implementation point of view, with associated maintenance schedules and health and safety
requirements, these do not involve regional disaster risk assessments or disaster management and
reduction programmes except for what may be required by the manufacturers in terms of operating
limits for individual factories.

Therefore, this assessment follows international best practice in identifying hazards and vulnerabilities
(in no particular order), and gives comments based on potential risk prevention measures or operating
solutions that could reduce the risk of disaster in the general zone of influence of the SEZ. The
various hazards and vulnerabilities are not assessed in relation to each other and therefore priorities
and hierarchies are not identified, as would usually be done in the case of provincial or municipal
disaster risk assessments. Some of the specific foci of the disaster risk assessment involved site
visits and discussions with stakeholders and representatives where such were available. However, a
complete public participation programme was not implemented and thus the perceptions and realities
of communities that live in or are affected by the SEZ and its hinterland have not been assessed.

A hazard level is indicated for each hazard, considering its impact, should it not be mitigated. The
levels that are presented are:

 Potential Fatal Flaw: A reality if the status quo remains.

 Critical Consideration: Unless this element of disaster risk is addressed, the sustainability of the
SEZ could be in jeopardy.
 General Consideration: This element is manageable and has to be attended to during
design/planning and operation of the SEZ.

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 Insignificant: Although the hazard exists, its management would form part of the design and
development of the SEZ, as well as day-to-day operations, and is therefore not considered to pose
a significant risk towards a disaster.
Where available, scientific or statistical data have been is used to substantiate a discussion of each
element of the risk equation described in Section 1.1.6 above that is applicable to this report. Once a
decision is made to go ahead with the development of the SEZ and implement specific infrastructure
or establish certain industries, the manufacturer operating parameters and an associated detailed
disaster risk assessment would have been conducted for the operators. Such assessment would
include cross-cutting and multi-hazard analysis, based on the potential impact that one industry and
its operations may have on surrounding others. Such future assessment should include a detailed
stakeholder and community interaction process, to ensure that the potential risk of societal rejection of
the project is mitigated.

c) Key performance areas for disaster management planning

The following Key Performance Areas (KPAs) should form part of a disaster management plan, and
are taken cognisance of in this report. The KPAs are based on the structure of the NDMF (DPLG,
2005):

 KPA 1: Establishing the necessary institutional arrangements for implementing disaster risk
management within the SEZ as a whole. This would specifically address the application of the
principle of co-operative governance for the entire SEZ as opposed to only implementing
regulations merely on an industry-level within the SEZ. It also emphasises the involvement of all
stakeholders in strengthening the capabilities of organs of state and the private sector alike to
reduce the likelihood and severity of disasters.
 KPA 2: Addressing the need for disaster risk assessment and monitoring to enabling the setting
of priorities, guide risk reduction action and monitor the effectiveness of related efforts. This
requires regional monitoring of non-disaster events which may point to hazard and vulnerability
presence and location. The focus would be in particular on implementation of monitoring and
reduction programmes within the SEZ related to external threats from and to structures, services,
communities and households.
 KPA 3: Introducing disaster risk management planning and implementation in the Atlantis and
other SEZ’s in a uniform manner, to inform sustainable development-oriented approaches, plans
and programmes within each SEZ and between SEZ’s that reduce disaster risk. This KPA requires
alignment of the Disaster Management Act and the NDMF with SEZ-specific requirements and
should give particular attention to the planning and integration of core risk reduction principles of
prevention, mitigation and early warning into daily SEZ-related initiatives.
 KPA 4: Implementing priorities concerned with disaster response, recovery and rehabilitation that
simultaneously address sustainable development objectives. This would lead to development of an
integrated and co-ordinated policy on the implementation of response and post-disaster recovery
in SEZ’s. When a significant event or pending disaster occurs or is threatening to occur, it is
imperative that there must be no confusion as to the roles and responsibilities and the necessary
procedures that need to be followed. These measures would ensure effective disaster response,
recovery and rehabilitation planning while at the same time providing enablers for community
stability and sustainable development in the vicinity of the SEZ.
These KPA’s would be associated with enablers, similar to what is defined in the National Policy
Framework (ibid), but customised to the SEZ. However, this is not elaborated on in this report.

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 C. Hazards related to Atlantis SEZ
All impacts related to natural or man-made hazards to the SEZ are in the end economic in nature. The
hazards listed may present negative economic impacts, thereby undermining the feasibility and long
term sustainability of the operation. Thus, it is critical that the opportunities that are related to these
hazards are recognised and that feasible options be implemented to mitigate and prevent these
hazards from occurring while at the same time providing benefit to society in and around the SEZ.

What is referred to as risk from natural hazards are more often than not impacts based on man-made
origin, since it is the interaction of humans with their environment that place or locating hazards or
vulnerable elements in association with each other. For example: when a volcano erupts in the middle
of the ocean and there are no vulnerable elements or negative impacts involved, it is not considered a
disaster, but instead as a building of a landmass. Such a process could be considered truly natural;
however, when such event occur where there are man-made structures and communities involved,
the process is not so “natural” at all – it is the intersection of the hazard with the vulnerable element(s)
and the resultant impact on humans, the environment and the economy that are of concern. In this
section of the report, “natural” hazards refer to disaster impacts being of natural origin, whether or not
human interference takes place. The section under “man-made” hazards, refer to hazards that cannot
exist without human involvement (for example services that are delivered by a service provider and
which communities or organisations rely on).

It is recognised that there are numerous hazards and vulnerabilities possible that may not be listed in
this report. Such omissions are not deliberate and are either a result of no hazard known to be
present, or due to a lack of information regarding specific hazards, vulnerabilities and
manageability/capacity or information that could not be accessed/obtained during the course of the
assessment. In some cases, the listing requires additional data collection and investigation once the
development of the SEZ is closer to implementation – such needs are indicated where relevant.
Recommendations are made for each hazard identified, in this section. General recommendations are
included in section 1.4. There are a number of hazards that has cross-cutting risks and impacts, for
example flooding and high winds may go hand-in hand with transport-related concerns; thus, some
discussions provide multi-disciplinary views on more than one hazard and have to be read in
conjunction with one another. Figure 1.3 provides a regional overview of the area with specific
disaster risk elements indicated.

D. Natural Hazards

a) Lightning strikes
Category: insignificant

Lightning strikes may give rise to fires and incidents of electrical nature. This includes the possibility of
harm or even death to humans, being in touch with metal structures, as well as potential power
outages related to lightning dstrikes.

