Chapter Irevised Proposal Noi

CHAPTER I
INTRODUCTION
Water scarcity is the main problem of whole world and for this reason, all countries, started to
search about the best ways of supplying drinkable water to the country population. One of the
countries which has considerable water problem is Cyprus and because of this structure of the
country, a profitable market has been generated by businessman in the Island, sale of drinkable
water via stations in Demijohns and currently this business market has a 12 Million YTL
potential and researches show that it will have a 20% increase in every year, if any solutions
does not found by the government.
For a long time, Turkey Government and North Cyprus Government has worked on the
solutions of this big water scarcity in Island and currently a new planned project exist, which
will have deep impact on the Drinkable water market in the near future. Apart from this planned
project, recent years, government has signed contract with some foreign companies to build
new systems to solve the water scarcity problem of the country and in these new systems, the
most important and valuable ones are the seawater desalination projects in North Cyprus.
Currently, there is 2 existing and one started seawater desalination projects in North Cyprus and
it is expected that in the near future, the half of the drinkable water demand will be supplied by
these projects.
In this report, foundation of a seawater desalination project will be analyzed by the means of
possible alternative systems, renewable energy usage, location analysis and some initial costs of
the project as a business company and also a market structure will tried to be generated for the
new company by the means of market share and pricing policies to be competitive in a perfect
competition structure market of drinkable water supply.
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CHAPTER II
SELECTION OF DESALINATION TECHNOLOGY
In selection process of any investment technology or any investment alternative, every feature,
factor and cost should be analyzed in detail and also advantages and disadvantages of
alternatives should be investigated properly.
In this chapter, selection of desalination technology will be analyzed in detail and two types of
power supply technology will be analyzed to find which power technology will be reasonable
and which desalination plant should be setup in Cyprus. From the researches, it has been found
that two types of power supply technology (wind power supply and solar power supply) are
applicable and reasonable to analyze for a medium size business structure in Cyprus Market. It
is obviously known that water is a unique product and product of any competitor will not be too
much different than a product of a newly founded desalination plant. For this reason, it every
aspect of analysis, a perfect competition model should be considered and cost/revenue analysis
should be done under the conditions of perfect competition. As it is known that in each of these
markets, the products are standardized commodities and supply and demand are clearly the
primary determinants of their market price. As a result, it should be known that in this market
as a producer, desalination plant will be a kind of price taker instead of price maker for this
reason costs should be considerably decreased to increase the profit on standardized market
price. It is obvious that there is a good amount of lack of water supply in Cyprus but on the
other hand existing competitors and planned projects will extremely affect the profitability of
projected facility. As it is known, there is planned water supply from Turkey project of
government and it is expected that at the end of 2012, this project will be completed. On the
other hand, government has signed a 15 years contract with a company for a desalination plant
in Famagusta and it is projected that till 2010 three additional projects will be completed in
North Cyprus. The completed one in Bafra produces 2000 cubic meters of drinking water per
day and in the following years, it is planned to increase the capacity of Bafra Desalination plant
to 8000 cubic meters, on the other hand, the contracted one which will be started to construct in
the following months will produce 10000 Tons of drinking water per day. Under these
conditions, it is obvious that supply of drinking water will reach daily demand in the following
2 or 3 years. From the statements of government officials, it is known that daily demand to
2
water in Cyprus is almost 90000 and 35% of this amount is demand to drinking water. As also
it is known that Bafra Desalination Plant supplies 2000 cubic meter water to government at a
price of 0.95 USD per cubic meter and from this information, it is also obvious that cost of per
cubic meter to projected plant should be less than or at least equal to 0.95 USD. For this and
above all reasons, every step and aspect for the project should be analyzed in detail to minimize
the cost of production as much as possible.
2.1. Alternative Desalination Technologies for North Cyprus
In this study, four desalination technologies will be considered and analyzed. These are Reverse
Osmosis, Multiple Effect Desalination (MED or MEE) and Multi Stage Flashing (MSF),
Mechanical Vapor Compression (MVC), Electro Dialysis Desalination is not applicable to sea
water desalination and generally it is used for brackish water desalination for this reason it is
going to be omitted from the analysis. In general view, two of them Reverse Osmosis (41.1%)
and Multiple Stage Flashing Desalination (44.4%) technologies are used mostly and because of
less economical structure of Electro Dialysis in contrast to Reverse Osmosis it can be also
omitted from the analysis, on the other hand financial analysis and feasibility analysis will show
the best one among RO, MED (or MEE), MVC and MSF for the Cyprus Market.
2.1.1. Reverse Osmosis Technology
Reverse osmosis (RO) is a membrane separation process that recovers water from a saline
solution pressurized to a point greater than the osmotic pressure of the solution. The United
States ranks second worldwide in desalination capacity, primarily relying on RO to treat
brackish and surface water [1]. In essence, the membrane filters out the salt ions from the
pressurized solution, allowing only the water to pass. RO post treatment includes removing
dissolved gasses (CO2), and stabilizing the pH via the addition of Ca or Na salts.
Pressurizing the saline water accounts for most of the energy consumed by RO. Since the
osmotic pressure, and hence the pressure required to perform the separation is directly related to
the salt concentration, RO is often the method of choice for brackish water, where only low to
intermediate pressures are required. The operating pressure for brackish water systems ranges
3
from 15 – 25 bar and for seawater systems from 54 to 80 bar (the osmotic pressure of seawater
is about 25 bar) [2]. Since the pressure required to recover additional water increases as the
brine stream is concentrated, the water recovery rate of RO systems tends to be low. A typical
recovery value for a seawater RO system is only 40% [3].
Since most of energy losses for RO result from releasing the pressure of the concentrated brine,
large scale RO systems are now equipped with devices to recover the mechanical compression
energy from the discharged concentrated brine stream with claimed efficiencies of up to 95%.
In these plants, the energy required for seawater desalination has now been reported to be as
low as 9 kJ/kg product [4]. This low value however is more typical of a system treating
brackish water. RO membranes are sensitive to pH, oxidizers, a wide range of organics, algae,
bacteria and of course particulates and other foulants [1]. Therefore, pretreatment of the feed
water is an important consideration and can a significant impact on the cost of RO [5],
especially since all the feed water, even the 60% that will eventually be discharged, must be
pretreated before being passed to the membrane.
2.1.2. Multiple Effect Desalination (MED or MEE)

Multi-effect evaporation (MEE) is distillation process related to Multiple Stage Flash (MSF).
MEE was developed early on and plants were installed in the 1950s. However, due to problems
with scaling on the heat transfer tubes, it lost favor and was replaced with MSF [6]. MEE is still
not widely used, but it has gained attention due to the better thermal performance compared to
MSF. Newer plants are designed to limit problems with scaling. In MEE, vapor from each stage
is condensed in the next successive stage thereby giving up its heat to drive more evaporation.
To increase the performance, each stage is run at a successively lower pressure. This allows the
plant to be configured for a high temperature (> 90 °C) or low temperature (< 90 °C) operation.
The top boiling temperature in low temperature plant can be as low as 55 °C which helps
reduce corrosion and scaling, and allows the use of low-grade waste heat. The MEE process can
have several different configurations according to the type of heat transfer surface (vertical
climbing film tube, rising film vertical tube, or horizontal tube falling film) and the direction of
the brine flow relative to the vapor flow (forward, backward, or parallel feed) [6]. MEE systems
can be combined with heat input between stages from a variety of sources, e.g. by mechanical
or thermal vapor compression (TVC) [32-34]. Hybrid MEE-TVC systems may have thermal
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performance ratios (similar to the gain ratio, energy used to evaporate water in all the stages/
first stage energy input) approaching 17 [7], while the combination of MEE with a lithium
bromide/water absorption heat pump yielded a thermal performance ratio of 21 [8].
2.1.3. Multi Stage Flash Desalination (MSF)
Multi-stage flash (MSF) units are widely used in the Middle East (particularly in Saudi Arabia,
the United Arab Emirates, and Kuwait) and they account for over 40% of the world’s
desalination capacity [9]. MSF is a distillation (thermal) process that involves evaporation and
condensation of water. The evaporation and condensation steps are coupled in MSF so that the
latent heat of evaporation is recovered for reuse by preheating the incoming water. To
maximize water recovery, each stage of an MSF unit operates at a successively lower pressure.
A key design feature of MSF systems is bulk liquid boiling. This alleviates problems with scale
formation on heat transfer tubes. In the Persian Gulf region, large MSF units are often coupled
with steam or gas turbine power plants for better utilization of the fuel energy. Steam produced
at high temperature and pressure by the fuel is expanded through the turbine to produce
electricity. The low to moderate temperature and pressure steam exiting the turbine is used to
drive the desalination process [1, 2, and 10]. A performance ratio often applied to thermal
desalination processes is the gained output ratio, defined as the mass of water product per mass
of heating steam. A typical gained output ratio for MSF units is 8 [2, 7, 11]. A 20 stage plant
has a typical heat requirement of 290 kJ/kg product [2].
2.1.4. Vapor Compression (Thermal and Mechanical)
Vapor compression processes rely on reduced pressure operation to drive evaporation. The heat
for the evaporation is supplied by the compression of the vapor, either with a mechanical
compressor (mechanical vapor compression, MVC), or a steam ejector (thermal vapor
compression, TVC). Vapor compression processes are particularly useful for small to medium
installations [37]. MVC units typically range in size up to about 3,000 m3/day while TVC units
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may range in size to 20,000 m3/day. MVC systems generally have only a single stage, while
TVC systems have several stages. This difference arises from the fact that MVC systems have
the same specific power consumption (power/unit water produced) regardless of the number of
stages, while the thermal efficiency of TVC systems is increased by adding additional stages
[12]. Thus the main advantage of adding effects to an MVC system is simply increased
capacity. Because renewable electrical power supply will be considered in this project, TVC
can be omitted from the analysis.
2.1.5. Electro Dialysis (ED)
Electro dialysis (ED) utilizes a direct current source and a number of flow channels separated
by alternating anion and cation selective membranes to achieve the separation of water and
dissolved salts [3]. Since the driving force for the separation is an electric field, ED is only
capable of removing ionic components from solution, unlike RO or distillation.
In the ED process, saline water is fed in parallel to each of the separate channels. Cations and
anions then migrate in opposite directions in response to the applied voltage. Due to the charge
selectivity of the membranes, the ion concentration increases and decreases in alternating
channels of the apparatus. A single membrane stack may consist of hundreds of these
alternating channels. Since the resistance in the stack changes from top to bottom, the
separation is typically carried out is a series of small steps. This makes the process more
economical and easier to control [2]. Like RO, the energy required to separate the ions from
solution increases with concentration, thus ED is generally limited to brackish waters
containing only a few thousand ppm of dissolved solids [2].
The membranes of ED units are subject to fouling, and thus some pretreatment of the feed
water is usually necessary. Precipitation of scale can be facilitated in the ED process by
changes on pH that occur near the membranes as a result of the transport of H+ and OH ions [2].
However, since there is not a flux of water through the membranes, ED can treat water with a
higher level of suspended solids than RO. Also, since nonionic solids, e.g. silica, are not
concentrated by the process, these components are of less concern [3]. The electro dialysis
reversal (EDR) process was developed to help eliminate membrane fouling. In the EDR
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process, the membrane polarity is reversed several times an hour. This has the effect of
switching the brine channels to freshwater channels, and the freshwater channels to brine
channels, and breaks up and flushes out deposits [2, 3].
2.1.6. Comparison and Elimination of Alternatives
Before any financial analysis, it is obvious that there is a possibility that some of the
alternatives can be eliminated from alternatives list without considering costs, because in the
end financial analysis will be the main method of deciding which one is the best financially, it
is possible to say that some of the alternatives are not applicable to projected facility in North
Cyprus.
At the beginning of section 2.1, it has been mentioned that ED process is only applicable to
Brackish Water Desalination and it has been eliminated from the alternatives and apart from
ED, other alternatives also have some drawbacks and process structures that are not suitable for
the projected facility. For example, MSF and MEE use thermal energy to distill water to use
any of these technologies electrical energy should be converted to thermal energy which will
be very costly because it is known that theoretical minimum energy required to desalt seawater
ranges from 3 – 7 KJ/Kg and also it is known that 1 Kwh is almost equal to 3600 KJ and on the
other hand it is known MEE consumes 30 times more energy than theoretical energy
requirement of seawater desalination, from this information if it is assumed that 1 liter water is
equal to 1 Kg water, for a capacity of 1000 cubic meter per day facility, just the process of
desalination will need a minimum of 25000 Kwh of electricity supply per day but because both
technologies are applicable to the desalination of seawater, other features should also be
considered to decide if they are applicable or not. On the other hand, as thermal processes,
when MSF and MEE compared with their usage in the world, it is possible to say that MSF is
one of the most widely used process of desalination due to problems with scaling on the heat
transfer tubes in MEE technology but on the other hand but MEE has gained attention due to
the better thermal performance compared to MSF.
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In general view, two alternatives out of four selected ones are suitable and applicable with
renewable energy supply sources without considering necessary rate of electricity demand.
These alternatives are Reverse Osmosis (RO) and MVC, because both technologies are working
directly with electricity and thus renewable energy supply technology. When we compare both
technologies, they have also drawbacks or disadvantages in between them. For example, for
RO, operational control is required as membranes are very sensitive but on the other hand
because the MVC has relatively simple operation, one may say that MVC can be a better choice
because of low complexity of operations but on the other hand when energy requirements
compared, it is possible to say that RO needs lower energy than MVC. Both alternatives need
pre treatment but pre-treatment for RO is higher than the necessary pre-treatment of MVC, for
this reason when both alternatives compared, it is possible to say that in pre-treatment means,
RO could affect local habitat than MVC.
When all four alternatives compared, RO and MVC has very high maintenance requirements
and almost in every 5 years, replacement will be necessary for both alternatives but on the other
hand MEE and MSF has very low maintenance requirements and also they does not need any
replacement almost forever. On the other hand, pre – treatment necessity of alternatives is
another drawback for RO and MVC among all four alternatives because in MSF and MEE
processes there is no pre treatment which makes them environmental friendly when electricity
used to produce thermal energy but in such case, because of high electricity needs MSF and
MEE can be very costly processes than RO and MVC. In the following table (Table 2.1),
comparison of alternatives is given under some criteria.
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Criteria RO MVC MEE MSF
Energy Electrical Electrical Thermal Thermal
Electricity Very Low Low Very High Very High

Consumption
Pre treatment High for Some treatment No No
seawater feed but nothing Pre Treatment Pre Treatment
compared to RO
Maintenance High High Low Low
Requirements
Replacement Yes Yes No No
Almost in every Almost in every
5 Years 5 Years
Usage Ratio in 41.1% 4.3% 4.1% 44.4%
the World
Output Quality Fair Fair Purer Purer
Table 2.1. Comparison of Alternative Water Desalination Technologies
In general, there is no literature or study on converting Electrical Energy to Thermal Energy for
MEE and MSF. In such cases, RO or MVC is put into the consideration, for this reason, MEE
and MSF will be omitted from the studies and financial studies will be applied for RO and
MVC. In other word, it may be possible to convert the electrical energy to thermal energy but
on the other hand it is possible to say that high energy consumption of MEE and MSF in
electrical basis will have very high impact on overall costs of the water. Even there is no
replacement of MEE and MSF, the monthly electrical cost of MEE and MSF will exceed the
cost of replacing RO or MVC. A simple calculation can be applied in financial basis to prove
the necessity of omitting MEE and MSF from the alternatives list. In the following sections
firstly, RO and MEE will be compared in the basis of finance and then main alternatives will be
compared to select the best alternative for the projected facility. Cause of selecting MEE
instead of MSF is that it is well known that MEE consumes less energy than MSF because it
has better thermal performance than MSF.
2.1.7. Financial Comparison of Thermal and Membrane Alternative
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As it has mentioned in previous section (2.1.6), Thermal Alternatives consume more energy
than the Membrane alternatives and this causes high impact on cost of water. In this study,
main approach is to minimize the cost of water to be competitive in the market because of
perfect competition structure of the water. In this comparison, as a thermal alternative, MEE
will be financially analyzed in front of the most widely used membrane alternative RO. It is
known that theoretical minimum required energy to desalt seawater ranges from about 3 – 7
KJ / Kg. From the analysis of existing models, it has been found that MEE uses a minimum of
30 times of the theoretical minimum required energy to desalt the seawater but on the other
hand RO uses a maximum of 10 times of the theoretical minimum required energy to desalt the
seawater. This means that for 1 liter of water RO needs a maximum of 30 KJ energy but on the
other hand for 1 liter of water MEE needs a minimum of 90 KJ. In the following study, it is
assumed that both alternatives will be used for a plant to a capacity of 8 cubic meter per day.
And analysis will be done for 15 years to consider the replacement of RO for three times and in
electrical cost basis, Industrial electricity pricelist will be used and it is known that 1 Kwh of
industrial electricity will cost 0.25 YTL to the facility. On the other hand, from Water Tech
Solutions Co. Ltd in China, it has been found that FOB price of an RO with a capacity of 1000
Liters/hour is $14.000 USD and with the assumed $2500 USD transportation cost to Cyprus it
will be $16500 and from the literature researches it has been found that Capital Cost of MEE is
higher than the cost of RO. Analysis of analysts on 16 RO Plants showed the average % cost of
each factor in a RO Plant as given in Table 2.2, it has been calculated that contacter and
associated components of RO can be purchased for about $1 per gallon/day capacity. The other
process units sum to about $0.60 - $0.80 per gallon/day capacity. Purchasing the site and
installing the equipment adds about another $3 per gallon/day for a total of about $4.50 - $5.00
per gallon/day ($1188 -$1320 per m3/day) of capacity. These rough numbers from 1993 are
slightly higher than the $2.88 – $3.95 range cited in 1998 [13] for 24 million gallon/day plants
(RO, MSF, MVC, or MEE), but within the range of $3.65 - $8.50 reported for three select
seawater RO plants in 1991 [14].
Factors Average %
Energy Cost 44%
Chemicals 3%
10
Replacement 5%
Labor Costs 4%
Maintenance & Parts 7%
Pre Treatment 30% on RO Unit Cost
Polishing 40% on RO Unit Cost
Installation 30% on RO Unit Cost
Site 150%
Table 2.2. Cost Factors of RO Plants
In general, some of the above values will be used under the TRNC conditions. For example,
electricity cost of RO and Labor Costs. For site and other factors we will assume similar
amounts to compare RO and MEE under the known factors. We know that cost of 1000 Liters
per Hour capacity RO is $16.500 USD and average daily electricity consumption of this
machine is known as almost 42 Kwh/day and from theoretical information, it has been also
calculated that 1000 Liters per Hour (or 1 cubic meter per hour = 8 cubic meter per day) Capacity
RO Machine will need almost 66.7 Kwh per day, which is almost same with the given
information of the machine from China. To prevent the gaps between MEE and RO, theoretical
energy consumption will be used for both alternatives. On the other hand, for replacement cost,
purchasing price will be used for every 5 years but also to prevent the misleading, it is going to
be assumed that there will be 40% change in purchase price in every 5 years, this means that
same machine will be bought at a price of $23100 USD five years from now. It is going to be
assumed that in every three month period, machines will have maintenance and in every four
months they will need polishing. Chemicals are used in pretreatment and post treatment
processes and it will be assumed that chemicals are used in daily basis and cost of chemicals are
3% x $1 USD per gallon per day which is equal to $0.03 USD per gallon per day or $6.599
USD per cubic meter per day (1 cubic meter = 219.97 gallon). Site cost and Installation are the
initial costs and Site cost will be omitted from the calculations because it will be assumed that
for both alternative same sites will be bought or leased from the government under the
investment incentives laws. On the other hand, it is also going to be assumed that number of
workers for both alternatives will be same and therefore monthly labor cost will be same, for
this reason, labor costs also omitted from the calculations. In the following table (Table 2.3),
cost factors and total costs of factors are given for RO Alternative.
Factors Type Cost
11
Machine Cost Initial Cost $ 16.500
Installation Initial Cost $4.950
Pretreatment Initial Cost $4.950
Maintenance & Parts Every three months $1.155
Energy Cost Monthly 0.25 YTL x 66.7 Kwh/day x
26 working Days = 433.5 YTL
= $290 USD
Chemicals Daily 6.599 USD per cubic meter =
$52.79 USD
Polishing Every four months $ 6.600
Replacement Every 5 years $16500 x (1.4)n
For n =1, 2 and 3
Table 2.3. Cost of each factor to RO Alternative
For MEE Alternative factors can be listed as Cost of Unit, Installation cost, Parts and Supplies,
Operation & Maintenance, Energy Cost, Chemicals and Capacity Charges. Cost of Unit is
known to be expensive than the Cost of Unit of RO and it is going to be assumed that Initial
Cost of Unit is not more than $25.000 USD, on the other hand, thermal energy of MEE will be
supplied from electricity by converting electrical energy to thermal energy and from the
analysis, it is known that MEE needs a minimum of 90 KJ energy to desalt 1 liters of seawater
and a maximum of 210 KJ, which means an average of 150 KJ energy will be needed. In this
case, for a 1000 Liter per Hour capacity (equal to 8 cubic meter per day), MEE will need
1200000 KJ per day which is equal to 333 Kwh per day (Almost $1.444 USD per Month). On
the other hand, it is also assumed that installation cost ratio of MEE is equal to the installation
cost ratio of RO. In this case, installation cost of MEE will be $7500 USD. From the analysis of
analysts it is known that Parts and Supplies Ratio of MEE is equal to 1% of total unit cost and
Parts & Supplies will be assumed to be in every five months basis and will be equal to $250
USD and also it is known that maintenance operation of MEE is low, for this reason it is going
to be assumed that maintenance to MEE unit will be in every five months and cost ratio of
maintenance is known as 5% of Total Unit Cost that is equal to $1250 USD. Cost Ratio of
Chemicals for MEE is 9% on $1 USD per gallon per day basis and in such case, daily chemical
cost of MEE will be $19.79 USD per cubic meter per day ($158 USD per Day). Capacity
Charges to MEE will be calculated in daily basis and it is known as $0.16 USD per gallon per
12
day (or equal to $35.2 USD per cubic meter per day). In Table 2.4 Cost Factors and cost of each
factor for MEE is given.
Factors Type Cost

Cost of Unit Initial Cost $25000
Installation Cost Initial Cost $7500
Parts & Supplies Every 5 Months $250
Operations & Maintenance Every 5 Months $1250
Energy Cost Monthly $1444
Chemicals Daily $158
Capacity Charges Daily $260
Table 2.4. Cost of each Factor to MEE Alternative
In financial comparison of two alternatives, Incremental NPV analysis will be used. Interest Rate will be
assumed to be 3% per year. Because alternatives are mutually exclusive incremental NPV will give the
best result for decision making. First of all, for both alternatives, total initial investment costs and
monthly costs should be calculated. For example, chemicals for MEE is given in daily basis and if it is
assumed that the working days in a month is equal to 26 days, monthly cost of chemicals can be
accepted as $4108 USD per month but on the other hand Operations & Maintenance is carry out in
every five months for this reason, first we should find total present value of these costs and then
calculate in monthly basis by considering interest rate of 3% per year.
A. Maintenance & Parts cost for RO
A = $1155 USD in every 3 months

i = 3% per year (i = 0.2465% per month)
0 1 2 3 4 5 6 7 8 9 10 11 12
A = $1155
i = 3%
13
$1155 $1155 $1155 $1155
PV = + + +
(1.002465 ) 3 (1.002465 ) 6 (1.002465 ) 9 (1.002465 )12
PV = $1146 .5 + $1138 .06 + $1129 .69 + $1121 .38 = $4535 .63
Present Value of Maintenance & Parts Cost for RO has been calculated as $4535.63 and now it
should be converted to monthly basis. It is known that
 i (1 + i ) n 
A = PVx  
 (1 + i ) − 1
n
 0.002465 (1.002465 )12 

A = $4535 .63 x   = $3708 .78 x 0.08467457 = $314 .04 per month
 (1.002465 ) − 1 
12
B. Polishing Cost for RO

A = $6600 USD in every four months
i = 3% per year (or 0.2465% per month)
0 1 2 3 4 5 6 7 8 9 10 11 12
A= $6600
i= 3%
14
$6600 $6600 $6600
PV = 4
+ 8
+ = $6535 .32 + $6471 .28 + $6407 .86
(1.002465 ) (1.002465 ) (1.002465 )12
PV = $19414 .46
A = $19414 .46 x0.08467457 = $1643 .911 per month
C. Parts & Supplies and Maintenance & Operations for MEE
A1 = $250 USD in every five months

A2 = $1250 USD in every five months
A = $250 + $1250 = $1500 USD in every five months
i = 3% per year or 0.2465% per month
0 1 2 3 4 5 6 7 8 9 10 11 12
$1500 $1500
$1500 $1500
PV = 5
+ = $1481 .65 + $1463 .52 = $2945 .17
1.002465 1.002465 10
A = $2945 .17 x 0.08467457 = $249 .38 per month
D. Replacement Cost of RO
It is known that RO will be replaced with a new one in every five years and cost of RO is
assumed to be increased by 40% of current cost in first 5 year and so on. In this case, if analysis
will be done for 15 years, cost of RO in present time should be calculated.
Initial Investment = $16500 USD
15
R1= $16500 x 1.4 = $23100 USD (First replacement price)
R2= $23100 x 1.4 = $32340 USD (Second replacement price)
R3= $32340 x 1.4 = $45278 USD (Last replacement price for 15 years analysis)
i = 3% per year
In this case;
$23100 $32340 $45278
PV = $16500 + 5
+ 10
+
(1.03 ) (1.03 ) (1.03 )15
PV = $16500 + $19926 + $24063 + $29062 = $89551
To compare alternatives initial costs and monthly costs listed as follows for incremental Net
Present Value (NPV);
RO MEE
Initial Investment Cost $89551 $25000
Installation Cost $9900 $7500
Monthly Costs $3620.45 $12561.38
Table 2.5. Initial and Monthly Costs of RO and MEE Systems
In this case, it is possible to say that

Incremental Investment = $64551
Incremental Installation cost = $2400
Incremental Monthly Inflows = $8940.93
This can be interpreted as there will be $64511 USD initial investment to RO towards MEE and
for RO there will be $2400 initial additional cost because of installation and pretreatment but
these high initial costs will bring $8940.93 USD monthly earnings because of high monthly
costs of MEE. If net present value of incremental results brings a positive result, it is possible to
say that RO should be selected as Desalination Technology instead of MEE.
NPV = Present Value of All Inflows – Present Value of All Outflows
16
 (1.002465 )12 − 1 
NPV = $8940 .93 x  12  − $66951
 0.002465 x (1.002465 ) 
NPV = $105591 .697 − $66951 = $38640 .697
From this result, it is obvious that selecting RO will be $38640.697 USD less costly than MEE.
From world wide analysis, it is known that among all Thermal Desalination Technologies,
MEE is the most economical one and from this analysis, it is obvious that even its economical
structure, MEE is more costly than RO, therefore, it is possible to say that in the following
analysis all thermal technologies can be omitted. As a result, there will be two alternatives that
should be compared in the following sections and these alternatives will be Reverse Osmosis
(RO) and Mechanical Vapor Compression (RO). In the analysis of RO and MVC, world wide
usage ratio and also other distinguishing features will be considered in monetary basis. In the
end, they are not going to be exact cost or revenue for the alternatives but will show the value
of alternative in monetary basis to lead the decision maker to choose the best alternative.
2.1.8. Financial Comparison of RO and MVC
In general view, it is known that RO Desalination plants are always most economical than the
MVC plants and also because of this structure of RO, it has highest usage rate than MVC. It is
known that the world wide usage rate of RO Desalination plants is 41.1% and on the other hand
MVC has a ratio of just 4.3% and this amount also consists of TVC plants too. On the other
hand, it is also known that MVC plants are only adaptable to the capacity of 20 cubic meter
/day to 2500 cubic meter per day. This can be also acceptable as a drawback for the projected
facility in North Cyprus. In fact, there is no constraint for capacity to projected facility but in
general it is assumed that a capacity of almost 210000 liters of fresh water (almost 11000 Unit
of Demijohns per month) production will be reasonable to enter North Cyprus Fresh Water
Market or at most 416000 liters (almost 21894 unit of Demijohns per month) but with a
minimum amount of MVC that is equal to 20 cubic meters per day, monthly capacity of plant
17
will be 520000 Liters (27368 unit of Demijohns per month), it can be also accepted as
reasonable but demand – supply and forecasting studies also will show the best starting point of
capacity for a seawater desalination plant in North Cyprus. On the other hand, it is known that a
RO plant can be completed in 18 to 24 months but a MVC plant can be completed in 36 to 60
months. For this reason, in financial comparison, opportunity cost of MVC should be taken into
consideration. Because, if it is taken in minimum basis, after 18 months of investment RO will
start to generate profit but MVC will need additional 18 months to be completed which means
that 18 months of loss of profit. If it is assumed that both plants will be constructed to have a
capacity of 2000 liters per hour, in 18 months RO will produce almost 394100 Demijohns and
if it is assumed that net profit from each unit will be 0.5 YTL, opportunity cost of MVC will be
almost $130.000 USD or in monthly basis opportunity cost of MVC will be almost $7298 USD
per month. In financial analysis, opportunity cost will not be used but in decision making part,
it should be considered to prevent unnecessary time consuming. Because, it is known that
because of ongoing similar projects and planned projects, projected facility should enter the
market as soon as possible to have a good market share on pie.
From the analysis of two technologies RO and MVC, cost factors and ratio of cost factors
between both technologies has been calculated. In these calculations, most of the RO and MVC
plants have been used as models and MVC/RO cost factors calculated as shown in Table 2.6.,
in the following table cost of factors of MVC is shown on in each $1 cost of RO technology.
For example, in each dollar of buying RO, $1.41 USD should be used to buy MVC System or
in each dollar of installing RO, $2.29 USD should be used to install MVC System. Again cost
of buying site will be omitted from the calculations because it is assumed that same site will be
bought regardless of desalination system. For the calculations, the idea used can be described
on the electricity costs. From the general average electricity consumption of RO plants has been
calculated to be almost 5.5 Kwh per cubic meter and on the other hand for MVC, it has been
found that electricity consumption of MVC Technology has been calculated to be about 10 – 11
Kwh per cubic meter. In such case, it is possible to say that average electricity consumption of
MVC Technology is 10.5 Kwh per cubic meter. From this information, ratio of both electricity
consumptions is almost equal to 1.91 that means that for $1 electricity usage to RO, $1.91 USD
will be needed for MVC. And for other factors, same approach has been used to compare both
18
technologies. On the other hand, it should be known that Product water quality for both
technologies is in the range of fresh water specifications of World Health Organization (WHO).
In RO Technology, Product water quality is between 350 – 500 ppm TDS and for MVC
technology it is almost 10 ppm TDS and according to WHO, standards of portable water is
shown in Table 2.6. and from the table it is possible to see that maximum allowed value for
Total Dissolved Salts is 1500 ppm TDS.
Table 2.6. WHO Standards for Portable water.
Factors RO MVC
Initial Cost 1 1.41
Installation Cost 1 2.29
Average Energy Cost 1 1.91
Consumable Costs 1 0.72
Labor Costs 1 1
Maintenance Costs 1 1.4285
Pretreatment 1 0.45
Table 2.7. Cost Factor Comparison of RO and MVC (in Ratio Dollar ($) Basis)
Apart from the above costs, two important things should be taken into consideration. One is the
opportunity cost because of late construction and the other one is world wide usage of
technologies. These two important cases are shown in Table 2.8. In calculation of Cost of Late
Construction, net profit from 1 demijohn assumed to be 0.5 YTL and production capacity
assumed to be 2000 liters per hour and also it is assumed that all produced products will be
sold. On the other hand, Cost value of usage ratio calculated by assuming that cost of selecting
19
less widely used technology is (Y – Usage Ratio x Y) and for Y, the value has been taken to be
$30.000 (In fact, this amount can be increased or decreased, there is no dependent factor to this
value.)
Opportunity Factors RO MVC

Construction Duration 18 – 24 Months 3 to 5 years
Cost from Late Construction 0 $7298 per Month
WW Usage Ratio 41.1% 4.3%
Cost Value of Usage Ratio $17670 $28710
Table 2.8. Opportunity Costs of both technologies
From Table 2.3 Costs of RO alternative for 1000 liters per hour is known, because the
minimum capacity for MVC is almost 2000 liters per hour, costs of RO alternative will be
converted to the same capacity of MVC and comparison will be done in these bases. From the
ratios, it is obvious that MVC is less economical than RO alternative and in fact it is possible to
omit MVC without financial analysis but to make MVC more competitive to prevent
misleading, it is going to be assumed that replacement cost of MVC will increase 30% in every
5 years. From the previous calculations, for RO, increase in replacement cost assumed to be
40% in every 5 years. In the following table (Table 2.9) new costs of RO has been calculated
for 2000 liters per hour capacity
Factors Type Cost

Maintenance & Parts Every three months $1.155
Energy Cost Monthly 0.25 YTL x 133.4 Kwh/day x
26 working Days = 867.1 YTL
= $578 USD
Chemicals Daily 6.599 USD per cubic meter =
$105.584 USD
Polishing Every four months $ 13.200
For n =1, 2
Table 2.9. Cost of each factor to RO Alternative
20
From the Ratio table, costs of MVC will be as shown in Table 2.9, consumable costs are
assumed to be chemicals and also polishing. And analysis will be done for 10 years. For these
analyses, interest rate will also be assumed to be 3% per year.
Factors Type Cost

Maintenance & Parts Every three months $1649,91
Energy Cost Monthly $1103,98
Chemicals Daily $79,188
Polishing Every four months $ 9504
For n =1, 2
Table 2.10. Costs of MVC alternative
Before starting NPV analysis, periodical costs should be converted to monthly basis and also because
the analysis will be done for 10 years, replacement costs of both alternatives should be taken to present
value basis.
A. Maintenance & Parts for RO Alternative
A = $1649,91 in every 3 months

0 1 2 3 4 5 6 7 8 9 10 11 12
21
i = 3% per year
$1155 $1155 $1155 $1155

PV = 3
+ 6
+ 9
+ = $1146 .5 + $1138 .1 + $1129 .7 + $1121 .4
1.002465 1.002465 1.002465 1.002465 12
PV = $4535 .7
 i (1 + i ) n 
A = PVx  
 (1 + i ) − 1
n
 0.002465 x(1.002465 )12 

A = $4535 .7 x   = $4535 .7 x 0.084674568
 (1.002465 )12 − 1 
A = $384 .058 per month
B. Polishing for RO Alternative

0 1 2 3 4 5 6 7 8 9 10 11 12

i = 3% per year
$13200 $13200 $13200

PV = 4
+ 8
+ = $13070 .6 + $12942 .6 + $12815 .7
1.002465 1.002465 1.002465 12
PV = $38828 .9
A = $38828 .9 x0.084674568 = $3287 .82
C. Replacement Cost of RO Alternative

R1 = $33000 x 1.4 = $46200 in fifth year
22
R2 = $33000 x 1.42 = $64680 in tenth year
$46200 $64680
PV = $33000 + + = $33000 + $39852 .52 + $48127 .99
1.03 5 1.0310
PV = $120980 .51
D. Maintenance & Parts for MVC Alternative
A = $1649.91 USD in every 3 months
i = 0.2465% per month
$1649 .91 $1649 .91 $1649 .91 $1649 .91
PV = 3
+ 6
+ 9
+
1.002465 1.002465 1.002465 1.002465 12
PV = $1637 .77 + $1625 .72 + $1613 .75 + $1601 .88
PV = $6479 .12
A = $6479 .12 x0.084674568 = $548 .62 USD per month
E. Polishing for MVC Alternative

0 1 2 3 4 5 6 7 8 9 10 11 12

I = 3% per year
$9504 $9504 $9504

PV = 4
+ 8
+
1.002465 1.002465 1.002465 12
PV = $9410 .86 + $9318 .64 + $9227 .32 = $27956 .82
A = $27956 .82 x0.084674568 = $2367 .23 per month
F. Replacement Cost of MVC Alternative

R1 = $46530 x 1.3 = $60684 in fifth year
23
R2 = $46530 x 1.32 = $78635.7 in tenth year
$60684 $78635 .7
PV = $46530 + + = $46530 + $52346 .5 + $58512 .3 = $157388 .8
1.03 5 1.0310
At this point, it is possible to construct the incremental table of both alternatives. In Table 2.11,
it is possible to see monthly costs and initial costs of both alternatives and in incremental part
Incremental MVC is going to be analyzed with NPV analysis and if NPV gives a positive result
MVC will be the best choice but if it gives negative result, it is going to be possible to say that
best decision will be the reverse osmosis (RO) technology.
Cost Factors MVC RO Incremental

Machine Cost $46530 $33000 $13530
Installation Cost $22671 $9900 $12771
Pretreatment Cost $4455 $9900 -$5445
Replacement Cost $110858.8 $87980.058 $22878.29
Monthly Costs $6114.7 $87980.61 -$876.348
Table 2.11. Incremental Analysis table for RO and MVC
From Table 2.11, it is possible to say that for MVC an initial cost of $43734.29 USD will be
invested but in the end it will bring $876.348 USD monthly revenue. But to be best choice total
inflows should be higher than total outflows otherwise it can be accepted as loss profit or
unreasonable choice. Even if it is positive, decision maker should also consider the world wide
usage ratios and opportunity cost of MVC before giving exact decision. In the following figure,
it is possible to see cash flow diagram of Incremental study.
A= $876.348
……………..
0 1 2 3 4 5 6 7 8 9 10 11 12
n = 12 Months
$43734.29
NPV = Total Inflows - Total Outflows
24
 (1 + i ) n − 1
NPV = A n 
− Total Initial Investment
 i (1 + i ) 
 (1.002465 )12 −1 
NPV = ($876 .348 )  12 
− $43734 .29
 0.002465 x(1.002465 ) 
 0.029984344 
NPV = ($ 876 .348 )  − $43734 .29
 0.002538911 