The area around Atlantis has an average Lightning Ground Flash Density point (‘lightning strike rate’)
of between 0.1 – 1 per square kilometer (Figure 35), which relates to a low total lightning risk (Figure
36).Thus, lightning is not a significant concern to the Atlantis SEZ.

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Figure 35 Lightning Ground Flash Density: Flashes per square km (2006 – 2012)

Source: South African Weather Services (SAWS, 2013)

Figure 36 Total Lightning risk for Southern Africa (2006 – 2012)

Source: SAWS, 2013

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 b) Wind direction, High Winds and Gust factor
Category: Critical Consideration – manageable via site-specific
regulations/guidelines

The operating parameters of industries in the SEZ will be unique, based on their individual foci. Thus,
each industry should consider their risk based on the information provided herewith. Their
assessment would depend on the type of building(s) that are constructed, materials involved/being
transported, and means of transport. For example: a waste recycling facility will need to consider wind
speed since it may present a waste-related nuisance (air pollution/solid waste) to the area when
blown off-site (thus requiring e.g. suitable fencing to catch wind-blown solid waste), or it may present
fire risk when associated with fire hazards such as electrical flash-overs.

South African design codes (SABS standards) require all permanent structures to withstand a
maximum wind speed of around 40m/s (BKS, 2011a). Wind speeds in the area vary mostly between 8
and 12 meters per second (m/s) but can reach up to 20 m/s in summer months. Although gust factor
is unknown, the Atlantis SEZ and surroundings often experience significantly gusty winds during the
months of December and January. The data presented in Figure 38 were measured and recorded at
Atlantis during 2013. During summer, a high percentage (approximately 30%) of the velocities is in
the range from 25 – 50 km/hr (13.5 – 27 knots). Winds are frequently strong and can attain gale force,
in excess of 70km/h at times especially in the afternoons. Velocities exceeding 100km/h (54 knots)
have been recorded (BKS, 2011a), especially when cut-off lows enter the area from the coast. One
specific incident occurred in July 2008 when a cut-off low was associated with strong south-easterlies,
resulting in direct damages of R 71.1 million (RADAR, 2010). Such wind speeds require significant
consideration when structures are designed – especially roofing, so as to reduce the potential for
building materials and on-site infrastructure to be blown apart, causing damages and having an
impact on safety of workers and residents in the area. For transport/access-related concerns in
relation to high winds/gusting winds, refer to section 1.3.1.3.

Winds are named from the direction it approaches. The prevailing wind direction throughout
the summer months (October to March/April) (
Figure 39) is North-north-west (NNW) (i.e. coming from the NNW and blowing towards the SSE);
while in autumn and winter it varies from South-westerly to South-easterly (Figure 40). The direction is
important when individual factories/industries are planned/located, to minimise pollution-effects to
surrounding areas. The impact in this regard from a disaster risk consideration is the potential for
aggravation of fires related to industry operations, where areas towards the SSE of the Atlantis
industrial area may be in danger.

The direction of the wind when considering fire risk related to electrical flash-overs from the power
lines towards the southeast of Atlantis does not translate into a significant risk since those wind
directions dominate during winter months, which is the rainy months when grass and veld is wet,
thereby reducing the prevalence of fires.

Wind speeds, rainfall and severe storms can be accurately predicted days in advance. The accuracy
of the prediction increases closer to the time of occurrence. It is therefore recommended that the
Atlantis SEZ include in its regional operation a monitoring process to ensure effective communication
between SAWS and in turn with the various operators/industries within the SEZ. The communication
would be needed particularly when severe storms are predicted or when significantly high winds and
gusts are expected, and infrastructure or materials has to be tied down or brought inside factory
buildings, or when staff health and safety is of concern.

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Figure 37 Average Wind Speed and direction at Atlantis

Source: SAWS, 2014

Figure 38 Wind Speed and direction at Atlantis during January 2014, representing the general
wind direction and speed during summer months, between October and March

Source: SAWS, 2014

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Figure 39 Wind Speed and direction at Atlantis during May 2014, representing the general wind
direction and speed during autumn months

Source: SAWS, 2014

Figure 40 Wind Speed and direction at Atlantis during June 2014, representing the general
wind direction and speed during winter months

Source: SAWS, 2014

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Figure 41 Wind Speed and direction at Atlantis during September 2014, representing the
general wind direction and speed during spring

Source: SAWS, 2014

c) Floods
Category: General Consideration

The Department of Water Affairs (DWA) no longer provides 1:x00 (e.g. 1:50 or 1:100 etc.) year flood
details for development consideration purposes, due to historical misinterpretation and subsequent
legal pursuits against DWA. The misinterpretation stems from the fact that a “1:x00 year flood“ means
that there is a probability that one flood of that particular height may occur in x00 years”.
Unfortunately, the reality of probabilities of this nature is that it is indeed possible to have multiple
floods reaching that height in any given year, after which this frequency may in turn affect the flood
return period statistics. Thus, the probability of a particular flood happening being expressed as 1:x00
is merely an indication of the potential height and return period based on historical flood frequencies
and rainfall. With climate change on the forefront of debates, historical records are considered in
some circles to be unreliable, therefore reluctance emerge to express flood hazards in this manner.
Therefore, this assessment interpreted the floodline of the river south-east of the Atlantis SEZ in a
non-specific manner.

Floods present a relatively low risk to the effective operation and economic viability of the Atlantis
SEZ. The reason for this is that floods are not site-related, but that floods may cut off certain transport
routes to and from the SEZ. This could have an impact on ease of operations and health and safety
statistics of industries in the SEZ and for temporary periods of time, however it is not expected to be
significant in reducing the effectiveness of the SEZ as a whole.

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 d) Hail storms
Category: General Consideration

In the Risk and Development Annual Review of the Western Cape (RADAR, 2010:2), mention is
made of one significant disaster that occurred in the area near Atlantis, between 2003 and 2008 – a
hail storm that occurred in Haarlem in the Western Cape, where 389 hectares of fruit trees were
damaged, 35 small traders impacted, and 194 permanent workers and 160 temporary workers were
left unemployed as a result. The direct damage costs were estimated to be R 9.4 million. Little other
information is available. Thus, as is the case with high winds and gusts, consideration should be given
to factory building materials/covering when it is being constructed, at an individual site level. Such
requirements should be made known to operators and investors, to ensure that they understand the
risk and related mitigation and insurance measures regarding potential hail damage. The risk to the
Atlantis SEZ as an operating entity, however, is not significant.

e) Fire
Category: Critical Consideration – manageable via provision of suitable Fire
Emergency Services in Atlantis SEZ

Fires are prevalent in the Atlantis area (Figure 42), although not as much as in other areas of
Southern Africa. Although flash-over fires could occur especially in areas where high voltage
powerlines run (Figure 43), the servitudes underneath the powerlines seem to be well-maintained and
the dominant wind direction would generally direct fires away from the SEZ, towards the south-west.

Figure 42 Map indicating fire hot-spots in the Atlantis area

Source: AFIS, 2014

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Figure 43 Eskom high voltage power lines south of Atlantis SEZ

Source: AECOM, 2014

The primary concern regarding fire in Atlantis is related to the potential for small, insignificant fires to
turn into disastrous events, due to wind strength. If a fire occurs, the chance for it to spread rapidly
and increase in ferocity is significantly high. In addition, large open spaces (especially during the early
stages of development) as well as the proliferation of dumping/storage of flammable materials in the
industrial area is of concern (Figure 44). These elements can be managed via effective SEZ
operational management and monitoring, as well as SEZ-wide fire safety procedures and drills (i.e.
not only as required by site, but for the entire SEZ).

Figure 44 Unused tires dump/storage site in Atlantis industrial area

Source: AECOM, 2014

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The current level of risk being regarded a Critical Concern in terms of fires in the Atlantis SEZ is not
as much related to the probability of the hazard, but rather the lack of manageability and capacity to
manage and contain a fire disaster should it occur. This assessment is based on information that the
nearest fire services to the SEZ are located at the Koeberg Nuclear Power Station, and there is
currently no evidence of an effective communication mechanism between Koeberg and Atlantis in
case a major fire breaks out. The nearest Municipal fire station location and capacity could not be
determined, and unless the latter is able to respond quickly and with adequate knowledgeable
manpower to be able to contain industrial fires (taking into consideration a need to understand the
industrial materials and operations that are envisaged in the SEZ), this hazard pose a significant
concern to the Atlantis SEZ.

The impact of fire risk in the Atlantis SEZ can be effectively addressed by locating a Fire Emergency
service within the SEZ, with adequate capacity and knowledge regarding industrial fire and
emergency management. This service could also function as a communication channel in case of
other emergencies, such as weather-related events, or nuclear disasters. In addition, there should be
an SEZ-guided monitoring and maintenance procedure with regards to Health and Safety matters
within the SEZ (which include Fire emergency procedures) as opposed to relying only on individual
operations to implement guidelines and legislation related to fire management.

During the site visits, no fire hydrants were identified or visible. This information should be researched
and obtained, and if available, be made part of the abovementioned procedures and SEZ-wide fire
management strategy. If there are no fire hydrants in the Atlantis SEZ, short-term alternative options
should be implemented, for example provision of remotely enabled/mobile fire services, until such
time as formal services can be provided. This plan and its implementation should be done in close
cooperation with the fire and emergency services of the District.

E. Man-made Hazards

a) Condition of access roads

Category: Critical Consideration – manageable via maintenance, upgrade,
monitoring, restriction and enforcement

The N7 freeway is suitable for the purpose of the Atlantis SEZ operation, from a Disaster Risk
Perspective. The R27, although suitable for such purpose, could be considered too narrow to handle
significant increased traffic volumes, especially freight traffic increase. Although only an in-depth
transport study could determine the exact requirements that may be needed from the R27, this is a
definite need and budgetary allowances should be made to enable the widening/upgrade of the road.
This requires engagement with the Department of Transport and Municipality.

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Although not directly related to the sites that form part of the SEZ, the condition of regional roads and
facilities that would serve the SEZ and its operators/workforce signal a potential decline in road
transport effectiveness. When comparing the condition of access roads, entry points to Atlantis
industrial area and safety on some of these roads, there is visible and dramatic decline in
maintenance visible. This is a Critical Consideration in the sustainability and feasibility of the SEZ,
since if the condition of the road access cannot be by-passed with alternative modes of transport
(such as rail), or with increased control as to the use of particular roads for selected purposes and to
a specific safety standard, a dramatic increase in budget and operational costs are expected to
ensure maintenance and upkeep of vehicle fleets that serve operators/factories in the SEZ. This may
be a direct cost to the individual facilities, but will have a knock-on effect on the viability and
effectiveness of the SEZ.

When considering storm occurrences, high wind velocities and floods in association with each other,
the currently desire-transport routes to and from the SEZ is under significant pressure. Although the
highways and regional roads are not generally affected by flooding, site visits in September 2014
indicated that roads leading to and from Atlantis industrial area are under significant pressure when
considering potential for flooding and falling trees/branches to obstruct routes and cause a danger to
human health and goods transportation

In contradiction to the section on Access, stipulated on page 11 of the Atlantis Spatial Framework
(2014): the R304 is not noted in the freight movement network. However, during site visits it was
observed that a significant amount of heavy vehicle traffic, including construction, freight and fuel was
transported on this road, with some vehicles travelling at significant speed. Site visits also indicated a
significant commercial heavy vehicle and hazardous materials transport load on the Philadelphia road
towards the T-junction with the R340.Although some of the observations indicated local use (e.g. for
operations to which the R304 provide a service for example a sand quarry, many used the road as
thoroughfare to the N7. There are signs at the entrance to the R304, approximately 15 km south of
Atlantis, from the turnoff of the N7, stating that only local residents should use the road. However,
despite the signs and the clearly unsuitably narrow, step drop-off at places on the side of the road,
and poorly paved condition/potholes on the particular road, a number of heavy vehicles were
observed using the route during different times of the day and on different days during the week. Of
these, a large number were also driving at speeds excessive to safe use of the road, considering its
poor condition. This road is probably used as opposed to the N7/Philadelphia turn-off since it is
significantly shorter than alternative options when travelling from Cape Town. This is despite the N7
highway being in a much better condition and designed to withstand the weight of the heavy vehicles.
The proposed R300 extension cannot be commented on at the time of this report being compiled,
however it may alleviate the current pressure on the R304.

The hazards of flooding and falling branches which may obstruct these routes have already been
discussed. Although this may cause temporary obstruction to transport at these particular crossings, it
is the occurrence of multiple disasters which are of more concern. Should these roads the blocked off
by any particular incident (for example high winds causing fallen branches), evacuation routes could
be compromised. Thus, the repair and maintenance of roads that are generally considered not part of
the SEZ operational ambit should be better maintained.