NPV = $10349 .602 − $43734 .29
NPV = −$33384 .687
From the NPV result, it is obvious that choosing MVC will be $33384.687 USD costly than
RO. Also with opportunity cost and low value because of less usage makes MVC undesirable
and illogical to choose. For this reason, it is possible to say that for the projected facility in
North Cyprus Reverse Osmosis Technology will be used.
25
CHAPTER III
SELECTION OF POWER SUPPLY TECHNOLOGY
After selecting Desalination technology, it is time to select the best possible power supply
technology for desalination plant. For this analysis, indeed, there is 3 possible alternatives Wind
Turbines, Solar Power Supply (Photovoltaic) and Wave Turbines to generate electrical energy
from renewable power supply sources.
In these studies, three important points should also be considered for feasibility analysis to
choose the best possible energy power supply. First of all, before working on technologies,
decision maker should know how much electricity will be needed for the projected facility in
daily basis. On the other hand, each energy supplier has different area coverage, for this reason,
when selection studies applied, cost of necessary area should be considered and in these studies
two alternatives should be taken into consideration buy or lease. As it is know, because of
investment incentives laws of TRNC, investor will have the chance to lease a possible
government land for such purpose for 99 years. And the third important one is continuity. As it
is known, none of the renewable power supplies under consideration has continuity, for this
reason a buffer electrical supplier should be considered in analysis process and also usage ratio
of renewable power supply and buffer power supply also should be considered to analyze the
costs of buffer supplier because of electricity cut from renewable energy supply. In this case, as
a buffer supply, two alternatives can be considered, one is a diesel generator and second one is
electricity from Grid. Before analyzing power supply sources, it is going to be reasonable to
analyze these three important issues and select the best possible alternatives for each issue.
3.1. Electricity Demand of Facility

From the researches and analysis expected minimum electricity demand of the facility has been
calculated to be 409.88 Kwh per day. In general, it can be assumed that the facility will work 8
hours a day and it is assumed that 3 hours out of 8, the facility will also use electricity for
lighting. Indeed, lighting is one of the least energy consumer part of the facility but instead of
26
starting from higher consumer tools, we should start from least to most to find all energy
consuming parts of the facility. On the other hand, it should be mentioned that printers, fax
machines, photocopy machines and similar tools also the parts that are consuming electricity in
the facility but it is obvious that those machines are the ones which uses least energy too
because such machines are not used continuously. For this reason, we will assume that daily
electricity consumption of these machines is not more than 0.2 Kw. In Table 3.1, list of tools &
machines and their daily electricity consumption is given but also it should be realized that
some of the number of machines may increase after the design of layout of managerial &
offices part of the facility. In general view, it is known that there will be offices for Accounting
Department, Production Department, Sales and Marketing Department, IT Department,
Electrical & Electronics Department, Public Relations Department, Secretary & General
Manager office. In each office there will be at least one computer, an Air Conditioning System,
100 watt bulb and in some offices there will be printers, scanners, fax machines. From the area
calculations, the estimated area for a 2 staff office has been calculated to be almost 36 sqm [w1]
and for 36 sqm area office, it is going to be assumed that 2 x 100 watt bulb will be suitable. In
fact, some of the design tools [w2] show that a cell office needs almost 220 watt lighting but
from design to design consumption shows great differences. Apart from office tools, in building
of offices at least two water dispensers will be needed for the staff and also for visitors. On the
other hand, because the distilled water will be filled to the bottles and demijohns, there will be a
filling department in the facility and for this department two machines will be assumed to be
used (demijohn filling machine and also small bottle filling machine), apart from filling
machines there will be at least three pump machines that will pump sea water to distillation
department and from distillation to drinking water tanks and from tanks to filling machines.
And as a last and one of the highest consumers, we should consider desalination machines. In
that point, from the previous chapter it is know that Reverse Osmosis Technology will be used
as desalination technology and in this analysis, a high capacity of RO Technology should be
considered to build a Renewable Power Supply Technology that will be useful when it is
decided to expand the facility. In any case, at the beginning, RO Technology may be chosen to
supply expected and calculated demand of projected market share but in the future,
management may decide to expand / improve the production capacity of the plant and in such
case, existing power supply should be good / high enough to be useful in any future plant
27
expansion. For this reason, in energy demand calculations RO capacity will be accepted as
2000 liters per hour (Almost 21894 Demijohns per month)
Average Average
# of tools in
Tool Consumption Working Hours Daily Consumption
Facility
per Hour per day
Computer 125 watt 15 8 15 kwh per day
Bulb (100 watt) 100 watt 12 3 3.6 kwh per day
A/C 1 kwatt 6 8 48 kwh per day
Water Dispenser 150 watt 3 8 3.6 kwh per day
Pump Machine 3.32 Kw 3 8 82.08 kwh per day
Bottle Filling Machine 2.5 kwatt 1 8 20 kwh per day
Demijohn Filling 19 kwatt 1 8 152 kwh per day
Machine
Reverse Osmosis 5.25 kwatt 2 8 84 kwh per day
Others (Fax, Printer, 0.2 kwatt 1 8 1.6 kwh per day
etc.)
Total Daily Consumption 409.88 Kwh
Table 3.1. Daily Minimum Average Electricity Consumption / Demand of Facility
Even it seems that daily minimum average electricity consumption is 409.88 Kwh, it shouldn’t
be forgotten that outside lighting and other omitted or forgotten machines or tools will also
need may be more than 2 kwh per day, for this reason, electricity supply technology should be
able to produce more than 411.88 Kwh electricity per day.
3.2. Selection of Area Deed (Buy or Lease)
For this issue, analysis should be done on 1 Acres (for TRNC Donum) area. It is known that
value (price) of lands changes location by location. If it selected to construct the facility in
Kyrenia, for each Donum of land on the sea side, a minimum of £85000 - £90000 UK Pound
should be sacrificed. On the other hand, if it is selected to construct the land in Famagusta, a
minimum cost will be almost £45000 - £55000 UK Pound per Donum. For Akdeniz, it is almost
£15000 UK Pound per Donum, for Karpaz, it is also almost £20000 - £25000 UK Pound in
current conditions of Karpaz. For Guzelyurt, it may be possible to find at a price of £5000 -
£10000 UK Pound per Donum. On the other hand, it shouldn’t be forgotten that free hold lands
are risky in some places because of three different kinds of title deeds in North Cyprus. One
28
may find lands with cheaper and better prices in the places under consideration but most of the
cheaper lands have allocated title deeds. On the other hand, one may find a land which does not
have allocated title deed but in such case, the land can be a equivalent value title deed, these
kind of lands does not have too much risk but in any case, they are risky to buy. On the other
hand, the ones which has no risk are the lands with Turkish Title deeds but nowadays, it is
almost impossible to find Turkish Title Deed lands on sea side and if it is possible to find, they
have a gold value and they have very high prices per donum basis and above mentioned prices
are the ones which gives the approximate value of a Turkish Title Deed lands in the given
locations but also in some of the locations it is possible to say that most of them are allocated
lands with allocated title deed. For example, in Karpaz, there is almost no Turkish title deeds
land.
On the other hand, there is another option to locate the projected facility, lease hold lands from
government. These lands are under the guarantee of government, they have no previous owners
(Greek owners) and they are allocated to investors for 99 years with the newly announced lease
hold land allocation law. For such lands, investor may apply to government with proposed
project and have the chance to request a possible land from the selected location. In this issue,
main risk is that even the best location analysis; applicant may not be able to lease a land from
the projected location because of lack of governmental land in the selected location. These
lands are given under the rules and regulations of investor incentive laws of TRNC. Fourth
section of article 16 of Incentive laws references the assurance of building plot, land and
building. In Appendix A, it is possible to see Investment Incentive Guide of State Planning
Organization of TRNC
At this point, analysis will be done for each area to decide on Lease or Buy issue for each
alternative location. For lease hold lands, only cost will be the monthly lease fee of land but on
the other hand for free hold lands, apart from initial purchasing price, there will be title deed
transfer costs (taxes) too. On the other hand, it shouldn’t be forgotten that lease hold lands
cannot be sold to other investors if there is no investment on it but for free hold lands, it is
possible to say that they may be sold at a price higher than the purchasing price. Or even there
is an investment on the land, investor may transfer the lease hold of the land to another investor
29
at a value of invested facility and lease costs will be just costs for the investor, they cannot be
added to the value of facility or investor cannot add any land value to the facility price, at least
the value of land will be zero in due diligence studies when it is decided to sold. But on the
other hand, for free hold lands, land will have a value which will be very higher than the
purchasing price and there will be a return on investment from land and also return on
investment from facility. In analysis, this issue will be considered and analysis for each location
will be done on 15 years basis. It is going to be assumed that after 15 years facility will be sold
to another investor. When it is decided to sold, lease costs and application costs of the lease
hold land will be equal to zero. In any case lease hold or free hold, it is going to be assumed
that facility will have same value after 15 years, for this reason, value of facility will be omitted
from the calculations.
3.2.1. Financial Analysis for Famagusta (Buy or Lease)
Famagusta can be a good alternative to lease from government or buy a Turkish Title Deeds
building land. Both opportunities exist in Famagusta but before deciding on buy or lease, a
financial analysis should be applied to decide which one is reasonable and in which conditions
investor should buy or lease. In any case, opportunity cost and unexpected situations also
should be taken into consideration and investor should be able to be resistant with the risk of
selection under the conditions of unexpected situations.
In all land selection analysis, interest rate will be used on the source of banks maximum interest
rate to USD. The list of interest rates to saving deposits of 27 banks in Turkey & Cyprus is
given in Appendix B and the list give the rates to the date 17 th November, 2008. The minimum
interest rate to USD saving deposits is 4.75% per year. For this reason, the minimum return on
investment should be more than 4.75% and it is going to be accepted that minimum expected
return on investment proposed by investor and management is 6%.
In this case, for freehold Turkish Title deed lands on the seaside, average purchasing price is
£50.000 UK Pound (Or $87333 USD) per Donum. And it is going to be assumed that because
of the new developments, investments and improvements in Famagusta Region, the value of
30
land will increase at least 125% after 15 years from now. Indeed, the main risk of this study is
the expected increase in the value of land. Because in some cases, because of the economical
conditions or because of the negotiations between North and South, the value of land may
increase more than 125% or in case of negative results it may not increase in such amounts. But
in these conditions, investor should be Risk Taker instead of being Risk Averse because the
main objective is not the selection of land but is the foundation of projected facility.
On the other hand, leasing a land in Famagusta will cost $1000 USD as an initial investment
and it will have $35 USD per Donum per Month.
In these conditions, costs and revenues because of the incremental NPV studies can be listed as
follows (Table 3.2.);
Free Hold Land Lease Hold Land Incremental

Initial Investment $87333 $1000
0.1% Tax per year $87.33 0
Monthly Fee 0 $35
Sale Price $196499.25 0
Table 3.2. NPV Studies for Famagusta
Step I. Calculation of Monthly fee in yearly basis

A = $35 USD per month
I = 6% per year (or 0.4868% per month)
FV = ? for n = 12 months
(1 + i ) n −1  (1.004868 )12 −1 

FV = A  = $35   = $35 x12 .326559 = $431 .43
 i   0.004868 
Step II. PV Calculation of Sale Price

FV = $196499.25
31
I = 6% per year
PV = ? for n = 15 years
FV $196499 .25
PV = = = $81992 .271
(1 + i ) n
(1.06 )15
Step III. Incremental Analysis

Initial Investment $87333 $1000 $86333 (O)
Yearly Costs $87.33 $431.43 $344.1 (I)
Sale Price $81992.271 0 $81992.271 (I)
Table 3.3. Incremental Analysis O – Outflow, I – Inflow
 (1.06 )15 −1 
NPV = $81922 .271 + $344 .1 15 
− $86333
 0.06 x(1.06 ) 
NPV = $81922 .271 + $3341 .98 − $86333
NPV = −$1068 .744
In this case, it is possible to say that for Famagusta, land should be leased from the government
by considering the risk of future value of Freehold land. If value of land increases more than
$196860 USD after 15 years, the NPV result will be unsuccessful and there will be a cost of
inefficient decision because of the assumption. For this reason, it should be considered that if
expected rate of return from free hold land exceeds 125.413% or if value of land increases more
than 5.56782% in yearly basis (every year), the result can be accepted as a wrong decision or
inconsistent but from the assumption and current result of NPV, it is possible to say that if
Famagusta is selected as a best location in Location Analysis, land should be requested from
government and leased.
3.2.2. Financial Analysis for Kyrenia (Buy or Lease)
Because of the market structure of the region, the second best possible location for such project
can be Kyrenia. The average purchase price of a Turkish Title deed land is £87500 UK Pound
(Or $154583.6 USD) per Donum. By the means of investments, Kyrenia is in its peak amounts
32
and it seems that most of the huge investments started to flow Famagusta and Karpaz. For this
reason, it is going to be assumed that value of land will increase 80 – 90% after 15 years.
For Lease hold, conditions are almost same, an initial investment of $1000 USD will take place
and monthly fee for Kyrenia is almost $45 USD per Donum per month.

Initial Investment $154583.6 $1000
0.1% Tax per year $154.58 0
Monthly Fee 0 $45
Sale Price $285979.66 0
Table 3.4. Cost Comparison for Kyrenia Freehold and Leasehold Lands

(1 + i ) n −1 (1.004868 )12 −1

FV = A  = $45   = $45 x12 .326559 = $554 .695
 i   0.004868 

FV = $285979.66
i = 6% per year
FV $285979 .66
PV = = = $119329 .32
(1 + i ) n
(1.06 )15

Initial Investment $154583.6 $1000 $153583.6 (O)
Yearly Costs $154.58 $554.695 $400.115 (I)
33
Sale Price $119329.32 0 $119329.32 (I)
Table 3.5. Incremental Analysis for Kyrenia Lands O – Outflow, I – Inflow
 (1.06 )15 −1 
NPV = $119329 .32 + $400 .115  15 
− $153583 .6
 0.06 x(1.06 ) 
NPV = $119329 .32 + $3886 .02 − $153583 .6
NPV = −$30368 .26
In this case, it is possible to say that for Kyrenia, land should also be leased from the
government by considering the risk of future value of Freehold land. If value of land increases
more than $358757.52 USD after 15 years, the NPV result will be unsuccessful and there will
be a cost of inefficient decision because of the assumption. For this reason, it should be
considered that if expected rate of return from free hold land exceeds 132.0799% or if value of
land increases more than 5.77325% in yearly basis (every year), the result can be accepted as a
wrong decision or inconsistent but from the assumption and current result of NPV, it is possible
to say that if Kyrenia is selected as a best location in Location Analysis, land should be
requested from government and leased.
3.2.3. Financial Analysis for Karpaz (Buy or Lease)
Another hope giving region in North Cyprus is Karpaz. Currently value of a Donum land is
almost £22500 UK Pound and a Spain Company is constructing a Marina Hotel in Karpaz
Region and there are really good investments and improvements in this region too. For this
reason, it is going to be assumed that because of natural beauty of region, leisure investments
and hotel investments, the value of land is expected to increase at least 230% after 15 years.
For lease hold, conditions are again same, initial cost will be at most $1000 USD and monthly
fee is almost $30 USD per Donum per month.

34
0.1% Tax per year $39.75 0
Monthly Fee 0 $30
Sale Price $131175 0
Table 3.6. Cost comparison of Karpaz Freehold and Leasehold Lands

(1 + i ) n −1 (1.004868 )12 −1

FV = A  = $30   = $30 x12 .326559 = $369 .7967
 i   0.004868 

FV = $131175
i = 6% per year
FV $131175
PV = = = $54734 .744
(1 + i ) n (1.06 )15

Yearly Costs $39.75 $369.7967 $330.046 (I)
Sale Price $54734.744 0 $54734.744 (I)
Table 3.7. Incremental Analysis for Karpaz Lands O – Outflow, I – Inflow
 (1.06 )15 − 1 
NPV = $54734 .744 + $330 .04  15 
− $39750
 0.06 x (1.06 ) 
NPV = $54734 .74 + $3205 .43 − $39750
35
NPV = $18190 .17
In this case, it is possible to say that for Karpaz, if there is land on seaside with Turkish Title
deed buy otherwise lease from the government by considering the risk of future value of
Freehold land. Indeed, in this case, main problem will be finding a Turkish Title deed land in
Karpaz but apart from finding a Turkish Title deed, in any case, the expected future value of
Karpaz Land may not increase as assumed in this report. For this reason, it should be
considered that if future value of land seems to be less than $87581 USD after 15 years or if the
expected value ratio seems to be less than 120.33% or in yearly basis, if the value of land does
not seem to be increase 5.40752% per year, in such case it is possible to say that these analysis
are inconsistent and a wrong decision has been made. In such case, there is another risky
decision, investor may wait for 1 year and analyze the increase of the value in Karpaz for one
years, if the value ratio seems to be higher than 5.40752% s/he will buy otherwise s/he will
apply for a land from Government but on the other hand, there will be opportunity costs of
taking such decision. First of all, foundation of facility will be late and as a result there will be
loss of profit from lateness, a second risk will be the loss of projected land and also loss of lease
lands in Karpaz Region and also third risk is that there may be an increase in the number of
competitors in the market because of lateness.
3.2.4. Financial Analysis for Akdeniz (Buy or Lease)
Akdeniz can be accepted as a new investment region, indeed currently there is no valuable
investment apart from the house investments of villagers but region has a virgin nature and sea
that can be considered as valuable because of more clean seawater. Apart from virginity,
Akdeniz has cheaper land values and also at least 1000 Donums of Turkish Title deed lands. In
Akdeniz Region, it is possible to buy a Turkish Title Deed land at a price of £15000 UK Pound
per Donum but on the other hand, because currently there is no investment movement to this
region, it is possible to say that value of land will not increase too much. Currently, it seems
that in the following 5 to 10 years there will be no valuable investment in this region because of
lack of roads and transportation and for this reason it is possible to say that in 15 years value of
36
land will increase at most 50 or 60%. In this analysis, the highest expected value of increase
(60%) will be taken into consideration.
For lease hold lands, situation will not change too much. Initial investment will not be more
than $1000 USD and Monthly fee will be at most $30 USD per Donum per month.