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Roads such as the R304 in the vicinity of the Atlantis SEZ are in desperate need of maintenance
and/or upgrading, even if it is not to be used by industries operating from the Atlantis SEZ. The
assessment of the access roads to the SEZ and costs relating to repairs/maintenance and upgrade
should be the subject of a separate study. However, this report does recommend that the R304
leading from the Southern side towards Atlantis be closed (with inspection posts at the entry and exit
zones) to heavy vehicles not operating at industries that are served by the road. Signs indicating non-
authorised use will not deter heavy vehicles from using their current routes, and therefore significant
penalties should be incurred if used by unauthorised heavy vehicles, and that the road be repaired as
a matter of urgency.

Traffic calming zones should be established at major intersections, areas where speeding occur, and
in Atlantis near critical facilities and educational premises.

Specific transport routes should be designed within the SEZ and surroundings for selected vehicles,
vehicle types and transport of specific materials to, from and within the SEZ. This is in particular
necessary for the transport of Hazardous and Flammable materials. These routes should be
monitored and enforced, and adequate major accident response capability enabled to respond to
accidents relating to these (for example via fire and health emergency services).

b) Socio-cultural stability
Category: Critical Consideration – manageable via community participation
and engagement

It should be noted that the analysis of statistics provided in this Section of the report is a reflection of
similar areas elsewhere in the Western Cape as well as in South Africa Nationally. The critical
consideration is therefore not unique to Atlantis and would not deter the development and operation of
the SEZ as an entity. The disaster risk reduction process and solution related to this hazard in relation
to the Atlantis SEZ is not contained in the SEZ itself, but rather in overall societal and developmental
progress and upliftment programmes, which the SEZ in itself could be a part of.

In order to anticipate potential challenges in regards to socio-cultural stability, the SEZ management
should ensure that effective communication and engagement takes place with the community in
Atlantis before and during the SEZ establishment process, to minimise disruptions on operations and
effectiveness of industries and businesses that form part of the SEZ and its hinterland. Media liaison
and management of perceptions related to socio-cultural stability and the potential to utilise the SEZ
as a catalyst for positive change in this regard should be used as a motivating factor, rather than
being viewed as a potential disaster.

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General perception and expectations

Perception has often one of the greatest influences on the implementation of economic facilitators
such as the SEZ. Thus, the perceived stability and dangers related to social and public safety should
be considered by SEZ management in order to convince investors and the public alike to invest in and
move to Atlantis. During this assessment, no formal or informal interactions were held with
stakeholders or residents operating in or living in or near Atlantis. Such investigation is necessary as
part of future implementation and development programmes of thin order to gauge the level of
confidence and safety related to the SEZ. At the same time, such engagement would enable
development agents of the SEZ to provide accurate information and share future plans with residents
in Atlantis. The engagement is the communities in and around Atlantis is critical to secure the
sustainable long-term effectiveness of the SEZ – if the community support the objectives of the SEZ
and are engaged in the processes that affect them, as well as positive spin-offs that may be gained by
the entire community, the SEZ could the that much more economically and socially successful.

In reality, the development of a SEZ could take a decade or more from the time of this report being
written, to realise to its full extent. This timing influences the positive economic impacts of the SEZ to
trickle down to the community. Thus, the expectations of local businesses, investors and communities
in and around Atlantis SEZ should be managed carefully to ensure that reality-based expectations are
created.

Violent service delivery protests

There is not a significant amount of information readily available for protest action in the Atlantis and
surrounding area. However, the Western Cape was reported in June 2012 to be the most protest-
afflicted province (University of KwaZulu Natal Centre for Civil Society (UKZN CCC), 2012). Some
specific incidents were recorded via news reports and provide a general indication of the level of
community-based violent protests, which is prevalent in Atlantis:

In 2008, violent taxi protests took place against the City’s Integrated Rapid Transit (IRT) (bus) system
(West Cape News, 2008) which operates along the R27 trunk route to Blaauwberg. Known as the
MyCiTi bus route which has been extended from Table View to Atlantis, the tensions between the taxi
owners affiliated to the Atlantis Blaauwberg Taxi Association (BTA) and the City is ongoing (taking
place in 2012 and again in 2014). The taxi industry claim that the reason for the violence was due to:

 uncertainty regarding the taxi industry role in the bus rapid transit system and how such a system
may benefit them;
 they criticised the lack of employment opportunities for locals in the construction of the MyCiTi
local bus depot;
 the claimed very few local have been employed in the maintenance of the Atlantis network; and
 more recently (August 2014) claiming that taxi driver earnings reduced from R 2000 per week
along the route to R 600 per week.

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Negotiations towards a peaceful involvement stalled and taxi representatives left the negotiating table
(West Cape News, 2008). This situation calls for a critical engagement with the community and
transport operators in and around the Atlantis SEZ, to ensure safe, stable and affordable access for
workers to SEZ sites. The SEZ can only be effective if workers in the industries in the SEZ are able to
travel safely and are enabled to attend their place of work on a regular and uninterrupted basis. Thus,
discussion with the community and transport operators in the SEZ need to take place, and should for
example include the MyCiTi bus Vehicle Operating Company (VOC) Kidrogen, since the discussions
and transport planning involve among other measures possible compensation for taxi drivers and
consideration of legal vs illegal taxi operations.

In August 2013, the multi-million rand state-subsidised People’s Housing Project (PHP) in Witsand
stalled due to soil problems not accounted for in the initial budget of R26.9 million (West Cape News,
2013). As a result, approximately 100 incomplete houses were vandalised by youths from adjacent
townships and informal settlements, thereby escalating costs and further delaying completion. The
residents in the area remain upset about delays and have been told that failure in housing delivery
was a result of the Human Settlement Department withholding additional funds for completion of the
project; however the City of Cape Town stated that the initial project funds were approved and
dispensed and that there is no withholding. Such unbalanced information provision from stakeholders
involved in the Atlantis region has an impact on the socio-economic stability of the entire SEZ.

In June 2012 the Atlantis community took justice into their own hands when a “mob justice killing” took
place. Between 200 and 500 community members were involved in protests relating to the incident, in
which the community (including the man accused of the mob killing) say they have “lost confidence in
the police” (IOL News, 2012b).

In March 2014 women in Atlantis protested for harsher sentences of human traffickers. This followed
an incident where two young children were subjected to human trafficking and a 25-year jobseeker
was lured into prostitution, and thereafter was held prisoner, raped, beaten, abused, drugged and
forced to work as a prostitute for a period of two years. Barbara Rass, Atlantis councillor and founder
of the Atlantis Women’s Movement, note that human trafficking was on the increase and that harsher
sentences for traffickers are needed (IOL News, 2014). Although the Prevention and Combating of
Trafficking in Persons Bill was signed into law in July 2013, giving South Africa a statute dealing
specifically with human trafficking, the activity remain rife in Atlantis (also see section 1.3.2.2d)
regarding child abuse and prostitution).

The residential community should not be regarded in separation from the SEZ – they function as an
integrated unit and thus the communities in and alongside the SEZ should form part of the SEZ
planning and discussion process. The days of simply calling a public meeting and informing residents
of what is taking place in their neighbourhood is long gone. Significant public participation is
necessary to improve the currently instable social environment in Atlantis, and improve the economic
viability of the SEZ. The involvement of local ward councillors and community leaders in the Atlantis
area is critical to address the issues related to public violence, in order to improve the viability of the
Atlantis SEZ.

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Demographics and income

Even though community stakeholders may have an understanding of the level of engineering
expertise that would be required to operate some green economy industries, as is envisaged for the
Atlantis SEZ, the expectation would still exist that significant direct local engagement (i.e. job creation)
would be made possible via e.g. basic construction and operational services. These expectations
should be managed from the start of the development of the SEZ, via community engagement
processes, including any potential suggestions that communities may have in regards to their
potential involvement and before and during the SEZ development process.

The following census statistics shed light on the potential areas of concern in Atlantis (StatsSA, 2011):

The level of education of residents in Atlantis is in general considered acceptable for effective disaster
risk management planning in the community. However, the present level of school attendance for
children of school-going are is significantly concerning, and signifies a long term critical concern not
only in the community, but for the SEZ. If the level of education in future falls due to current low
school attendance figures, the Atlantis SEZ will have fewer schooled workers to provide employment
to, while at the same time crime and social disruption is expected to increase. School attendance
should therefore in particular be addressed not only as a social element in Atlantis, but as part of a
broader Atlantis SEZ sustainability strategy to ensure the SEZ’s future long term
success/effectiveness.

Figure 45 Level of Education

Source: StatsSA, 2011

Figure 46 Present school attendance

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Source: StatsSA, 2011
The employment status in Atlantis is low – only 44% of the residents, who are able to work, are
employed. The development of the Atlantis SEZ could have a positive impact on this concerning
statistic and would improve the economic situation in which the residents of the town and
surroundings find themselves:

Figure 47 Employment Status

Source: StatsSA, 2011

The annual household income of residents in Atlantis is significantly low. This may be positively
affected by the Atlantis SEZ, however only if there are active plans implemented that focus on
employment of local residents where feasible. This situation reflects in the incidents of public violence
and vandalism where residents protested violently against employment of non-Atlantis residents in
services and functions provided within or to Atlantis.

Figure 48 Annual Household Income

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Source: StatsSA, 2011
With debt levels related to housing standing at 37% and renting constituting a large part of dwelling
tenure (20%), a large proportion of the community is not owners of their properties. In general, such
an insecure situation at household level gives rise to additional movement and insecurity within the
community as a whole. The establishment of the Atlantis SEZ and associated job opportunities that
may arise (if locals are able to fill positions or be trained to fill positions in local industries), could
address this concern positively.

Figure 49 Tenure status per household

Source: StatsSA, 2011

The male to female resident ratio in Atlantis is 51% male vs 49 % female, with females showing a
slightly higher level of schooling.

Children constitute a large age group in Atlantis, with the largest age group being between 0 – 4 years
of age as measured in the 2011 Census. This distribution not only signifies a significant social
concern, but also signifies an important element of disaster risk early warning and response. Should
there be any disaster risk emanating from the SEZ (for example a large industrial fire), it means that a
significant proportion of the community may not be in a position to avoid the impact of a potential
disaster that may be imposed on them from within the SEZ. These statistics does present an
opportunity, whereby school programmes in the SEZ in particular could involve disaster risk reduction
and early warning elements, for example in particular in regards to:

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  Industrial Fires and health and safety incidents,
 Nuclear and power station related disasters/explosions, and
 Earth tremors
In these three instances in particular, an increase in awareness and education of young children will
assist in distributing the message to the rest of the community (since children could take the message
home).

In addition, schools and educational facilities in the vicinity of the Atlantis SEZ should be engaged and
form part of early warning measures that relate to the Atlantis SEZ, thereby ensuring community
safety not only within the SEZ but in the broader region.

Figure 50 Age Distribution of people living in Atlantis

Source: StatsSA, 2011

c) Crime, especially drug-related concerns

Crime statistics for Atlantis SEZ during 2014 can be visualised as follows, where the size of the text
represent the relative numbers of incidents of the specific kind occurring since 1 January 2014:

Figure 51 Crime statistics for 2014 visualised

Source: StatsSA, 2014

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The statistics show that individual incidents/events of crime is, as elsewhere in the Western Cape, at
the forefront, and on its own does not constitute a disaster. However, it is the culmination of the
effects of the individual cases that brings a concerning picture to the fore. Considering the relatively
small community of Atlantis (see demographics section), the number of crimes are concerning,
considering that the development of the Atlantis SEZ will be dependent on a stable and safe
investment opportunity perceptions. In particular, the drug problems that the community is experience
is significant and unless this is addressed as part of the Atlantis SEZ development plan, and taken
cognisance of by investors and developers in the area, it could present a Critical Consideration to the
long term sustainability of the SEZ.

During the site visits, police patrols were visible throughout the industrial and residential area.
Although this gives an indication of police activity, it also signifies the need for constant patrols. The
underlying need for such patrols is of great concern to the stability of the SEZ – not only for individual
operators or factories that may be subject to specific crimes, but of long term economic concern since
it could deter investment in the SEZ.