0.1% Tax per year $26.5 0
Monthly Fee 0 $30
Sale Price $42400 0
Table 3.8. Cost Comparison of Akdeniz Freehold and Leasehold Lands

(1 + i ) n −1 (1.004868 )12 −1

FV = A  = $30   = $30 x12 .326559 = $369 .7967
 i   0.004868 

FV = $42400
i = 6% per year
FV $42400
PV = = = $17692 .04
(1 + i ) n
(1.06 )15

Yearly Costs $26.5 $369.7967 $330.046 (I)
Sale Price $17692.04 0 $17692.04 (I)
Table 3.9. Incremental Analysis for Akdeniz Lands O – Outflow, I – Inflow
37
 (1.06 )15 −1 
NPV = $17692 .04 + $330 .04  15 
− $26500
 0.06 x(1.06 ) 
NPV = $17692 .04 + $3205 .43 − $26500
NPV = −$5602 .53
In this case, it is possible to say that for Akdeniz, land should also be leased from the
government by considering the risk of future value of Freehold land. If value of land increases
more than $55826.792 USD after 15 years, the NPV result will be unsuccessful and there will
be a cost of inefficient decision because of the assumption. For this reason, it should be
considered that if expected rate of return from free hold land exceeds 110.667% or if value of
land increases more than 5.09283% in yearly basis (every year), the result can be accepted as a
wrong decision or inconsistent but from the assumption and current result of NPV, it is possible
to say that if Akdeniz is selected as a best location in Location Analysis, land should be
requested from government and leased.
3.2.5. Financial Analysis for Güzelyurt (Buy or Lease)
Guzelyurt is one of the hopes giving region because of the ongoing investments and new
METU campus in the region. On the other hand, region is among the first level incentive
regions of the government like Karpaz Region and incentives to this region are higher than the
other ones under consideration. Because of the new university and improved road constructions
to the region, the value of region seems to be high and will give high investment opportunities
to the investors. Currently, it is possible to buy a freehold land at a price of £7500 UK Pound
and because of the developments and investments in this region, the value of land expected to
increase at least 130% after 15 years.
For lease hold lands, initial investment will not be higher than $1000 USD and Monthly fee is
almost $30 USD per Donum per month.
38
0.1% Tax per year $13.25 0
Monthly Fee 0 $30
Sale Price $30475 0
Table 3.10. Cost Comparison of Guzelyurt Freehold and Leasehold Lands

I = 6% per year (or 0.4868% per month)
(1 + i ) n −1 (1.004868 )12 −1

FV = A  = $30   = $30 x12 .326559 = $369 .7967
 i   0.004868 

FV = $30475
I = 6% per year
FV $30475
PV = = = $12716 .15
(1 + i ) n
(1.06 )15

Yearly Costs $13.25 $369.7967 $356.55 (I)
Sale Price $12716.15 0 $12716 (I)
Table 3.11. Incremental Analysis for Guzelyurt Lands O – Outflow, I – Inflow
 (1.06 )15 −1 
NPV = $12716 + $356 .55  15 
− $12250
 0.06 x(1.06 ) 
39
NPV = $12716 + $3462 .87 − $12250
NPV = $3928 .87
In this case, it is possible to say that for Guzelyurt, if there is land on seaside with Turkish Title
deed buy otherwise lease from the government by considering the risk of future value of
Freehold land. In any case, the expected future value of Guzelyurt Land may not increase as
assumed in this report. For this reason, it should be considered that if future value of land seems
to be less than $21058.87 USD after 15 years or if the expected value ratio seems to be less
than 58.935% or in yearly basis, if the value of land does not seem to be increase 3.137% per
year, in such case it is possible to say that these analysis are inconsistent and a wrong decision
has been made.
As a summery of all regions, the following table (Table 3.12.) should be taken into
consideration and decisions should be made on table by also considering minimum value ratio.
Considered Value Yearly Minimum Ratio

Region Proposed Decision for Decision (NPV) for the land value
increase to BUY
Famagusta Leasehold -$220.57 5.56782%
Kyrenia Leasehold -$30368.26 5.77325%
Karpaz Buy (TTD Freehold) $18190.17 5.4075%
Akdeniz Leasehold -$5602.53 5.09283%
Guzelyurt Buy (TTD Freehold) $3928.87 3.137%
Table 3.12. List of Alternative Locations and Proposed Decision for each Location TTD – Turkish Title Deed
3.3. Selection of Buffer Electricity Supplier (Diesel Generator or Grid)
As it mentioned in previous sections, Renewable Power Suppliers (wind, solar or wave) does
not supply continues electricity because of weather conditions. For example, wind turbines
need at least 2.5 m/s to generate electricity but on the other hand with 2.5 m/s it is not possible
to generated the amount demanded and sometimes weather conditions of North Cyprus &
hourly wind speed averages show the possibility that the wind speed can be 0 m/s for one or
40
two hours [W4, W5, W6, W7, W8]. On the other hand, it is possible to say similar things for
Solar Power Suppliers too. For this reason, in any case of power supplier, it is going to be a
must to use a buffer electricity supplier.
In these conditions, there is two options to think about one is Grid Buffer (electricity from
Electricity Association of Government) and second option is a diesel generator. Indeed, the
most reasonable one seems Grid buffer but before deciding about which one to use, a financial
analysis should be applied to find the best possible option for the projected facility.
It is known from the analysis that the minimum electricity consumption of the facility will be
411.88 Kwh per day and also is known that industrial tariff of Grid Electricity is 0.25 YTL per
Kwh [W9]. On the other hand, for a Diesel Generator, in the following table (Table 3.13)
expected and known costs are given. The generator under consideration will be a 450 Kwh,
Kohler diesel generator [W10].
Manufacturer : Kohler
Model : 450DSEBopen
Kw : 450
Power : Diesel
Description : Openskid (oil field ready), EPA tier II Engine, 277/480 Volt
FOB Price : $66.000 USD
Costs
Initial Investment (CIF Price) $68000
Average Diesel Consumption (Gallon/Hour) 32.15 (or 146.15 lt)
Maintenance & Repair Cost (Every 6 Months) $1200
Salvage Value $41000
Expected Life 15 years
Table 3.13. Investment Information of Diesel Generator Power Supplier
For the initial price CIF price is used because the machine will be bought from the
manufacturer company and from place of manufacturer to Cyprus, there will be cost of
transportation plus insurance cost, for this reason it is assumed that CIF costs will be almost
41
$2000 USD and total price of generator will be $68000 USD. On the other hand, from the
source of generators [W10], it has been found that average fuel consumption with a full load
will be 32.15 gallon per hour, for this reason for both option Generator and Grid, it is going to
be assumed that a full load capacity of 450 Kwh will be used. For maintenance and repair costs,
it is assumed that daily and monthly usage of the machine will be low because of Renewable
Power supplier, for this reason, there will be low service to machine and in such case every six
months will be a reasonable duration. On the other hand, for salvage value, second hand prices
has been taken into account from generator source and from the source [W10] it is known that a
1993 model similar generator will be sold at a price of $41000 USD (almost after 15 years).
In these conditions, for two options Incremental net present value analysis will be used and
result will lead to the decision. For Grid, it will be assumed that to setup the system, almost
$4500 USD will be spend as an initial cost and taxes will be assumed to be 0% because of the
incentives and also it is going to be assumed that daily usage of buffer supplier will be at most
2.5 hours. And also industrial diesel price will be assumed to be not more than 1.5 YTL/liters.
Daily Cost of Grid
Daily Cost of Grid = ( DailyConsu mption / 8) x 2.5hoursxElec tricityCos t (YTL ) / 1.5(USD )
 450 kwh  
Daily Cost of Grid =   x 2.5hours  x 0.25YTL / Kwh = 35 .156 YTL = $23.438 / day
 8  
Daily Cost of Generator

Hourly Cost of generator =146 .15 lt x 1.5YTL / lt = 219 .22 YTL / hour
Daily Cost of generator = 219 .22 YTL / hour x 2.5hours = 548 YTL = $365 .375 / day
Generator Grid
Initial Cost $68000 $4500
Daily Cost $365.375 $23.438
Maintenance & Repair Cost $1200 0
Salvage Value $41000 0
Life 15 years ∞
Table 3.14. Cost Comparison of Generator and Grid, i = 3% per year (or 0.2465% per month )
42
Step I . Daily Costs in Monthly Basis
For Grid;
A = $23.43 USD per day
i = 0.00821% per day
n = 26 working days
FV = ?
 (1 + i ) n −1
FV = A 
 i 
(1.0000821 ) 26 −1
FV = $23 .438   = $23 .438 x 26 .0267 = $610 .014 per month
 0.0000821 
For Generator;
i = 0.00821% per day
n = 26 working days
FV = ?
(1.0000821 ) 26 −1
FV = $365 .375   = $365 .375 x 26 .0267 = $9509 .506 per month
 0.0000821 
Step II. Maintenance and Repair Costs in Monthly Basis
For Generator;
FV1 = $1200 USD after 6 months from now
43
FV2 = $1200 USD after 12 months from now
PV and A = ?
$1200 $1200
PV = + = $1182 .404 + $1165 .066 = $2347 .47
(1.002465 ) 6
(1.002465 )12
 i (1 + i ) n   0.002465 (1.002465 )12 

A = PV   = $ 2347 .47 x   = $2347 .47 x0.084674568
 (1 + i ) − 1  (1.002465 ) − 1 
n 12
A = $198 .77 USD per Month
Step III. Present Value of Salvage Value

FV = $41000
i = 3% per year
n = 15 years
PV = ?
FV $41000
PV = = = $26316 .339
(1 + i ) n
(1.03 )15
Step IV. Incremental Analysis
Generator Grid Incremental

Monthly Cost $9708.276 $610.014 $9098.262 (O)
Salvage Value $26316.339 0 $26316.339 (I)
Table 3.15. Incremental Analysis for Diesel Generator and Grid
  (1.002465 )12 − 1  
NPV = $26316 .339 − 9098 .262  12 
+ $65500 
  0.002465 x(1.002465 )  
NPV = −$146633 .42
44
From NPV result, it is obvious that selecting Diesel Generator will be too much costly, just 2.5
hours electricity supply will cost $146633.42 to the facility when it is compared with Grid
electricity supply, for this reason, as a buffer supplier, Grid will be used for the projected
facility.
3.4. Alternative Power Supply Technologies for North Cyprus
In this report two Power Supply Technologies will be considered, Solar Power Supply and
Wind Power Supply (Wind Turbines). Indeed, it is known that there is three kind of renewable
power supply technology, Wind, Solar and Wave but because wave technology is very new and
is not widely used nowadays, it has been encountered with a lack of information and for this
reason, this technology has been omitted to prevent the future problems because of lack of
information and analysis.
In general, wind and solar power supply technologies are the best possible renewable energy
supply sources for North Cyprus. As it is known, almost 10 months of a year it is possible to
see sunshine in everyday period in Cyprus and this structure of the Island is a very good
advantage to think about solar power supply technology, on the other hand, it is know that 2,5
m/s is an enough speed to generate electricity from Wind Turbines and in Cyprus average wind
speed changes between 3,4 and 5,4 m/s. But before deciding on the best source, average daily
electricity demand of facility should be considered and than size of necessary power supply
source should be calculated or found and in the end financial analysis should be applied to find
the less costly one to decrease the costs of facility as much as possible. In that point, from
section 3.1, it is known that daily minimum electricity requirement of the projected facility will
be 411.88 Kwh, for this reason, in selection of Renewable power supplier, minimum energy
supply capacity should be considered as 450 Kwh.
In any case, it should be known that with any of power supply technology, it is not possible to
generate continuous electricity but on the other hand, from the researches it has been found that
Solar Power Supplies has more continuity than wind power supplies. For this reason, for both
systems, a diesel power generator should be considered and also grid as a buffer supplier. In
45
that point from previous section it is known that use of Grid as a buffer electricity supplier will
be more cheaply and reasonable. For this reason, in the financial analysis of Renewable Power
Suppliers, hours of electricity buffer should be taken into consideration and should be added as
a cost to the Renewable Power Supplier. As a result, it will be more detailed analysis to find
which Renewable Power Supplier is more reasonable than the other alternative(s).
3.4.1. Wind Energy Supply Alternative
Wind power is the conversion of wind energy into a useful form, such as electricity, using wind
turbines. At the end of 2007, worldwide capacity of wind-powered generators was 94.1
gigawatts [W11].
The principle application of wind power is to generate electricity. Large scale wind farms are
connected to electrical grids. Individual turbines can provide electricity to isolated locations. In
the case of windmills, wind energy is used directly as mechanical energy for pumping water or
grinding grain.
Wind energy is plentiful, renewable, widely distributed, clean, and reduces greenhouse gas
emissions when it displaces fossil-fuel-derived electricity. Therefore, it is considered by experts
to be more environmentally friendly than many other energy sources. The intermittency of wind
seldom creates problems when using wind power to supply a low proportion of total demand.
Where wind is to be used for a moderate fraction of demand, additional costs for compensation
of intermittency are considered to be modest. [15]
Good selection of a wind turbine site is critical to economic development of wind power. Aside
from the availability of wind itself, other factors include the availability of transmission lines,
value of energy to be produced, cost of land acquisition, land use considerations, and
environmental impact of construction and operations. Off-shore locations may offset their
higher construction cost with higher annual load factors, thereby reducing cost of energy
produced. Wind farm designers use specialized wind energy software applications (The GH
Bladed software package) to evaluate the impact of these issues on a given wind farm design.
46
3.4.1.1. Wind in North Cyprus
North Cyprus is in low wind speed area in the world. In general, annual average wind speeds
mostly below 5.0 m/s. In Figure 3.1. It is possible to see wind speed range in every point of the
world and from the figure, it is obviously clear that North Cyprus is mostly in white wind point.
On the other hand, from the sources [W4, W5, W6, W7, W8], it has been also observed that
average wind speed of North Cyprus is not more than 21.4 km/h (5.94 m/s) in a week period
and also it has been observed that most of the time it is between 4 and 5 m/s and sometimes it
shows 0 m/s and it also observed that in a week period an average of 2.5 or 3 hours per day
wind speed shows 0 m/s. On the other hand, as it is mentioned in Figure 3.1, annual wind speed
for Cyprus mostly below 5.0 m/s.
Figure 3.1. Wind structure of the world.
47
Under these conditions, it is possible to say that in a week period, an average of 2.5 or 3 hours,
wind will not be able to supply electricity to projected facility and as a result, buffer grid
electricity will be used to supply the energy request of facility. In such case, it is possible to say
that average daily cost of Wind Turbine because of this drawback will be at least $23.438 USD.
The wind turbines have advantages as low maintenance and repair costs and free wind source
but on the other hand it has drawbacks because of limited to small generators, low efficiency
because need 3x the amount of installed generation to meet demand, need expensive energy
storage, highly climate dependent - wind can damage equipment during windstorms or not turn
during still summer days and can effect endangered birds, however tower design can reduce
impact. From the analysis of 4 alternative turbines, it has been found that a 450 Kwh wind
turbine can supply at most 60 Kwh of electric power with an average of 21.4 Km/h wind speed.
In such cases, it is possible to say that for North Cyprus conditions, with a 450 Kwh wind
Turbine, it is almost impossible to supply the demanded energy of projected facility. Figure 3.2,
Figure 3.3. and Figure 3.4. shows the graphs of speed – electricity supply structure of analyzed
wind turbines and from the graphs, it is obvious that with an average speed of 21.4 Km/h all
three turbines generate electricity below its capacity and also two of them produces below 100
Kwh and one with a capacity of 1.75 Mw can only produce more than 100 Kwh but less than
200 Kwh.
48
Figure 3.2. 225 Kw Turbine efficiency vs wind speed.
Figure 3.3. 450 Kw Wind Turbine Efficiency vs Wind Speed
Figure 3.4. 1.75 Mw Wind Turbine Efficiency vs Wind Speed.
49
From the figures, it is obvious that for the projected facility one of the biggest Turbine with a
capacity of 1.75 MW will not be enough. In such case, it is possible to say that for the projected
facility, a Wind Turbine Farm should be constructed. And with the conditions of North Cyprus,
for the projected facility at least four 1.75 Mw Turbine or almost 17 450 Kw Turbine will be
necessary to generate demanded amount of electricity.
3.4.1.2. Wind Turbine Alternative and Costs of Wind Electricity Supply
From the previous section, it is obvious that for the projected facility one wind turbine will not
be enough and also buffer supplier will be used more than 2.5 hours a day to supply the
electricity demand of the facility.
From the analysis and researches, it has been found that daily average electric power supply of
a 450 Kw Turbine is almost an average of 28.9 Kwh with the peak wind speeds (2.5 – 5.94 m/s)
of North Cyprus. On the other hand, it is known that wind speed for North Cyprus changes
between 0 and 5.94 m/s which means that it is not possible to generate 450 Khw of electricity in
every time period of a day. In such case, the number of wind turbines should be higher than the
number of wind turbine needed for peak wind speed of North Cyprus. From the calculated
average electricity generation, it is possible to say that with peak wind speeds (2.5 – 5.94 m/s),
projected facility will need at least sixteen 450 Kw wind turbines to generate 450 Kwh
electricity per day. From the prices of Wind Turbines, it is known that FOB price of a 450 Kw
Turbine is almost $386500 USD. On the other hand, it has been found that for each turbine
1618 sqm area is needed and for these costs, location of projected facility has also a very high
impact on the selection of power supplier. In such case, costs of Wind turbine farm can be listed
as given in the following table (Table 3.16.) and in Appendix N brochure of a 450 Kwh Wind
Turbine is given.
50
Initial Investment (CIF Price) $386500 per Turbine
Minimum electricity cost $23.437 USD per Day
Maintenance and Repair Cost (Every 1 year) $10.000 USD
Cost of Area (25888 sqm, 20 Donums) Depends on the location of facility
Table 3.16. Investment Information for Wind Turbines
3.4.2. Solar Energy Supply Alternative
Semiconductors which convert solar energy directly into electricity are called photovoltaic (PV)
devices or solar cells. Although there are about 30 different types of PV devices under
development, there are three main technologies in commercial production – monocrystalline
cells, polycrystalline cells and thin-film cells.
The amount of power from a PV array is directly proportional to the intensity of the light hitting
the array. Photovoltaic arrays produce direct-current (DC) electricity. They can be configured
to produce any required combination of voltage and current - including conventional residential
alternating current (AC) voltages.
Solar cells are typically combined into modules that hold about 40 cells; about 10 of these
modules are mounted in PV arrays that can measure up to several meters on a side. These flat-
plate PV arrays can be mounted at a fixed angle facing south, or they can be mounted on a
tracking device that follows the sun, allowing them to capture the most sunlight over the course
of a day. About 10 to 20 PV arrays can provide enough power for a household.
3.4.2.1. Solar Energy Source in North Cyprus
It is known that Cyprus has sunny days almost 10 months a year. From the sources, it has been
found that for Cyprus, on the average 9.05 Hours a day, it is possible to see sun shine.
In such condition, because of the structure of PVs, it is possible to say that Cyprus is one of the
best place to generate electrical power from Solar Energy Suppliers.
51
A PV can generate electricity even in cloudy days with an efficiency of 75% which means that
a system which produces 450 Kwh electricity, it is possible to generate 337.5 Kwh energy in
cloudy days too. Apart from this advantage of PVs, there are other advantages in front of wind
turbines. First of all, a 450 Kwh PV system is cheaper than a Wind Turbine, on the other hand,
with a 600 Kwh system, it is also possible to generate 450 kwh energy in cloudy days too.
Apart from electricity supply advantage, PVs covers very low area and from the researches it
has been found that to generate 450 Kwh electricity power 78 unit PV will be enough and for
such system almost 90 sqm area will be enough, that is almost 1/144 of the necessary area of
wind turbines. Average area of a PV is 1.154 sqm and it is also known that a PV system
average daily electricity supply can be shown as 5 Kwh per sqm per day and from this general
information, it is possible to know number of necessary PVs to generate 450 Kwh in cloudy
days too. In these cases, it is possible to say that for 600 Kwh electricity supply, almost 104
PVs will be enough and average cost of a PV is almost $1144 USD. Average life of a PV can
vary 5 to 10 years and in these report, it is going to be assumed that on the average 10% of
existing PVs will need maintenance (will be completely changed) in every years. In these
conditions, it is possible to say that the buffer generator will be used may be almost one hour in
a week. On the other hand, major advantages of the PV power can be listed as follows;
• Short lead time to design, install, and start up a new plant.