In 2003, Atlantis was cited as an area where child abuse was rampant (IOL News, 2013). The survey
of 272 pupils in four high schools in Atlantis indicated that 38% of children sampled in a survey in
Atlantis had been sexually abused/raped and 12% had turned to child prostitution. The use of pimps
were common and specific homes are known from which prostitution was “run unhindered”, with girls
as young as 14 and 15 being involved. The report considered the more than 300 shebeens in Atlantis
to be of paramount significance as a factor in understanding the cycle of abuse and exploitation of
youth and children in the area. Although this report was done in 2003, it means that these young
people are now, 11 years later, young adults, with a significantly scarred emotional background and
potentially unstable personal life. Also, the ongoing manner of such behaviour in the community is
spoken of on an informal level, although no recent statistics are available. This critical element of
social break-down is expected to have a significant impact on the socio-economic stability of the
Atlantis SEZ and has to be addressed through a collaborative process that engage the entire
community, operators of the SEZ (who need to consider the social and emotional well-being and
stability of their workforce in order to ensure effective operating capacity) as well as social,
educational and health services in the area.

d) Societal instability based on external factors

Category: Insignificant

External factors that could lead to terrorism or sabotage in the region does not seem to be a
significant concern. However, this may depend on the type of industries that enter the SEZ.
Considering that such industries would be related to the green economy, it is not expected that such
industries would generate a negative response in terms of potential sabotage or acts of terrorism.

e) Aerial and aviation-related hazards

Category: General Consideration

When considering the Atlantis SEZ, there are currently no aviation related hazards that would present
a significant impact. There is a remote controlled aircraft field approximately 5 km from the SEZ
presenting no hazard to the SEZ, and an unmanned airstrip south of Atlantis, accessible from the R
27. The latter is used for pilot training and skydiving operations. Usually, a 1 nautical mile buffer is
considered the most important zone of hazard – this zone falls towards the south of the Atlantis
industrial area and SEZ and therefore would not have a significant impact on the SEZ. (A 1nm buffer
is considered to be the area of hazard where possible accidents may occur (AECSA, 2014)).

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Current approach funnels from the Cape Town International Airport (CTIA) does not affect the Atlantis
SEZ. The air space over with the Atlantis SEZ will as it is currently, not affecting the SEZ in a
hazardous manner. The images in Figure 52 show the flight paths to and from CTIA: for Standard
Instrument Departure (SID) on Runway 01 and 19, as well as Standard Terminal Arrival (STAR)
Runway 01 and 19, there is no zone of influence on Atlantis SEZ.

Figure 52 Control areas and runway approaches for CTIA

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Source: BKS, 2011a
For the past decade there has been talk of the possibility of a second international airport in the
vicinity of Cape Town, however there is currently no evidence that shows that the development is
considered seriously, however it is expected that in two or three decades from now, such an airport
will be required. Earlier studies showed that an area approximately 20km south of Atlantis may be
suitable for such an airport.

Should such an international airport be considered south of the Atlantis SEZ, the following
considerations would apply: Larger aircraft are less affected by strong wind velocities than smaller
aircraft. Based on the dominant wind directions and a report regarding “Impact of CTIA and Cape
West on each other” (BKS, 2011b), the orientation of the proposed runway of a possible large airport
south of Atlantis airport would cause the approach/departure funnel to intersect with the Atlantis SEZ.
Should such a development become a reality, the disaster management plan for the Atlantis SEZ will
have to be reviewed. In such instance, the Department of Transport (DOT) and Air Traffic Navigation
Systems (ATNS) has to be involved, and the National Airspace Committee (NASCOM) has to be
presented with an information document related to the airport, its airspace requirements, and related
impacts. Since this is not yet a consideration, the matter will not be elaborated on in further detail.

f) Bulk services supply failure: Bulk water, waste water treatment and
storm water; solid waste
An assessment of bulk infrastructure requirements for the proposed Atlantis SEZ was undertaken as
part of the pre-feasibility study. Key findings are summarised in the Atlantis SEZ Spatial Development
Framework (AECOM, 2014) and therefore not repeated here.

g) Electricity supply failure

Category: Critical Consideration – manageability can be improved via on-site
mitigation

Apart from the assessment of electricity infrastructure requirements for the proposed Atlantis SEZ that
was undertaken as part of the pre-feasibility study and the key findings that are summarised in the
Atlantis SEZ Spatial Development Framework (ibid), the following should be considered: Power
outages of the local electricity supply grid, as with any business in South Africa can impact the
Atlantis SEZ. Consideration should therefore be given by individual operators in the SEZ to provide
their own back-up power generators to run their operations to keep the individual facilities operational
during power outages. Of greater concern than power outages is the expected increase in cost of
electricity over the next decade, with figures of up to 20% year on year increases being expected.
Potential investors should be made aware of the arrangements which the Atlantis SEZ may be
considering to ensure affordable and uninterrupted power supply.

h) Power station hazard

Category: Critical Consideration – early warning procedures need to be
included in SEZ operations and all industries in the SEZ should be made aware
of SEZ-wide early warning procedures and evacuation plans

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The Koeberg Nuclear Power Station is situated approximately 8km southwest of Atlantis industrial
area. Construction of the Eskom-owned and -operated Koeberg Nuclear Power station began 1976,
and it was commissioned 1984. This pressurised water reactor is currently the only one of its kind in
South Africa. Based on the above discussion, early warning procedures and evacuation routes thus
have to be considered and included in the Atlantis SEZ operational process. Currently there is little
information available regarding how local residents and industries would be made aware of a potential
danger and how evacuation of industrial areas, residential, educational and health facilities in
particular would respond to a warning of potential nuclear disaster risk. This gap needs to be
addressed as part of the Atlantis SEZ disaster management plan, once the Koeberg UPZ and
operational/early warning processes are made available for perusal.

Due to the importance of the concern, the following information is repeated from the Koeberg
Emergency Plan: “All urban development within the KNPS Precautionary Action Zone (PAZ) (area
within a 5 m radius of the Koeberg nuclear reactors and Urgent Protective action planning Zone (UPZ)
(area within a 5km to 16km radius of the Koeberg nuclear reactors) must conform to the following
restrictions necessary to ensure the viability of the Koeberg Nuclear Emergency Plan:

No new development is permissible within the PAZ (as defined above) other than development that is
directly related to the siting, construction, operation and decommissioning of the Koeberg Nuclear
Power Station or that is as a result of the exercising of existing zoning rights.” The Atlantis SEZ falls
outside of this zone.

“New development within the UPZ (as defined above) may only be approved subject to demonstration
that the proposed development will not compromise the adequacy of disaster management
infrastructure required to ensure the effective implementation of the Koeberg Nuclear Emergency
Plan (version approved by the National Nuclear Regulator (NNR)). Specifically, within the UPZ area,
an evacuation time of 16 hours of the projected population, within any 67,5° sector to designated
mass care centres (as appropriate), must be demonstrated by means of a traffic (evacuation) model
approved by Council and acceptable to the NNR. The evacuation time must be measured from the
time that the evacuation order is given. These development controls will be superseded by National
‘Regulations on Development in the Formal Emergency Planning Zone of the KNPS to ensure
effective implementation of the Koeberg Nuclear Emergency Plan’ when approved.” The
establishment of the SEZ therefore need to take the above requirements into consideration and
adhere to the necessary requirements which thus require the need for an effective early warning
system to be implemented in the SEZ and all operators within the SEZ.