• Highly modular, hence, the plant economy is not a strong function of size.
• Power output matches very well with peak load demands.
• Static structure, no moving parts, hence, no noise.
• High power capability per unit of weight.
• Longer life with little maintenance because of no moving parts.
• Highly mobile and portable because of light weight.
Apart from the researches, from the solar energy distribution figure (Figure 3.5) it is possible to
see that for Cyprus in a year almost 1900 Kwh/sqm solar energy can be generated and in Table
3.16, it is possible to see costs of PV Systems.
52
Figure 3.5. World Solar Energy Distribution Table
Apart from the research data, from Figure 3.5. it is also possible to calculate average daily solar
energy possibility per sqm. From the figure it is obvious that Cyprus is in the range of 1700 –
1900 Kwh/sqm and in a year it is known that there is 365 days and if average solar energy is
assumed to be 1800 kwh/sqm/year, daily amount will be almost 4.932 Kwh/sqm which is
almost equal to the data from research.
Initial Investment (CIF Price) $1170 per Turbine

Minimum electricity cost $1.88 USD per Day
Maintenance and Repair Cost (in every year) $11.897 USD
Cost of Area (120 sqm) will be assumed as 1 Donum
Table 3.17. Investment Information for PV Solar Power Supplier Systems.
3.4.3. Financial Comparison of Energy Supply Technologies
53
In sections 3.4.1 and 3.4.2. advantages and disadvantages of Solar & Wind technologies has
been mentioned in monetary basis. To find which one is going to be best possible Supply
source, indeed, financial analysis can not be a decision tool but from the general advantages and
disadvantages, it is possible to say that Solar Electric Power Supply source seems the best
alternative but when buffer power supply also considered, financial analysis will be the best
source to decide on the one which will generate less cost to the facility.
In this analysis, Incremental Net Present Value analysis will also be used to find the best
alternative between two alternatives. On the other hand, because the location analysis has not
been applied to find the best location for the facility, in this analysis, it is going to be assumed
that the projected facility will be constructed to Famagusta and cost of area will be calculated
on the per donum cost of Famagusta lands and it shouldn’t be forgotten that in section 3.2
financial analysis showed that if facility decided to be constructed in Famagusta, it will be
leased from the government. In such case, it is possible to say that cost of area for Wind
Turbine Alternative will be 20 x 35 USD per Month and for Solar Power Supplier it is going to
be 1 x 35 USD per Month. The initial cost for lease hold will be omitted from the calculations
because for both systems, initial cost will be same ($1000 USD) and also study will be done for
15 years period of time, on the other hand, because the both system will need mechanics and
electrical engineers, cost of staff will also be omitted from the analysis. In that point, costs of
both alternatives can be listed as follows;
Cost Factors Wind Turbine PV Solar System Incremental
54
Initial Investment $6.184.000 $121680 $6.062.320 (O)
Minimum Electricity
Cost per Day $23.437 $1.88 $21.557 (O)
Maintenance and
Repair Cost per year $10000 $11.879 $1879 (I)
Cost of Area per

Month 20 x $35 1 x $35 19 x $35 (O)
Table 3.18. Incremental Analysis for Power Supplier Systems (Wind & PV) O – Outflow, I – Inflow
In fact, from the figures it is possible to say that wind turbine technology will be too expensive
to move forward on it, apart from maintenance and repair cost, other figures clearly indicates
the expensiveness of wind turbines under the circumstances of Cyprus weather conditions.
From the literature, it is known that in some cases Wind Turbines are more reasonable to use
instead of PV but as it is mentioned, in the conditions that are exist in Cyprus weather PV is the
more reasonable system to use. To decide more surely, financial analysis should be applied in
any case.
Step I – Calculation of Electricity in Monthly Basis

A - Wind Turbine
i = 6% per year (or 0.4868% per month or 0.0162% per day)
n = 26 days
 (1 + i ) n −1  (1.000163 ) 26 −1

FV = A  = $ 23 . 437   = $606 .85 USD per Month
 i   0.000163 
B – PV Solar Power Supplier

55
i = 0.0162% per day
n = 26
(1 + i ) n −1 (1.000163 ) 26 −1

FV = A  = $1.88   = $48 .68 USD per Month
 i   0.000163 
Step II – Maintenance Cost in Monthly Basis

A – Wind Turbine
FV = $10.000 USD per year
n = 12 Months
 i   0.004868 
A = FVx   = $10000 x  = $10000 x 0.081125641 = $811 .26 USD per Month
(1 + i ) −1  (1.004868 ) −1
n 12
B – PV Solar Power Supplier

FV = $11879 USD per year
n = 12 Months
 i   0.004868 
A = FVx   = $11879 x   = $11879 x 0.081125641 = $963 .69 USD per Month
(1 + i ) −1 (1.004868 ) −1
n 12
Now, it is possible to calculate Incremental NPV to find the best alternative to move forward.
Cost Factors Wind Turbine PV Solar System Incremental
Initial Investment $6.184.000 $121680 $6.062.320 (O)
Minimum Electricity
Cost per Month $606.85 $48.68 $558.17 (O)
M & R Cost per
56
Month $811.26 $963.69 $152.43 (I)
Cost of Area per

Month $700 $35 $665 (O)
Table 3.19. Incremental Analysis for Power Supplier Systems (Wind & PV)
NPV = Total Inflows – Total Outflows
 (1.004868 )12 −1    (1.004868 )12 −1  

NPV = $152 .43  12 
− $ 1223 .17  12 
+ $6,062 ,320 
 0.004868 x(1.004868 )    0.004868 x(1.004868 )  
NPV = $1772 .57 − {$14223 .96 + $6,062 ,320 } = −$6,074 ,771 .39
From the Incremental NPV result, it is again obvious that for the projected facility, PV Solar
Power Supply Technology should be used.
CHAPTER IV
LOCATION ANALYSIS
4.1. FAMAGUSTA
For this region, from city to Bafra borders will be analyzed. This border can be a good
alternative because of University and investments in Bogaz and Bafra. In general, it is known
that there is an existing competitor and also known that in the near future there will be a second
competitor by means of seawater desalination plant.
57
First competitor is located in Bafra Region and operated by an Israel Company (Tahal
Consulting Engineers Ltd.). It is known that this competitor produces 2000 Cubic meter
drinking water per day; this is almost equal to 2 million liters per day. On the other hand, it is
also known that this company sells it water to government at a price of $0.98 USD per cubic
meter. The water is distributed to villages and towns nearby the Bafra Region and it is also
planned that the company will increase its capacity to 8000 cubic meter per day in the near
future. This means that existing company is a real big competitor to a projected small scale
seawater desalination facility but on the other hand, because it distributes most of its product to
villages by selling its product to government will be a good opportunity to the projected
company by the means of bottled water.
Second competitor will be located nearby Salamis and projected capacity for this facility is
10000 cubic meter. Again, this company also will produce for government under the conditions
of signed contract for 15 years and this company also will distribute its product to the villages
and towns nearby the region.
By the means of house demand, both companies will decrease the demand to demijohns from
the villages under consideration but on the other hand, it is expected that it will have low
impact on demands to bottled water, especially the 0.5 ml ones.
Apart from the existing and projected competitors, it is known that Famagusta Region will host
very big investments, especially in Bogaz and Bafra Region. It is also expected that these
tourism investments will increase the demand to bottled waters especially in summer times.
It is known that in Bafra, there will be 14 huge hotels, a Golf field, a Yacht Marina Project and
two leisure projects. Most of the hotels will be the hotels of world wide known hotel chain
groups. For example, Sheraton group has applied to two plots and the application of group has
been accepted and this group will build two luxury hotels and the golf field of the region with a
minimum investment of $500 Million USD. On the other hand, well known group W Hotels of
USA has applied for a plot in Bafra region and also hotel project of this group has been
accepted. On the other hand, it is known that Accor Group also start to work on same region
58
and it is expected that Accor Group also will take two plots from the government. Apart from
these world wide known groups, there is an existing project of KAYA Group, Kaya Artemis
and a project of Limak which is planned to be completed in 2009 and also Cornelia Group of
Turkey will start to construct a luxury Cornelia Hotel in same region. Apart from 14 luxury
huge hotels, YAGA (Cyprus Investment Development Agency), has announced two leisure
investments to plots 16A and 16B [W3] and these investments also will increase the population
in this region in summer times.
From the investments in Bafra Region, it is expected that within 4 years, there will be 14
completed huge hotels, a golf field, a luxury yacht marina and two leisure centers. This means
that in summer seasons, there will be at least 15000 people as tourists, at least 1300 or 1400
staff of hotels and at least 500 or 600 visitors in daily basis. As a result, it is known that a
human consumes 2 to 3 liters water per day, it can be assumed that at least 2 small 0.5 liters
bottle water will be sold to the people in Bafra region in daily basis and with this assumption, it
is possible to say that daily demand will be at least 33500 small 0.5 liters water.
Apart from the projected investments and expected market potential of region, Famagusta has
also other valuable features to be a good alternative for the projected facility. Because of
Famagusta Sea Port, it is possible to say that proximity to port has very high positive ratio value
and it is known that the port will be modernized in the near future. Modernization will be done
by current existing operating Import – Export Company or 100% of rights to operate the port
will be sold to a Turkey company and as a result will be done by new company. Modernization
of port will also be a good point for this candidate region by the means of exporting the
products, if there is an export opportunity or if exporting is a feasible approach for the projected
facility. On the other hand, because of the university, region has good, educated and skilled
staff and workers feature, for this reason, it is possible to say that labor ratio point of this
candidate region also have valuable points. By the means of Market, the region can be accepted
as a good and hope giving market because of the projected tourism investments and university.
On the other hand, by the means of transportation and transporting the produced products to
other markets, it is possible to say that the region has good transportation possibilities and
flexible road alternatives to other points. Famagusta – Nicosia Motor way and the new road
59
from Bogaz to Ercan and Nicosia Motor way also increases the transportation ratio point of the
region. By the means of permission, it is possible to say that government approves and supports
such projects in this region, for this reason; there will be no permission problem for the
projected facility. On the other hand, there are possibilities to lease lands or buy Turkish Title
deed lands from borders of candidate region. But by the means of land costs, this candidate
region may be accepted as an expensive point than some other candidate regions. Cost of labor
and cost of electricity will be omitted in location analysis because it is possible to say that in
any candidate region cost of electricity and cost of labor will not be different. Main problems of
this candidate region are number of competitors in the region and the high costs of the building
lands.
4.2. KYRENIA
Kyrenia Region can be accepted as current tourism region of the Island. After 2004, Kyrenia
showed a growth and population of Kyrenia almost approached the population of Famagusta. In
2006 census, total population of Kyrenia has been found as 62158 and with this amount
Kyrenia can be accepted as second biggest market among the alternative locations.
It is well known that currently, Kyrenia does not have any desalination plant and under the
competitor basis, Kyrenia Market can be accepted as no competitor base.
With the City Port, Kyrenia can be accepted as second best alternative from the view of
proximity to ports factor. On the other hand, because of the closeness to the Nicosia the biggest
market of North Cyprus, Kyrenia can be seen as one of the best alternative among the other
alternatives. Apart from proximity to biggest market, its own market also has high potential
because of the highest tourism potential and number of luxury hotels in it. And apart from
tourism places Kyrenia also has a good amount of military bases in and nearby and military
bases also can be accepted as good potential even they are buying with bidding adjudication
process.
From the view of labor ratio, because the city has third biggest population and also has a high
amount of immigrates, it is possible to say that Kyrenia does not have any labor problem.
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The main drawback of the city is acquisition of land. In general, it is almost impossible to find
Turkish title deed lands on the sea side but if it is found, it is possible to say that it will have
considerably very high price. Indeed, in the buy or lease analysis, it has been found that leasing
land from Kyrenia will be reasonable than buying and it is also known that government will
support such kind of project for Kyrenia but in any case, it should be known that acquisition
cost will be a little bit higher than the other alternatives.
From the view of transportation, Kyrenia does not have considerable problems and with the
new motorway for Kyrenia districts the city traffic will be more comfortable than the current
situation
4.3. KARPAZ
Newly developing region Karpaz, has hope giving structure with some drawbacks. Indeed,
accepting Karpaz Region as a candidate region can be because of current developing structure,
low acquisition costs and being on the seaside. Apart from these advantages, as a market,
currently it has very small potential and therefore most of the products produced will be
transported to the main cities of the Island. In such case, it is possible to say that cost ratio of
transportation will be reasonably higher than the others because of high transportation volumes.
On the other hand, current roads of the region is not reasonable for transportation and proximity
to ports, main markets, tourism centers and official offices can be a great problem for a
business company.
On the other hand, Karpaz has a lower educated population than the other main alternatives and
for this reason; hiring educated staff from main cities can be a considerably very big problem
because of the proximity to these cities.
On the basis of competitors, currently there is a desalination plant of a Turkish company and for
the main market of the region, it seems almost enough for the region. For the near future,
61
Karpaz can be a good alternative and it is one of two regions which has highest investment
incentives but with the risk of future expectations, it has really unrequested problems.
4.4. AKDENIZ
Akdeniz Region can be accepted as a new candidate region for investments. Indeed, it is a
virgin region and there is almost no investment in this region, for this reason, it is possible to
say that as a candidate region drawbacks of this region is higher than the advantages. By the
means of advantages, it is possible to say that because the region is a virgin region, prices of
lands are reasonable cheap, on the other hand, there is almost more than 1000 donums of
Turkish title deed lands and the region is almost in between two big markets Nicosia and
Kyrenia. But on the other hand, because there is almost no investment apart from the new house
constructions of villagers, the roads of the region will bring difficulties by the means of
transportation. The public of the region consists of Turks and Maronits, for this reason, apart
from the proximity to big markets, it is possible to say that most of the Maronits makes their
purchases from the south side and it that region it will be almost impossible to sell products to
some of the restaurants and cafeterias. On the other hand, it is possible to say that there is
almost no direct road to seaside lands and from main road to seaside lands there is at least 1 km
distance that means that for any project on the seaside, investor will have to construct the road
to facility and this will bring higher investment costs. On the other hand, most of the people of
the region are old and low educated people for this reason, educated staff should be hired from
the Nicosia and therefore it is possible to say that labor ratio will be low and costly for this
region. Apart from all these drawbacks, it is possible to say that main problem of the region is
the permission for any project in that region. An application may have been approved a year
ago but currently, no application will be approved by government because of negotiations
between North and South. From the official sources, it is known that in negotiations, for the
seaside lands of the region Green Field approval offered by EU and South side and has been
accepted by North side for this reason, currently no permission is given for any kind of project
on the seaside in this region and currently, it is not possible to put even a single nail to the
seaside lands in this region. For this reason, this region will be omitted from the Location
Analysis.
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4.5. GUZELYURT
One of the smallest market among the alternatives but the biggest one among three small
candidates (Guzelyurt, Karpaz and Akdeniz). Guzelyurt is the second region which has highest
incentive opportunities. Guzelyurt is forth biggest region with a population of 31116 and it has
a good amount of educated labor potential when it is compared with Akdeniz and Karpaz.
In the view of proximity to markets, it is possible to say that it is the second region among the
others because of the proximity to biggest market Nicosia and because of the new motorway,
value of this proximity increases. On the other hand, because of the new road, transportation of
products will be much more easier than the other two small candidates. But on the other hand,
Guzelyurt does not have any port and for this reason proximity to ports will be a real problem
for this alternative.
By the means of acquisition, region is one of the cheapest region among alternative regions and
because of the new developments and universities in Guzelyurt, region will have very good
acquisition investment return and this expectation has been calculated in section 3.2.5 of this
report too.
4.6. Qualitative Location Analysis
The location scoring method is a very popular, subjective decision-making tool that is relatively
easy to use. It consists of these steps:
Step 1 List all the factors that are important—that have an impact on the location decision.
Step 2 Assign an appropriate weight (typically between 0 and 1) to each factor based on the
relative importance of each.
63
Step 3 Assign a score (typically between 0 and 100) to each location with respect to each factor
identified in step 1.
Step 4 Compute the weighted score for each factor for each location by multiplying its weight
by the corresponding score.
Step 5 Compute the sum of the weighted scores for each location and choose a location based
on these scores.
Although step 5 calls for the location decision to be made solely on the basis of the weighted
scores, those scores were arrived at in a subjective manner, and hence a final location decision
must also take into account objective measures such as transportation costs, loads, and
operating costs.
Step I. Factors for all alternatives
In this step, as important factors, proximity to ports, proximity to markets, proximity to official
offices, acquisition costs, ease of transportation, region population & market and number of
competitors, permission to projected facility, investment incentives will be taken into account.
Step II. Weights of Factors
Among all factors, most important ones are proximity to markets, proximity to ports,
acquisition costs, ease of transportation and permission to projected facility. Second level
important ones are proximity to official offices and region population and third important ones
are number of competitors and investment incentives.
No Factors Weights
1 Permission to Project 0.500
2 Acquisition cost 0.150
3 Proximity to Main Markets 0.150
4 Ease of Transportation 0.100
5 Proximity to Ports 0.050
64
6 Region Population 0.020
7 Proximity to official Offices 0.015
8 Number of Competitors 0.010
9 Investment Incentives 0.005
Table 4.1. Subjective Factors and weights of Subjective factors for Qualitative Location Analysis
Step III. Scores for Locations (0 – 100)
No Weights Famagusta Kyrenia Karpaz Akdeniz Guzelyurt