Ankerlig an open cycle gas turbine power station is located in the Atlantis industrial area, presenting
an explosion hazard. The Atlantis SEZ should implement early warning procedures to ensure that any
potential related disaster is communicated to the SEZ and the industries operating in the vicinity of the
power station.

Figure 53 Koeberg Nuclear Power Station

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Source: http://en.wikipedia.org/wiki/Koeberg_Nuclear_Power_Station

i) Fire and Rescue Emergency Services

Category: Potential Fatal Flaw

See information in earlier Section regarding Fire hazard. Unless there is a service centre in the
Atlantis area that was not identified during the course of the disaster risk assessment, it is critical that
Fire and Rescue Emergency Management Services are provided to the SEZ, even if it is initially in a
mobile form. This is since the existing available services are located too far away from the Atlantis
area to provide speedy and effective industrial-related disaster response.

j) Public Protection Services

Category: Undetermined

No data was available at the time of this report being compiled. Additional research is required to
determine the capacity and ability of the South African Police Force (SAPS) and military services that
may be engaged in case of a major disaster in the Atlantis SEZ.

k) Health Services
Category: Critical Consideration – manageable via provision of medical
services associated to industrial incidents in the SEZ

There are four medical facilities in vicinity of Atlantis. Unfortunately, only services provided at the one
closest to the SEZ could be established at the time that this report was compiled – that of the
Wesfleur Private Clinic. The other Clinics/facilities may be able to provide additional services and
there is apparently a drive to update existing health services. However, adequate information in this
regard could not be obtained at the time of this report being compiled.

Figure 54 Wesfleur Clinic

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 Source:
AECOM, 2014

The capacity of the Wesfleur Clinic varies depending on how many people they treat a day, clinic staff
did not want to estimate. Services that are offered include Family Planning, Child Health Care, HIV &
AIDs, TB, Pap smears and STI’s, and they have a satellite clinic. The clinic is open from 07:30 to
16:30 daily. These services are, however, not suitable for industrial purposes. As a mitigation method,
the Atlantis SEZ should invest in either its own medical facility, or one or more of the existing facilities
in the vicinity of Atlantis should be upgraded to cater for industrial incidents such as cut and pressure-
wounds, burn wounds and the like.

F. Disaster management recommendations

The Hazard-specific discussions and recommendations above relate to specific hazards and should
be considered in more detail based on the specific industries and businesses that establish it in the
Atlantis SEZ. In addition, the following should be considered:

a) Early Warning Processes

Census 2011 statistics indicate that cell phone connectivity, television and radio broadcasts would be
the most effective way of reaching Atlantis SEZ workers and residents for purposes of early warning
in case of an industrial or other disaster. The SEZ should ensure that adequate communication
channels are established with each industry or operator in the SEZ to enable a communication
network that allow fast and efficient early warning for especially disasters related to fire and power
plant malfunctions (the latter at Koeberg or Ankerlig). In particular, it is necessary that health facilities,
SAPS, schools and educational facilities (and potential future fire and rescue emergency services) in
the Atlantis area be connected to the early warning network.

The schooling system and health care units in the area can also be used to establish disaster related
communication channels.

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Figure 55 Household communication services availability in Atlantis

Source: StatsSA, 2011

Figure 56 Internet access by residents of Atlantis

Source: StatsSA, 2011

b) Awareness and Training

The SEZ operator should consider inclusion of guidelines for industries that form part of the SEZ, to
include training and skills development modules as part of their operational processes. Such options
could upskill local residents (who seem to have at least matric graduation) and allow the local
community to fill positions where possible, as opposed to transporting workers from externally into the
area. Such a process will stabilise the community as well as reduce the potential for violent service
delivery protests that are related to job security and a view of outsiders “taking” local jobs away from
residents. If such a project is not embarked on or guidelines/requirements implemented for
businesses that want to operate in the SEZ, the chances of social uprising and increase in already
significant prevalence of violent protests are expected. Such an outcome could have a negative
impact on the long term economic feasibility of the Atlantis SEZ since it could reduce investor
appetite..

c) Establishment of SEZ Disaster Management Protocols and implementing

agent

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Considering the interventions presented in this report, both for hazard-specific disaster prevention,
mitigation, early warning and response situations as well as in general, the following is recommended
as an overall disaster management strategy for the Atlantis SEZ (and any other SEZ for that matter):

 Consider the small scale of the envisaged SEZ, sufficient early guidelines should be put into
existence to ensure that operators and industries adhere to disaster management requirements
from the start. It will be easier to establish the SEZ with recording processes and requirements in
place, than to try and introduce it in retrospect.
 Consider provision of area-based disaster risk and operational maps, guidelines and planning
services, as opposed to relying on site-specific risk management and disaster response. Thus,
where industries are served as an agglomerate, as opposed to each having its own (potentially
contradicting), plans, the SEZ would be better served as a whole. Such a process should span the
entire disaster risk management continuum: from prevention and mitigation, to early warning,
response and recovery.
 Establish a SEZ Disaster Risk Management Technical Task Team, of which the Health and safety
representative or suitable senior competent person of every industry in the SEZ is a member.
 Provide basic disaster risk reduction and management training for staff who are involved in
managing and operating the SEZ.
 Provide induction training for disaster risk management for representatives of new industries, and
any specific new staff.
 Provide guidelines to regulate, and monitor that the above training/induction is transferred to on-
site staff within each industry/operator.
 Monitor small scale incidents across the entire SEZ as well as in the community (e.g. re: violent
protests). This is an extension of the usual health and safety monitoring, which is done at site level
– it refers to a SEZ-wide incident monitoring system.
 Collaborate with the health centres in and around Atlantis: establish whether it is feasible to extend
some of the services that are being provided, to cater for industrial incidents and accidents, or
investigate the possibility of providing a SEZ-specific facility to cater for industrial accidents.
 Establish a fire emergency services facility for Atlantis SEZ, or even as part of one of the larger
operators in the area, allowing them to extend services wider than their own operating entity. This
will require collaboration and negotiation depending on the type of operation and services
involved.
 Monitor and check that health and safety, fire and related regulations, and disaster management
planning requirements are implemented by operators/industries in the SEZ, via a regular recording
and checking mechanism.
 Implement traffic calming zones, restrictive zones and heavy/hazmat vehicle routes and implement
measures to record and curb ignorance of reasons for such elements to be implemented.
 Consider road transport upgrades in the vicinity of Atlantis – especially the R 304 and the R 27.
 Make this report available to all industries in and around the Atlantis SEZ, and consider sharing
information with the community at large.
 Give particular guidance on building/design details considering heavy winds and gust factor, as
well as earthquake potential.