1 0.500 100 100 100 0 100
2 0.150 80 70 100 100 100
3 0.150 90 100 50 70 80
4 0.100 100 100 50 50 100
5 0.050 100 100 75 80 90
6 0.020 100 90 50 45 80
7 0.015 100 100 50 65 80
8 0.010 70 100 80 100 100
9 0.005 85 85 100 70 100
Table 4.2. Scores for Locations in Qualitative Location Analysis
Step IV. Computation of Weighted Scores
No Weights Famagusta Kyrenia Karpaz Akdeniz Guzelyurt

1 0.500 50 50 50 0 50
2 0.150 12 10.5 15 15 15
3 0.150 13.5 15 7.5 10.5 12
4 0.100 10 10 5 5 10
5 0.050 5 5 3.75 4 4.5
6 0.020 2 1.8 1 0.9 1.6
7 0.015 1.5 1.5 0.75 0.975 1.2
8 0.010 0.7 1 0.8 1 1
9 0.005 0.425 0.425 0.5 0.35 0.5
TOTAL 95.125 95.225 84.3 37.73 95.8
Table 4.3. Computation of Weighted Scores for Qualitative Analysis
Based on these scores, it is again possible to say that Akdeniz can be eliminated from the
alternatives because of permission problem and also low score from the analysis. On the other
hand according to this analysis, alternative locations can be listed from best to worst as follows;
1- Guzelyurt
65
2- Kyrenia
3- Famagusta
4- Karpaz
5- Akdeniz
Indeed, these analysis can not be the main source of decision because even the scores given
based on the calculations and researches that has been done in previous sections, there may be
some cost factors and critical factors that may eliminate one of the best of this analysis from the
list. For example, according to this analysis Guzelyurt seems the best alternative among all
alternatives but on the other hand because of the low population and proximity to ports,
Guzelyurt may cause unexpected costs that has not been considered in this analysis but will be
considered in other analysis.
4.7. Quantitative Location Analysis (Hybrid)
To decide on a location, quantitative location analysis gives more realistic results than
qualitative analysis. In fact, most of the time, the factors are same but on the other hand, factors
are analyzed by figures than expectations and assumptions.
In Quantitative location analysis Hybrid and Brown & Gibson approaches will be used under
the figure calculations of proposed factors and proposed factors will be divided to the specific
headlines, like Critical Factors, Objective Factors and Subjective factors.
4.7.1. Critical Factors
Critical Factors will exterminate some of the alternatives, if the proposed alternative fulfills any
Critical factor. For the projected facility, main critical factor will be “Permission to the project
on the alternative site”. In general view, it is possible to say that under the Water Scarcity
conditions, none of the government will give negative decision on the construction of such
project but on the other hand, it is possible to get rejection to some places because of the
environmental problems, natural problems or existing or proposed laws.
66
When subject comes to the “Permission to the project on the alternative site”, it is possible to
say that for Famagusta, Kyrenia, Guzelyurt or Karpaz, there is no real problem under the
current conditions of North Cyprus but on the other hand, for Akdeniz, it is not possible to say
same thing because of the ongoing negotiations between North and South. From the reliable
sources and official offices, it has been understood that for Akdeniz it is not possible to get
permission for any kind of project because of the proposals in ongoing negotiations. Indeed,
Akdeniz has very nice nature, virgin coast and almost more than 1000 Donums of Turkish Title
Deeds land with cheaper prices but on the other hand, according to the accepted proposal in the
negotiations coast bands of Akdeniz will be announced as Green Areas of the Island and there
will be no project on that coasts apart from natural projects and because of this accepted
proposal it is not going to be possible to pound a single nail on the coast lands of Akdeniz. For
this reason, it is possible to say that in fact critical factor of Akdeniz is going to be equal to
zero.
4.7.2. Subjective Factors
For subjective factors, there is exactly seven proposed candidate that has been proposed. In fact,
there may be more than seven but they may have been overlooked in this report. Subjective
factors can be listed as follows;
No Factors
1 Proximity to Main Markets
2 Ease of Transportation
3 Proximity to Ports
4 Region Population
5 Proximity to official Offices
6 Number of Competitors
7 Investment Incentives
Table 4.4. List of Subjective Factors
And for each location, subjective factors should be analyzed by means of figures. For example,
in this report, main markets have been assumed to be Nicosia, Kyrenia and Famagusta. In this
case, if projected facility proposed to be build in Kyrenia, proximity to main markets will be
67
analyzed by means of KMs and proximity to Kyrenia will be accepted zero kilometers,
proximity to Nicosia will be almost 35 kilometers and proximity to Famagusta will be almost
95 kilometers. In this case, total transportation to main markets without considering return of
trucks will be 130 kilometers but on the other hand, if projected facility proposed to be build in
Karpaz, proximity to Famagusta, Nicosia and Kyrenia should be considered and minimum total
transportation will be 180 kilometers. In such case, it is possible to say that Kyrenia is powerful
than Karpaz when proximity to main markets is under consideration. In the following table
(Table 4.5), proximity to main markets has been calculated for each candidate alternative.
Main Markets
Alternatives Famagusta Kyrenia Nicosia TOTAL
Famagusta 0 95 55 150
Kyrenia 95 0 35 130
Guzelyurt 100 80 45 225
Karpaz 90 180 145 415
Akdeniz 105 85 50 240
Table 4.5. Proximity to Main Markets of Alternative Locations
From the above table, it is possible to say that among all candidates, Kyrenia has the best value
by the means of Proximity to Main Markets, the second best alternative is Famagusta and the
worst alternative is Karpaz.
When Subject comes to the ease of transportation, most important this that should be
considered is time, accident risk and difficulty of roads. In this case, it is possible to say that
because of single band roads and curve intensity of roads, Karpaz and Akdeniz are the worst
alternatives. On the other hand, because of the Dual Band roads in between Famagusta and
Nicosia, Nicosia and Kyrenia and Nicosia and Guzelyurt, it is possible to say that time, accident
risk and difficulties are lower than the ones for Karpaz and Akdeniz. When it is thought in
physical terms, from Karpaz to Famagusta, the length of road is almost 90 kilometers and with
an average speed of 90 Km/hours, a truck should be able to arrive Famagusta is at most one
hours but because of the curve intensity and single band roads, it takes at least 2 hours to arrive
Famagusta from Karpaz. For the dual band roads, accident risk depends mostly on driver but on
68
the other hand for single band roads it is possible to say that it is not just because of the driver
but also drivers on reverse band.
In case of Proximity to Ports, Export and Import subjects will be considered for the projected
facility. For the projected facility there is low but possibility to export products to other
countries. Indeed, it is said that the export possibility low because there is two important
factors, one is export constraints for North Cyprus because of the current situation of North
Cyprus and second one is the prohibition of exporting Demijohn drinking waters to and from
other countries. In fact, even if it was not prohibited, there is a fact that most of the countries
started to use Desalination technology in Gulf and also Europe for this reason, transporting
products from an Mediterranean Island to Gulf or Europe will be more costly than the products
that are locally produced but even if any country in Europe has not the chance to produce via
Brackish or seawater desalination, they will prefer to buy from the countries nearby them
because of the perfect competition structure of the products hence because of the CIF costs
from Cyprus to Europe or from Cyprus to Gulf countries like Bahrain or United Arab Emirates.
On the other hand, if export is excluded from this scenario, proximity to port will again be
important because of importing some necessary chemical raw materials, machine parts or
machines. In any case, FOB cost will be same for each alternative point but when it comes to
local transportation, transporting raw materials, machine parts of machines from ports to
locations that are far from the ports will be more costly than the locations which have ports. In
this, Kyrenia and Famagusta have the highest positive value than the value of Guzelyurt,
Akdeniz and Karpaz by the means of proximity to ports. In figures, if kilometers assumed to be
points, this subject can be shown as follows and lowest point will show the better alternative;
Alternatives Kyrenia Port Famagusta Port Total

Famagusta 95 0 95
Kyrenia 0 95 95
Guzelyurt 80 100 180
Akdeniz 85 105 190
Karpaz 180 90 270
Table 4.6. Proximity to Ports of Alternative Locations
69
When alternatives compared with this table according to proximity to ports, Kyrenia and
Famagusta are going to be best alternatives, Guzelyurt will be in third place and Karpaz will be
the worst location for the projected facility.
The subjective factor, “Region Population” indeed, shows the market potential, employment
level and other related factors that exactly depend on the number of people on the related area.
In this report, other factors will be omitted but market potential and employment level are the
most important ones. In fact, it is not correct to say that educated staff depends directly on the
population level but on the other hand, effects the ratio of educated staff that are located in the
related region. For example, Karpaz has low population than Famagusta, Kyrenia and
Guzelyurt and also it can be accepted that most of the educated people of Karpaz, migrate the
main cities to be employed instead of having long distance problems of Karpaz and in such
case, most of the villagers that are located in Karpaz are low educated and mostly working on
agriculture and farming jobs of themselves. In such case, to employ an experienced staff or
educated staff, facility should look for employees from main cities and in such cases; cost of
staff will be higher than the ones working in the main cities because of the distance problem. In
any case, the distance problem will be affected on labor costs because of the wages or at least
because of the necessity of hiring a transportation service (Bus) for the staff that are staying in
main cities (especially for Famagusta).
On the other hand, population of the region is also effective on the cost of transporting the
products. Because, it is possible to say that if facility is located in a location with a low
population, most of the products will be transported to the main markets and local sales will be
low because of the low population rate. In such case, even the total demand amount is same for
all alternatives, when it is divided to the locations, it is possible to say that highest ratio of the
products will be transported to the locations that have higher demands and in this case, it is
possible to say that population rate of location effects total transportation costs of the products.
For example, if projected facility is decided to found in Karpaz, because of the low population
rate of Karpaz, let’s say, 10% of the produced products will be sold locally and remaining ones
will be transported to the main markets but on the other hand, if it is decided to found in
Kyrenia, it is possible to say that almost 60% of the demand will be from Nicosia and Kyrenia
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and number of transported products will be almost equal to the number of local sales and as a
result transportation cost will be lower than the transportation costs of the Karpaz. In that point,
population of each location and expected Demijohn demands on each location under the
assumption of 2.2% market share and also amount of local sales and transported products are
given in the following table, in this study, average daily consumption of water per people has
been found and accepted that will be 2.5 liters per day and total capacity of each demijohn is
going to be 19 liters per demijohn. De Facto Population rates has been taken from the state
planning organization and are the results of 2006 census [W12, table 2.nitelik].
Total Total Expected Total Amount

Cities Population Demand Demand Amount of of
(in liters) (in Demijohn) Local Demand Transported
Daily Basis Daily Basis (In Denijohns) Products
Nicosia 85579 213947.5 30450 11260 -
Famagusta 64269 160672.5 30450 8457 21993
Kyrenia 62158 115395 30450 6074 24376
Guzelyurt 31116 77790 30450 4094 26356
Karpaz 3699 9247 30450 487 29963
Akdeniz 595 1487.5 30450 78 30372
Table 4.7. Total Amount of Transported Products from Alternative Locations
Demands for the Projected Facility and Amount of Transportation in tons per day
(2.2% Market Share – Full Capacity)
Total Cost per
Cities Total Demand Expected Total Total Amount of Cost per ton for month
(2.2% Market Daily Local Transported transportation without
Share) Demand Demand ($) considering #
(in demijohns) (in demijohns) (in tons) of trucks and
kms
Famagusta 670 186 9.2 $20 $4784
Kyrenia 670 134 10.2 $20 $5304
Guzelyurt 670 90 11 $20 $5720
Karpaz 670 11 12.5 $20 $6500
Akdeniz 670 2 12.7 $20 $6604
Nicosia 670 248 - $20 -
71
Table 4.8. Total Cost of Transportation from Alternative Locations
From the results it is possible to say that the best alternative will be Famagusta by the means of
effect of local population on transportation amount and cost.
For the proximity to official offices, it should be considered that as a business there will be
daily or monthly duties to be completed with the help of official offices or duties that has to be
completed directly with the official offices. In such case, distance to official offices has small
but valuable importance that should be considered. For example, for such duties an employee
will be hired or existing employee will be used. In this case, by the means of distance, if the
official offices are far from the facility, in every morning employee will visit the facility, will
take the necessary documents for official purposes and will move to the place of official
offices. In such case, for example if the facility is located in Karpaz, employee will need at least
2 hours and will go at least 90 kilometers to Famagusta to visit the official offices and in such
case, every necessary document should be in the file of the employee. If any document does not
exist, s/he will turn back to the facility, s/he will spent 2 more hours to get necessary document
and than 2 hours to Famagusta which means that 6 hours will be spend on the road and also 270
km fuel consumption. In such cases, there will be a good amount of cost for simple jobs.
Therefore, proximity to official offices can be accepted as a small but valuable factor to be
considered. By the means of this factor, Kyrenia, Famagusta and Guzelyurt can be accepted
best places but on the other hand Karpaz will be the worst and Akdeniz will be in the fourth
place.
Number of competitors in the region of selected alternative can be accepted as an important

factor in general view. Indeed, Cyprus is a small island and distance between cities is not so far
it is possible to say that there will be no much changes between having competitors locally or
having competitors from different cities but on the other hand, number of competitors in the
local market may affect the power structure of the business by the means of local contracts and
local distribution points and competitors in the local market decreases the market share of the
business in local market and pushes the company to distribute its products to external or foreign
markets. In some cases, external markets or foreign markets can be more profitable than the
72
local ones but in Cyprus conditions and the conditions of transportation, having competitors in
local market may cause costs than benefits of the external markets.
From the collected information and researches, it is known that there is one competitor in
Famagusta, Bafra Region and one will be completed in the following years. In such case, it is
possible to say that by means of number of competitors in the market, Famagusta has the
smallest value. On the other hand, it is also known that there is one competitor in Karpaz region
and for this reason; Karpaz can be in the third place among the all alternatives. In Kyrenia,
Guzelyurt and Akdeniz, currently there is no existing competitors and this can be a valuable
reason to select one of the three places as best alternative by the means of number of
competitors in the market and on the other hand, it is also known that government will support
such project for Kyrenia and also Guzelyurt.
For Investment incentives factor, it is possible to say that all of the alternatives will have
investment incentives except Akdeniz. But among four alternatives Karpaz, Guzelyurt,
Famagusta and Kyrenia, it is known that Karpaz and Guzelyurt are in the priority basis of
investment incentives and for this reason Investment Incentives for Karpaz and Guzelyurt are
higher than the incentives of Famagusta and Kyrenia. For both Karpaz and Guzelyurt incentives
are same and for Kyrenia and Famagusta incentives are also same but lower than the incentives
of priority level places. In such case, for example when Famagusta and Guzelyurt compared by
the means of Investment Incentives, Guzelyurt will have higher point than Famagusta.
For the weights of the subjective factors, weights in section 4.6. will be used but in qualitative
location analysis, objective factor and critical factor also had weight and for this reason, they
will be figure out from the total and weights of the seven subjective factors will be converted to
give a total of 1. In this case, weights of remaining seven subjective factors will be added
together and weights of each subjective factor will be divided to the total weight of seven
subjective factors. In this case, revised weights of the subjective factors will be as follows;
73
No Factors Weights
1 Proximity to Main Markets 0.42856
2 Ease of Transportation 0.28567
3 Proximity to Ports 0.14289
4 Region Population 0.05709
5 Proximity to official Offices 0.04289
6 Number of Competitors 0.02860
7 Investment Incentives 0.01430
Table 4.9. Revised Weights of Subjective Factors
4.7.3. Objective Factors
For objective factors, cost of acquisition, transportation cost and cost of employees will be
taken into consideration. In the previous parts of this section, transportation costs for loads have
been analyzed. In this part, these analyses will be considered in detail to calculate the total
transportation cost from alternative points to other points.
In the following sections, costs of transportation will be calculated for each alternative location
to be used in Objective Factor. In this study, cost per km for full track has been calculated to be
almost $1.4 USD and for empty truck almost $1 USD per km and total cost of transporting the
load will be $20 USD per tons. On the other hand, the hours of distribution should be calculated
to be finding, if it is possible to distribute the calculated amounts in a working day and if it is
not possible for any of trip, for that trips an overtime cost will be calculated and added to the
worker cost. If it is assumed that the worker (Driver) wage is 1500 YTL (Or $1000 USD) that
means cost of worker per hour will be $4.81 USD per hour and for overtime, it is going to be
assumed that for 1 hour 1.5 of normal working hours will be paid to the worker. That means,
overtime cost of worker will be $7.22 USD per hour. On the other hand, average speed will be
assumed to be 75 km per hour and average unloading duration for each demijohn will be
assumed to be 8 seconds and total hours of loading is going to be assumed that will be equal to
total hours of unloading. As an additional, it is going to be assumed that dual band roads will be
used for the safety of worker for this reason, for example from Kyrenia to Guzelyurt, trip will
74
follow dual band road between Kyrenia to Nicosia and then dual band road between Guzelyurt
and Nicosia. In such case, total length of road will be more but on the other hand, trip will be
safer than using single band roads. If there is no dual road exists, this is not going to be under
the responsibility of business but responsibility of driver to drive in safety and legal way.
4.7.3.1. Transportation Cost Analysis for Famagusta
From/To Kyrenia Nicosia Guzelyurt Karpaz Akdeniz

Famagusta 2.546 4.712 1.710 0.21 0.038
(# of tons)
In Demijohns 134 248 90 11 2
Unloading in Minutes 17.87 33.1 12 1.47 0.27
Famagusta $50.92 $94.24 $34.2 $4.2 $0.76
(cost of tons per day)
Famagusta 90 55 100 90 105
(kms)
Famagusta $119.7 $73.15 $133 $119.7 $139.65
Cost of kms
Table 4.10. Transportation Cost Analysis for Famagusta
In that point, a 20 tons capacity truck from Famagusta will be able to supply daily demand of
Kyrenia, Nicosia, Guzelyurt and Akdeniz with one trip and trip length will be almost 350
kilometers. Trip and length can be shown as follows;
Famagusta – (55 km) – Nicosia – (35 km) – Kyrenia – (35 km) – Nicosia – (50 km) – Akdeniz
– (75 km) – Guzelyurt – (100 km) – Famagusta
Famagusta – (90 km) – Karpaz – (90 Km) - Famagusta
Total Trip Length = 350 kilometers + 180 kilometers = 530 km
Total cost of Transportation to all locations; (There will be one trip to Karpaz)
(350 – 100) x $1.33 + 100 x $1 + 90 x $1.33 + 90 x $1 = $642.2 USD
Total cost for tons of transportation;
9.2 x $20 USD = $184 USD
Total Transportation cost for Famagusta = $184 + $642.2 = $826.2 USD in daily basis.
75
Total Hours of Trip = 7.06 Hours
Total Hours of Loading/Unloading = 64.71 Min. x 2 = 129.42 Min. = 2.16 Hrs.
Total Hours of Distribution = 9.22 Hrs.
Overtime Cost = (9.22 – 8) x $7.22 = $8.81 USD
Overall Total Cost = $835 USD
4.7.3.2. Transportation Cost Analysis for Kyrenia
From / To Famagusta Nicosia Guzelyurt Karpaz Akdeniz

Kyrenia 3.534 4.712 1.710 0.21 0.038
(# of tons)
In Demijohns 186 248 90 11 2
Kyrenia
(cost of tons per day) $70.68 $94.24 $34.2 $4.2 $0.76
Kyrenia 90 35 80 145 85
(kms)
Kyrenia $119.7 $46.55 $106.4 $192.85 $113.05
Cost of kms
Table 4.11. Transportation Cost Analysis for Kyrenia
Trip for Kyrenia will be as follows;
Kyrenia – (35 km) – Nicosia – (55 km) – Famagusta – (90) – Karpaz – (195 km) – Akdeniz –
(75 km) – Guzelyurt – (80 km) – Kyrenia
Total Trip Length = 530 kilometers

Total cost of Transportation to all locations;
(450 km) x $1.33 + (80 km) x $1 = $678.5 USD
10.2 x $20 USD = $204 USD
Total Transportation Cost = $882.5 USD
Total Hours of Loading/Unloading = (24.8 + 33.1+12+1.47+0.27) x 2 = 143.28 Min. = 2.39 Hr.
76
Total Hours of Distribution = 9.45 Hr.
Overall Total Cost = $882.5 + $10.47 = $892.97
4.7.3.3. Transportation Cost Analysis for Guzelyurt
From/To Famagusta Nicosia Kyrenia Karpaz Akdeniz

Guzelyurt 3.534 4.712 2.546 0.21 0.038
(# of tons)
In Demijohns 186 248 134 11 2
Unloading in Minutes 24.8 33.1 17.87 1.47 0.27
Guzelyurt
(cost of tons per day) $70.68 $94.24 $50.92 $4.2 $0.76
Guzelyurt 100 45 80 190 75
(kms)
Guzelyurt $133 $59.85 $106.4 $252.7 $99.75
Cost of kms
Table 4.12. Transportation Cost Analysis for Guzelyurt
Trip :
Guzelyurt – (75 km) – Akdeniz – (50 km) – Nicosia – (55 km) – Famagusta – (90 km) – Karpaz
– (190) – Guzelyurt
Total Trip = 460 km

Total Trip Cost = 270 x $1.33 + 190 x $1 = $549.1 USD
11 x $20 USD = $220 USD
Total cost of Transportation = $769.1
Total Hours of Loading/Unloading = 77.21 x 2 = 155.02 Min. = 2.58 Hours
Total Hours of Distribution = 8.71 Hours
Overtime Cost = (8.71 – 8) x $7.22 USD = $5.13 USD
Overall Total Cost = $769.1 + $5.13 USD = $774.23
77
4.7.3.4. Transportation Cost Analysis for Karpaz
From/To Kyrenia Nicosia Guzelyurt Famagusta Akdeniz

Karpaz 2.546 4.712 1.710 3.534 0.038
(# of tons)
In Demijohns 134 248 90 186 2
Karpaz $50.92 $94.24 $34.2 $70.68 $0.76
Karpaz 180 145 190 90 195
(kms)
Karpaz $239.4 $192.85 $252.7 $119.7 $259.35
Cost of kms
Table 4.13. Transportation Cost Analysis for Karpaz
For Karpaz, distribution trip will start from Famagusta, then Lefkosa, Kyrenia, Akdeniz and
will end in Guzelyurt. In such case, trip for Karpaz region can be shown as follows;
Karpaz – (90 km) – Famagusta – (55 km) – Nicosia – (35 km) – Kyrenia – (35 km) – Nicosia –
(50 km) – Akdeniz – (75 km) – Guzelyurt – (190 km) Karpaz.
Total Trip = 530 km

Total Trip Cost = 340 x $1.33 + 190 x $1 = $642.2 USD per day
12.5 x $20 USD = $250 USD
Total cost of Transportation = $892.2 USD per Day
Total Hours of Trip = 7.1 hours
Total Hours of Loading / Unloading = 88.04 x 2 = 176.1 Min. = 2.93
Total Hours of Distribution = 10.03
Overall Total Cost = $906.86
78
4.7.3.4. Transportation Cost Analysis for Akdeniz
From/To Kyrenia Nicosia Guzelyurt Famagusta Karpaz

Akdeniz 2.546 4.712 1.710 3.534 0.21
(# of tons)
In Demijohns 134 248 90 186 11
Unloading in minutes 17.87 33.1 12 24.8 1.46
Akdeniz $50.92 $94.24 $34.2 $70.68 $4.2
Akdeniz 85 50 75 105 195
(kms)
Akdeniz $113.05 $66.5 $99.75 $139.65 $259.35
Cost of kms
Table 4.14. Transportation Cost Analysis for Akdeniz
For Akdeniz Trip will start from Nicosia, then Kyrenia, Famagusta and Karpaz and in the end
last distribution point will be Guzelyurt. As a result, trip can be shown as follows;
Akdeniz – (50 km) – Nicosia – (35 km) – Kyrenia – (90 km) – Famagusta – (90 km) – Karpaz –
(180 km) – Guzelyurt – (75 km) – Akdeniz
Total Trip = 520 km

12.7 x $20 USD = $254 USD
Total cost of Transportation = $920.85 USD per Day
Total Hours of Loading/Unloading = 17.87 + 33.1 + 12 + 24.8 + 1.46 = 89.23 Min. (1.49 Hr.)
Total Hours of Distribution = 6.93 + 1.49 x 2 = 9.91
Overtime cost = 1.91 x $7.22 = $13.79 USD
Overall Total Cost of Transportation = $920.85 + $13.79 = $934.64 USD
79
As a result, transportation cost of each alternative in daily basis can be written as given in
following table.
Alternative Location Transportation Cost in Daily Basis

Famagusta $835.00
Kyrenia $892.97
Guzelyurt $774.23
Karpaz $906.86
Akdeniz $934.64
Table 4.15. Transportation Costs in Daily Basis
4.7.3.6. Other Objective Factors (Employee & Acquisition)
As another objective factor, acquisition cost of each alternative will be used. As it is known in
section 3.2. acquisition type (Lease or Buy) and cost of each alternative has been mentioned
and calculated. In this part, for all alternatives, lease prices will be considered to prevent
misleading because for some alternatives, it has been found that buying will be more reasonable
than leasing because of sale opportunity but when it comes to present worth results without
considering sale price after 15 years, acquisition costs of Freehold ones will seem to high in
front of the Leasehold ones. For this reason, as an objective factor, acquisition cost of each
alternative can be shown as follows;
Alternatives Acquisition Costs

Famagusta $5190.00
Kyrenia $6387.00
Karpaz $4591.55
Akdeniz $4591.55
Guzelyurt $4591.55
Table 4.16. Acquisition Costs for Alternative Locations
As a employee cost, it is going to be assumed that standard workers will be hired locally but on
the other hand for some locations, hiring educated and experienced staff will be from main
cities like Nicosia, Famagusta, Kyrenia and Guzelyurt. In such case, for the alternatives which
are accepted as main cities, average cost of a educated staff will be accepted as 2000 YTL
($1333 USD) but on the other hand, for the alternatives which are not in the list of main cities
(Akdeniz and Karpaz), it is going to be necessary to also hire a service company to transport the
80
educated employee from main city to Karpaz or from main city to Akdeniz. In this case, it is
going to be assumed that monthly cost of hiring the service company is going to be 5000 YTL
for Karpaz (For 90 kms x 2 per day) and 2777 YTL for Akdeniz and also it is going to be
assumed that 12 educated employees will be hired for the facility (Accountant, Electrical
Engineer, Industrial Engineer, IT Engineer, Public Relations, Manager, Mechanical Engineer,
Biologist, Chemist, Marketing & Sales Manager, Manager Assistant, Production Manager). As
a result, cost of each educated employee will be gross wage + transportation cost. In this case,
gross wage of each employee will be assumed to be 3000 YTL ($2000 USD) and transportation
cost per worker will be 416.67 YTL (or $277.8 USD) for Karpaz and 231.41 YTL (or $154.3
USD) for Akdeniz. In such case, monthly cost of educated staff will be as follows;
Alternatives Gross Wage per Employee Transportation Cost per

per Month Employee per Month
Karpaz $2000 $277.8
Akdeniz $2000 $154.3
Famagusta $2000 -
Kyrenia $2000 -
Guzelyurt $2000 -
Table 4.17. Employee Transportation Costs for Alternative Locations
4.7.4. Analysis and Calculations to Select Best Alternative
 1, i f p e r m i s si isog ni v e n l ot oc a tiio n
C Fi j = 
 0 , o t h e r w is e
O Fi j = C o sot fO b j e c tfiva ce t oj ar tlo c a t iio n
S Fi j = n u m e rvi ac l ua es s i g n(eodns c a loef0 - 1 ) t os u b j e c tfiva cet oj ar tl o c a t iio n
W j = w e i gahsts i g n teosd u b je c tfiavcet oj (r 0≤ Wj ≤ 1
81
p
CFM i = CF i1CF i 2 CF i 3 ..... CF ip = ∏CF ij i = 1,2,....., m
j =1
q  q
Max ∑OF ij  − ∑OF ij
OFM =
i
 j =1  j =1 i = 1,2,......, m
i
q  q 
Max ∑OF ij  − Min ∑OF ij 
i
 j =1  i
 j =1  From the
r
SFM i = ∑w j SFij i = 1,2,......., m analysis,
j =1
for
subjective
LM i = CFM [αOFM i + (1 − α) SFM i ] factors to
each alternative, pointing system has been used and according to the analysis in this section,
worst ones has got the lowest point but better ones have got the highest values between 0 and 1.
As a result, for the subjective values, following table has been formed.
1 2 3 4 5 6 7
Famagusta (1) 0.80 0.50 0.90 0.90 0.90 0.60 0.80
Kyrenia (2) 0.90 0.70 0.90 0.80 0.90 0.90 0.90
Guzelyurt (3) 0.70 0.60 0.50 0.60 0.90 0.90 0.90
Karpaz (4) 0.50 0.30 0.40 0.40 0.40 0.70 0.80
Akdeniz (5) 0.60 0.40 0.45 0.10 0.50 0.80 0.70
Table 4.18. SF Scores for Alternative Locations
On the other hand, Objective Factors has been calculated in Monthly basis and following table
has been formed. Same costs have been omitted from the calculations. For example, gross
employee cost is same for each site and this cost is affected by service cost for this reason, only
service cost will be used in this table. Or for the acquisition of lease hold, there is initial
investment of $1000 USD for each alternative, for this reason it can be omitted from the
calculations and as a result only the monthly fee can be shown on the table.
Transportation Acquisition Educated Total

Cost Cost Employee Cost
82
Famagusta (1) $21710 $35 0 $21745
Kyrenia (2) $23217 $45 0 $23262
Guzelyurt (3) $20129 $30 0 $20159
Karpaz (4) $23578 $30 $277.8 $23886
Akdeniz (5) $24300 $30 $154.3 $24484
Table 4.19. Monthly Costs of Each Alternative Location
Now, it is possible to calculate ratio of each factor to find the best alternative among five
candidates.
Critical Factors
CF1 = 1, CF2 = 1, CF3 = 1, CF4 = 1, CF5 = 0
Objective Factors
$24484 − $21745
OFM 1 = = 0.63329
$24484 − $20159
$24484 − $23262
OFM 2 = = 0.28254
$4325
$24484 − $20159
OFM 3 = =1
$4325
$24484 − $23886
OFM 4 = = 0.13826
$4325
$24484 − $24484
OFM 5 = =0
$4325
Subjective Factors;
1 2 3 4 5 6 7 Total
0.42856 0.28567 0.1428 0.05709 0.0438 0.02860 0.01430
9 9
(1) 0.80 0.50 0.90 0.90 0.90 0.60 0.80 0.734
(2) 0.90 0.70 0.90 0.80 0.90 0.90 0.90 0.838
(3) 0.70 0.60 0.50 0.60 0.90 0.90 0.90 0.655
(4) 0.50 0.30 0.40 0.40 0.40 0.70 0.80 0.429
(5) 0.60 0.40 0.45 0.10 0.50 0.80 0.70 0.496
83
In that point, it should be known that Objective factors are dependent to the structure and
effects of subjective factors in this study. For this reason Subjective Factors are more important
than the Objective Factors. As a result, α will be selected to be 0.2.
LM 1 = CFM 1 [αOFM 1 + (1 − α ) SFM 1 ] = (1)[ (0.2)( 0.633 ) + (0.8)( 0.734 )] = 0.714

LM 2 = (1)[ (0.2)( 0.282 ) + (0.8)( 0.838 )] = 0.727
LM 3 = (1)[ (0.2)(1) + (0.8)( 0.655 )] = 0.724
LM 4 = (1)[ (0.2)( 0.1382 ) + (0.8)( 0.429 )] = 0.371
LM 5 = 0
From this analysis, it is possible to say that Kyrenia will be selected as the best alternative
location for the projected facility. It should not be forgotten that, in these analysis, very high
importance has been given to the subjective factors because in the end Objective Factor is really
dependent on the subjective factors for this reason, the one which has higher value on
subjective factors should be the best choice.
84
CHAPTER V
WATER SPECIFICATIONS
In general, for water specifications a standards list should be generated from the Global
Drinking Water standards. As given in Table 2.5 of Chapter 2, World Health Organization
standards for portable water can be taken as a reference for the quality specifications of
drinking water that will produced in the projected facility. In this chapter, a general view of
quality standards description will be given as a reference for the quality control studies and
basics of quality control standards of the facility.
5.1. Scope
This specification prescribes the requirements, methods of sampling and test for bottled
drinking water.
5.2. Definition
For the purpose of this specification the following definition shall apply:
5.2.1. Bottled Drinking Water
Bottled drinking water is water other than natural mineral water which is filled into
hermetically sealed containers/bottles of various compositions forms, and capacities that is safe
and suitable for direct consumption. Bottled drinking water is included in the category of food.
5.3. Supplementary Definitions
85
5.3.1 Underground water
Water such as spring water, stream water, well water originating from subsurface aquifers.
5.3.2 Protected underground water
Protected underground water is water coming from a unique environmental resource, not
directly influenced by surface water (water such as streams, rivers, lakes, ponds and reservoirs)
or the surface environment.
5.3.3 Prepared Water
Water such as demineralised water, distilled water which are not characterized by their origin
(for example, tap water) and remineralized water.
5.4. REQUIREMENTS
5.4.1. General
5.4.1.1. SUITABILITY
The assessment of the suitability of water for human consumption shall be based on
consideration of its physical, chemical and microbiological requirements and limits for toxic
substances.
5.4.1.2. REQUIREMENTS
The bottled drinking water shall be free from all chemicals and bacteriological contaminations
which are hazardous to health.
The product shall conform to the permissible levels given under the following Tables:
1. Table –I Physical characteristic for bottled drinking water. (Appendix C)

2. Table –II chemical characteristic for bottled drinking water. (Appendix D)
3. Table –III Chemical characteristics/microorganisms for bottled drinking water. (E)
4. Table – IV Microbiological Limits. (Appendix F)
86
5.5. PACKAGING
The containers/bottles shall be hygienic suitable completely clean and shall not cause any
undesirable change in taste, odour or colour or quality of the water. It can be inspected at
random just prior to being filled and sealed.
It shall be packed in hermetically sealed containers of food grade material to prevent

contamination of bottled water.
Filling and sealing operations of containers/bottles shall be done in an aseptic atmosphere so as
to prevent any contamination.
Bottled water shall be transported by any suitable means of transport to protect it from
contamination.
In addition to Standard for the Labeling of Pre-Packaged Foods, the following provisions shall
apply :
• Name of the product – e.g. “Bottled Drinking Water

• Brand name or trade name if any,
• Net volumes in System International/Metric System,
• Name and address of the manufacturer,
• Batch number or code number
• Date of Expiry,
• Chemical composition for e.g. Sulphate, Sodium, Magnesium, Potassium, Chloride,
• Mark & Licence Number.
• Date of Bottling
• Location and name of the source.
5.6. SAMPLING
87
5.6.1. Lot
In any consignment all the bottles of the same size and belonging to one batch of manufacture
or supply shall constitute a lot.
5.6.2. General Requirements of Sampling
Each bottle of the sample shall be marked with necessary details of sampling and the bottles for
bacteriological testing shall be marked separately.
The bottles of the sample shall be stored in such a manner that there shall be no deterioration of
quality of water.
The bottles for bacteriological testing shall be brought to the testing laboratory within one hour,
of sampling. If this is not possible the bottles shall be stored at 10 0C or below and transported
to the testing laboratory within 24 hours. In case of small units, the original packing shall be
treated as sample.
5.7. SCALE OF SAMPLE
Samples shall be tested from each lot for ascertaining its conformity to the requirements of this
specification.
The number of bottles to be selected from a lot shall be in accordance with the Table – V in
Appendix G.
88
CHAPTER VI
FORCASTING ANALYSIS
From the collected information it is known that most of the time monthly sales of water
companies does not fluctuates too much. In general, it seems that monthly demands have a
steady state structure and increase in the demand in the long run depends on the population
increase in the country. In fact, from some of the information that has been collected from some
sources, exact picture of demand and population relation can be shown in the following table.
Amount of water in demand row shows the average daily water consumption ratio per person in
the related month.
Months Daily Demand Ratio Population Rate