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Finally, it is necessary that an SEZ such as the Atlantis SEZ implement an area-wide disaster risk
management plan, monitoring and response mechanism. In an SEZ it is not adequate to depend on
the ability of each industry to reduce disaster risk and respond to it if it does occur. It is the
responsibility of each operator within the SEZ to form part of a larger integrated sphere of operating
entities that care for the safety and reduced disaster risk in the entire area. At the same time, it is
important that the community be engaged and made aware of mutually affecting disaster risks, in
order to prepare them for potential impacts while at the same time making them aware of their own
actions and resultant impact on the SEZ.

When the SEZ flourish, the community could flourish, and then the SEZ operates as a unified entity in
regards to disaster risk management, its sustainability is significantly increased.

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Reference List for disaster risk assessment

AECOM. (2014). Atlantis SEZ: Spatial Development Framework/Plan. August 2014. AECOM.

Author unknown. (2008). Special Town Planning Investigation into the Potential Impacts that the
establishment of the Pebble Bed Modular Reactor Demonstration Power Plant may have on
current and future land uses. January 2008. Publisher unknown.

Author unknown. (2014). Proposed Greentech Special Economic Zone at Atlantis, Pre-feasibility
Study, September 2014. Publisher unknown.

BKS. (2011a). Impact of Cape Town International Airport and Cape West Gateway International
Airport on each other. Final Report. BKS, Pretoria.

BKS. (2011b). Impact of Cape West Gateway International Airport on Koeberg Nuclear Power
Station. Final Report. BKS, Pretoria.

Council for Geoscience (CGS). (2014). Presentation provided to the City of Tshwane Disaster
Management Forum, September 2014.

Co-operative Governance and Traditional Affairs (COGTA). (2005). Policy Framework for Disaster
Risk management in South Africa. Government Printers.

Deloitte. (2014). The Atlantis green technology special economic zone, Pre-feasibility study
presentation. Deloitte.

Department of Provincial and Local Government (DPLG). (2002). Disaster Management Act 57 of
2002. Government Gazette, Vol. 451, Cape Town. January 2003, No. 24252. Government Printers.

DPLG. (2003). Basic Disaster Management Training for the Nine Provinces and their
Municipalities in their areas. DPLG.

Department of Public Works (DPW). (2014). Built Environment Act of 2000. Government Gazette,
Vol. 426, Cape Town. December 2000, No. 21818. Government Printers.

DPW. (2014). Draft Built Environment (BEP) Policy published for comment (Gen N 370 in GG
37653 of 23 May 2014). Government Printers.

International Strategy for Disaster Reduction (ISDR). (1998). International Strategy for Disaster
Risk Reduction.

IOL News. (2003). Child abuse rampant in Atlantis – survey. Accessed at

http://www.iol.co.za/news/south-africa/child-abuse-rampant-in-atlantis-survey-1.105923, accessed on
30 September 2014.

IOL News. (2012a). Western Cape had most protests. Cited by the University of KwaZulu Natal
Centre for Civil Society (UKZN CCC). Accessed at http://ccs.ukzn.ac.za/default.asp?3,28,10,4044,
accessed on 30 September 2014.

IOL News. (2012b). A community’s pact over mob killing. Cited by the University of KwaZulu Natal
Centre for Civil Society (UKZN CCC). Accessed at http://ccs.ukzn.ac.za/default.asp?3,28,10,4044,
accessed on 30 September 2014.

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IOL News. (2014). Jobseeker lured into prostitution. Accessed at http://www.iol.co.za/news/crime-
courts/jobseeker-lured-into-prostitution-1.1664237#.VCuOIaMaKUk, accessed on 30 September
2014.

South African National Standards (SANS). (2012). SANS10400 Building Regulations. Boundary
Walls and Fences Policy. Accessed at http://sans10400.co.za/download-regulations/, accessed on 7
October 2014.

SANS. (2013). SANS10400 Building Regulations (2011). Cape Town Zone Scheme Regulations
of Nov 2012 Part2; Electric Fence Legal Booklet; Electrical Machinery Regulations of 2011;
General Electrical Specification Part A and Part B; Guide for Drainage and Storm-Water.
Accessed at http://sans10400.co.za/download-regulations/, accessed on 7 October 2014.

Statistics South Africa (Stats SA). (2014). Crime Statistics for South Africa, 2004 - 2014. Accessed
at http://www.crimestatssa.com/provinceselect.php?ShowProvince=Western+Cape, accessed on 30
September 2014.

University of Cape Town (UCT). (2010). Disaster Mitigation for Sustainable Livelihoods
Programme. RADAR Western Cape 2010: Risk and Development Annual Review. PeriPeri
Publications. Rondebosh.

West Cape News. (2008). Taxi industry say they’re in the dark over imminent IRT rollout.
Accessed at http://westcapenews.com/?p=2613, accessed on 30 September 2014.

West Cape News. (2013). Soil foils completion of Atlantis housing project. Accessed at
http://westcapenews.com/?s=Soil+foils+completion+of+Atlantis+housing+project, accessed on 30
September 2014.

World Development Report (WDR). (2014). Risk and Opportunity: Managing Risk for
Development. The World Bank. Washington, DC. pp 343.

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Contact details of data providers and potential stakeholders for disaster risk assessment

Organisation/ Name Designation/ Contact number(s) e-mail

affiliation involvement

Eskom Sajida Hoosen GIS Sajida.Hoosen@eskom.c

o.za

Western Cape Schalk Carstens Disaster SchalkWillem.Carstens@

Disaster Management Management westerncape.gov.za

Western Cape Nabeel Rylands Disaster Nabeel.rylands@westernc

Disaster Management Management ape.gov.za

South African Weather Gail Linnow (021) 934 0831 salesct@weathersa.co.za

Services

Department of Janine Prins 082 857 7931 prinsj@dot.gov.za

Transport (DOT) (alternatively Johan
Buurman)

Air Traffic Navigation Dave Joubert (011) 607 1263 /

Systems (ATNS) 079 517 6863

Aero Club of South Kevin Storie General Manager 083 233 1063
Africa (AECSA)

Private person Jon Heeger Commenting on Jon.heeger@bicyclepowe

the National r.co.za
Airspace
Development Plan

Wesfleur Clinic Bernice Hartnick Sister (021) 572 5380

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