January 2.10 286100
February 2.03 286100
March 2.10 286100
April 2.10 286100
May 1.88 286100
June 2.10 286100
July 2.03 271100
August 2.10 280600
September 2.03 280600
October 2.08 286100
November 2.08 286100
December 2.02 286100
Table 6.1. Daily Demand Ratios for Drinkable Water in Demijohns
89
Apart from the above information, it is known that in Cyprus, there is almost 6 firms that
supplies drinking water from different sources (natural or desalination) and on the other hand,
water market has a growth rate of almost 20% per year and it is expected that total supply
amount will reach to 100 Million liters in the near future and local demijohn market has a
capacity of almost 65 Million liters per year and import of these products does not allowed. On
the other hand, small bottle drinking water has a small market with a capacity of 750 thousand
cases per year and almost 20% of these products are imported ones. In such cases, it is possible
to say that starting with the production of demijohns and than entering market with small bottle
drinking waters can be a good strategy. But on the other hand, it is also known that because of
the new environmental movements of some organizations, small drinking water market started
to have problems and demand to such products started to decrease in Europe and USA. For this
reason, some of the EU companies started to change their product structure or bottle designs
from small to demijohns or from PET to Glass or Aluminum bottles. In such case, it is also
possible to say that such environmental protection impacts may also cause a decrease in the sale
of these products in Turkey and Cyprus too because of the Public Relations and Advertisement
strategies of some of the companies. In such case, as a beginner, company should start with the
production of demijohns and then if the demand to PET products does not change in the near
future, company should enter this small market too to increase the sales by product diversity
strategy.
As it is known, monthly and daily demand is proportional to the population rate of the country,
and as population rate, it should be considered that there is 6 Universities in North Cyprus and
in winter times, almost 21000 students arrive to North Cyprus for education purpose and this
amount also effective for the changes of demand ratio but on the other hand because of the new
developments and because of the increase in the tourism investments, it is also possible to say
that in summer times, at least a same amount of arrival will exist and this will also effect the
monthly demand amount of the products. From the monthly demands ratio table above, if it is
assumed that the market share of the company will be 2.2% and may change ±0.1% in some
months, for a year, monthly demand amount of the company can be shown as follows;
90
Months Expected Demand Amount
January (2.2%) 396534 liters
February (2.1%) 365893 liters
March (2.3%) 414414 liters
April (2.2%) 396534 liters
May (2.3%) 371128 liters
June (2.3%) 414558 liters
July (2.3%) 379729 liters
August (2.2%) 388912 liters
September (2.2%) 375948 liters
October (2.1%) 374905 liters
November (2.2%) 392758 liters
December (2.1%) 364090 liters
Table 6.2. Expected Demand in Liters for the Projected Facility
From the above table it is also possible to say that demand has almost steady state structure in
monthly basis too and it is possible to see this structure from the following demand graph too.
91
420000
410000
400000
390000
380000
370000
360000
350000
340000
330000
Ma rch
April
May
June
July
Augu st
Septe mb
Jan uary
February
Oc tob er
Novem ber
Dec emb er
er
Demand (Liters) Linear (Demand (Liters))
Indeed, it seems that there is a decreasing trend and any forecasting analysis will lead wrong
decisions because of the structure of the graph. For this reason, in fact, forecasting analysis
should be applied to find the future population rate and from the ratios, a new table should be
produced to use data for more than one year. Because with this data, future value of the
monthly demands will have a decreasing trend too, this is almost impossible for such product.
In this case, it is going to be assumed that population of North Cyprus increases between 0.4% -
0.5% per year. In such case, population rate of 2004, 2005, 2007 and 2008 will be calculated
and from the calculated results, water consumption of those populations will be generated from
the figures of 2006. In the following table, generated population rates are given;
Year Population Rate

2004 262730
2005 263912
2006 265100
2007 266293
2008 267491
Table 6.3. Population Rate of TRNC in years
From the above table, now it is possible to generate 5 years demand ratio of drinking water
from the values of 2006. Five years generated table of demands and graph of demands is given
92
is Appendix K, from the graph it is possible to observe that Regression Analysis will be the best
possible model to use for the future demand forecasts and equation for Regression Analysis will
be Y = 157,53X + 359632
From this result, it is possible to calculate demand forecasts of each month of 2009 and 2010
Y = Forecasted Demand Amount
X = Month
In this case, following table (Table 6.4.) will be the result of the forecasts of 2009 and 2010.
According to the table in Appendix K, current time X = 59 and for the following months, base
point will be 59.
Y
Months X Demand Forecasts
2009 January 61 369230
February 62 369388
March 63 369545
April 64 369702
May 65 369860
June 66 370017
July 67 370174
August 68 370332
September 69 370489
October 70 370647
November 71 370804
December 72 370961
2010 January 73 371119
February 74 371276
March 75 371433
April 76 371591
May 77 371748
June 78 371905
July 79 372063
August 80 372220
September 81 372377
October 82 372535
November 83 372692
December 84 372849
Table 6.4. Monthly Demand Forecasts for 2009 & 2010
From the regression analysis and structure of the population, it is possible to say that there will
be a monthly increase in demand. But on the other hand, it shouldn’t be forgotten that the
planned projects of government and also Drinking Water Pipes project of Turkey to Cyprus,
93
will affect these demand ratios sharply. For this reason, any strategy and plan should be done
by considering these threats to the Drinking Water Market in North Cyprus.
As it is mentioned in the previous sections and also in this section, because of the perfect
competition structure of the product market, objective market share of the projected facility will
be 2.2% and for a short time, it is going to be tried to be price competitive in the market as a
new business but it shouldn’t be forgotten that being price competitor for a long time in a
perfect competition structure is almost impossible and instead of price maker, facility will be a
price taker after the increase of suppliers in the market. Indeed, currently the demand is higher
than the supply sources and when the natural sources end, demand to the products of such
businesses will increase and for a while it is going to be possible to be a price maker by also
considering the prices of competitors but when the planned projects start to supply projected
amount of drinking water to North Cyprus, some of the companies will left the market and the
strong ones will try to find other ways of product diversity and also companies in the market
again will be price maker and will try to get profit from high sales not from the high profit
margins.
6.1. Annual Sales of Small Bottle Drinking Waters
At the beginning of this chapter, as it has been mentioned two type of market exist in drinking
water products. One is Demijohn Market which has local competitors only and consists of the
most of the drinking water market density and the second one is the small bottle drinking water
market which consists of competitors locally and also from Turkey.
For the small bottle drinking water market, it is known that a small amount of market exist and
annual sales capacity is almost 3,6 Million YTL and on the average 20% of this market is
imported from Turkey. In such case, it is possible to say that for both market, market share
should be adjusted to conform to the initial projected total capacity of the facility and also
future drawbacks of this market should be taken into consideration.
94
From these information, it is possible to say that annual sales of small drinking water products
is almost 15 Million small bottle, on the other hand, total capacity for small bottles of the
projected facility is almost 124800. As a result, it is possible to say that current capacity of the
projected facility will be able to meet 9.98%, which is almost 1,497,600 bottles a year. It is also
known that monthly capacity of projected facility is 416000 liters and the highest share of this
capacity is planned to use in the demijohn market that is almost 21894 Demijohns per month.
When monthly demand forecasts for demijohns analyzed, it is possible to see that with a 2,2%
share of the market, projected facility will use almost 88.94% of total capacity to demijohn
market but on the other hand there will be almost 46000 liters of drinking water that can be
used for the small bottle drinking water market. In such case, it is possible to say that maximum
objective market share for small bottle market of the projected facility should be at most 7.36%
that is almost 92000 bottles per month or 4600 Cases of bottles per month. When it is
calculated on population + students + tourists in the market, it is possible to say that total
consumption of small bottle waters a day is not more than 0.144 per person but in general it is
also possible to say that daily sales amount of small bottle drinking waters is almost 41666
bottles a day or 1,250,000 units per month. In this case, a reasonable approach will be targeting
a market share of 5% of total sales per month or per year. In this case, forecast of small bottle
waters can be also generated from the population rates and expected tourist potential in the
following years. When it is thought in annual basis, because of the increase in the population
there will also be increase in the sales of small bottle waters too but main leverage of the small
bottle water sales are Tourists, students and military basis. For example, it is known that total
almost daily sales is 41666 and when this amount compared with the number of students in the
Island, it is also obvious that almost half of the sales signs the number of students and the
remaining other half is tourists and military basis and it can be also assumed that in daily basis,
rate of population almost does not have a good impact on the sales of the small bottle waters
because most of the employee part of the population uses the demijohns in their homes and also
in their offices and as a result it is possible to assume that at least 5 days of a week employee
part of the population consumes drinking water from Demijohns. In this case, if it is assumed
that the ratio of tourists (not the ones who visits just for the Casinos) in a year is almost equal to
the number of students in Island, it is possible to assume that during the semester periods, more
than 50% of the purchases done by students and in summer seasons total amount of sales have
95
potential from the tourists and this amounts almost balances the yearly sales figures. In this
case, it is possible to say that an increase in the tourist amounts will increase the number of
sales of small bottle waters and also an increase in the number of students in Island will also
increase the number of small bottle waters sold. For this reason, forecasting should be done on
the population rate of tourists and rate of students to find the better and robust results about the
future sales of the small bottle waters.
6.2. Approximate Annual Sales
From the previous sections, monthly average sales of the demijohns have been calculated to be
almost 370000 liters per month. On the other hand, with a 5% market share, monthly average
sales amount of small bottle waters is expected to be at least 62500 units. It is known that a unit
of small bottle is 0.5 liters, in this case, total monthly production amount of the small bottle
drinking waters is expected to be at least 31250 liters. As a result, total monthly sales amount of
projected facility will be 401250 liters and annual sales will be expected to be almost 4,815,000
liters that is almost 96.45% annual capacity of the projected facility.
CHAPTER VII
PRICING POLICY
96
An effective pricing policy can be determined only after deciding specifically what the business
is and how the objectives of the pricing policy can further support and define the identity of
business.
Pricing objectives should be closely tied in with the overall business and marketing goals and as
a result take into the consideration what impact the prices will have on sales volume, sales
revenue, market share, competitive position, company image and profitability.
For the projected facility, initial objectives should be competitive position and catching a
market share as a new company in the market. For this reason, in first steps profitability should
not be the objective for a new company and prices should be as competitive as possible to
introduce the newly founded company to the market by selling products with better prices.
At this point, the main objective of the projected facility will be sell what you produce
approach, therefore, it is planned to have a market share that is almost 2.2% of the total sales in
the market. In such cases, with a full capacity, company will be able to sell what it produces.
But to have such chance, prices should be taken below the current market prices or at least the
same with the cheapest price in the market.
To be exactly sure about the minimum market price per liters for the facility, every single
monthly cost of the facility should be calculated and divided to the monthly production capacity
of the facility. In this case, all expected and calculated costs will be calculated and than will be
divided to 416000 liters and result will give the cost of water per liter and any single cent after
that amount can be accepted as profit. The cost should be too much less than the market prices
and profit margin should be as much as that give equal price or less price than the current
market prices of the water per liters. From Demijohns, it is known that average market price of
water is almost 0.09868 YTL per liters and total cost of water per liter should be at most 0.08 to
be able to say that projected facility will make a net profit of at least 80.000 YTL per year.
7.1. Calculation of Monthly Costs of Projected Facility
97
For the projected facility, from office tools to construction cost of the facility should be
calculated in detail and should be converted to monthly basis for at least 15 years and as a result
it is going to be possible to talk about minimum profit margin, pricing policy and prices of the
products of the projected facility. In the following table, some of the monthly costs, expected
costs, Initial Investment Costs are given and by using financial analysis techniques, it will be
possible to calculate monthly costs of facility. The minimum interest rate should be 6% and
analysis should be done for 15 years basis.
7.1.1. Initial Costs of the Facility (Initial Investment Costs)
Reverse Osmosis Cost $33000

PV Solar System Cost $121680
Water Filling Machine (Demijohns) $35000
Water Filling Machine (Small Bottles) $30000
Installation Cost $9900
Pretreatment Cost $9900
Computers for Offices (12) $10800
Water Dispenser (3) $500
Fax Machines (2) $300
Printers (2) $200
Photocopy Mach. (1) $1500
Acquisition Cost $1000
Grid Cost $4500
Pump Cost (3) $1855
Construction Cost * $335980
Unexpected Initial Costs $10000
TOTAL INITIAL COST $606115
* Building Area Calculated to be almost 938 sqm and costs calculated from Appendix L
7.1.2. Annual Costs of the Facility
PV M&R Costs Per Year $11897

Water Filling Mach. M&R Per Year $10000
M&R for RO System Every 3 Months $1155
M&R of Photocopy Mach. Per 2 Months $100
Polishing of RO System Every 4 Months $13200
Chemicals for RO Daily $105.58
Fee for Land (4 Donums) Monthly $180
Electrical Cost Daily $1.88
98
Staff Cost (12) Per Month $30000
Driver Cost Per Month $1500
Workers Cost (5) Per Month $7500
Office Tools Per Month $1000
Transportation Costs Per Month $11609
Replacement of RO Mach. Every 5 Years $33000
Unexpected Costs Per Month $1000
Total Annual Cost = $21897 USD per Year

Total Monthly Cost = $52789 USD per Month
Daily Costs = $107.46 USD per Day
Others
Every 2 Months = $100 USD
Every 5 Years = $33000 USD
7.1.3. Calculations for Monthly Basis
Step I. Calculation of Initial Investment in Monthly Basis
PV = $606115 USD
i = 0.4868%
n = 180 Months
A =?
 i (1 + i ) n   0.004868 (1.004868 )180 

A = PVx   = $606115 x   = $5063 .018 / month
 (1 + i ) − 1  (1.004868 ) − 1 
n 180
Step II. Calculation of Periodic Costs
- Daily costs = 26 x $107.46 = $2793.96
- Every 2 Months
i = 0.4868%
99
$100 $100 $100 $100 $100 $100
PV = 2
+ 4
+ 6
+ 8
+ 10
+
(1.004868 ) (1.004868 ) (1.004868 ) (1.004868 ) (1.004868 ) (1.004868 )12
PV = $580 .03
 0.004868 (1.004868 )12 
A = $580 .03 x   = $49 .88 / month
 (1.004868 ) −1 
12
- Every 3 Months
$1155 $1155 $1155 $1155
PV = + + +
(1.004868 ) 3 (1.004868 ) 6 (1.004868 ) 9 (1.004868 )12
PV = $4455 .35
A = $383 .14 / month
- Every 4 Months
$13200 $13200 $13200
PV = 4
+ 8
+
(1.004868 ) (1.004868 ) (1.004868 )12
PV = $38095 .85
A = $3276 / month
- Every 5 years
i = 33.82% for every 5 years
Price increase will be omitted
 (1.3382 ) 3 − 1 
PV = $33000 x  3 
= $56858 .25
 0.3382 (1.3382 ) 
 0.004868 x(1.004868 )180 
A = $56858 .25 x   = $474 .95
 (1.004868 )180 −1 
- Annual Costs
Cost per year = FV = $21897
n =12 Months
i = 0.4868%
 0.004868 
A = $21897 x   = $1776 / Month
 (1.004868 ) −1
12
100
Step III. Calculation of Total Monthly Cost (TMC)
TMC = $1776 + $474.95 + $3276 +$383.14 + $49.88 + $2793.96 + $5063.018 + $52789

TMC = $66606 USD per Month
At this point, it is possible to calculate the cost of per liter water produced. It is known that
hourly production capacity of the facility is 2000 liters and facility will work a minimum of 8
hours a day and 26 days a month. In this case, total production capacity of the facility will be
416000 liters per month and monthly total cost of the facility will be $66606 USD per month.
In this case;
Cost of Water per Liter : CWPL
TMC $66606
CWPL = = = $0.16
TotalCapac ityperMont h 416000
In this case, it is possible to say that with these costs, total cost of water will be at least $0.16
USD per liters which is not reasonable to talk about. For this reason, the main objective of the
facility should be increase of the market share for full capacity and decrease of some of the
unnecessary costs to decrease the monthly costs of the facility. For this purpose, the following
costs can be minimized to decrease the monthly costs and hence cost of water per liters.
Objectives of the facility should be;

1- Increase the Market Share as much as possible
2- Designate a sale price which is equal to average market prices
3- Minimize the costs
- Minimize the employee costs
- Layoff unnecessary employees (such as Public Relations, Assistant Manager)
- Decrease the number of Quality Control Staff (one experienced staff with the
knowledge of all Quality Control Machines will be enough or at most two)
101
- Decrease the office tool costs
- Minimize the Transportation costs, for example by omitting place with very low
demands
In such cases, for example worker costs can be decreased to minimum wage level and with all
taxes worker costs will be at most 1254 YTL that is equal to at most $836 USD. On the other
hand, Public Relations and Assistant Manager will not be hired as a result there won’t be a
monthly cost of $5000 USD. On the other hand, instead of hiring an IT Engineer, service of a
computer company will be used when there is any problem in any computer system. Instead of
hiring a production manager and an industrial engineer, an experienced Industrial Engineer will
do the all necessary Industrial Engineering, production and production control studies. This will
also save $5000 USD. As a result, with a small revision on employment, monthly costs will be
decreased at least $13320 USD. On the other hand, if the number of quality staff also decreased
to one, it will also save $2500 USD from monthly costs and with a small study, office tools
costs may be decreased to $800 or $900 USD from $1000 USD. And from these savings total
monthly saved amount will be $15920 USD and on the other hand, instead of paying 3000 YTL
to educated staff, it can be decreased to 2500 YTL for managers and 1750 YTL to other
educated staff. In this case, gross wage of managers will be at most 3100 YTL and gross wage
of other educated staff will be at most 2100 YTL and this will also save $7468 USD and as a
total, saving will be at least $23388 USD and from these savings, cost of water per liter will be
decreased to $0.1039 USD per liters which is also not again reasonable. In fact, objective price
is an amount less than 0.08 YTL per liters, costs should be decreased as much as possible and
working hours should be increased from 8 hours to 9 hours to increase the monthly production
capacity of the facility and hence increasing the flexibility of objective market share to highest
amounts. A one hour increase in the daily working hours will increase the monthly capacity by
52000 liters and as a result this capacity increase will also decrease the cost of water per liters
and in this case cost of water will be $0.09234 USD per liters. In such case, the only way of
decreasing the cost in the planned life time of the facility is going to be the deceasing the
transportation costs by omitting the small markets like Karpaz and Akdeniz and increasing the
market share in main markets like Nicosia, Kyrenia, Guzelyurt and Famagusta. In such case,
102
cost of transportation should be calculated and revised by revising the trip from Kyrenia to the
distribution points.
Step IV. Revision of Transportation Trip and Calculation of Transportation Costs for
Kyrenia.
In the previous studies, transportation trip was;
Kyrenia – (35 km) – Nicosia – (55 km) – Famagusta – (90) – Karpaz – (195 km) – Akdeniz –
(75 km) – Guzelyurt – (80 km) – Kyrenia
But from the pricing policy studies, it has been realized that increasing the market share in main
markets and omitting the small markets will have a valuable impact on the cost of one liter
product produced in facility. When Karpaz and Akdeniz omitted from the distribution points
lost of demand will be at most 248 liters and this amount of market share can be easily
collected from the main cities and lost of total number of demijohns sold will be 13 and if it is
assumed that the profit from each demijohn is 0.5 YTL, loss of profit will be at most 6.5 YTL
per day or 169 YTL per month but on the other hand, transportation length of the truck will be
at most 270 kms. In such case, revised trip and trip calculations can be shown as follows;
Kyrenia – (35) – Nicosia – (45) – Guzelyurt – (100) – Famagusta – (90) - Kyrenia
From / To Famagusta Nicosia Guzelyurt

Kyrenia 3.534 4.712 1.710
(# of tons)
In Demijohns 186 248 90
Unloading in Minutes 24.8 33.1 12
Kyrenia
(cost of tons per day) $70.68 $94.24 $34.2
Kyrenia 90 35 80
(kms)
103
Kyrenia $119.7 $46.55 $106.4
Cost of kms
Total Trip = 270 km

9.96 x $20 USD = $ 199.2
Total cost of Transportation = $ 528.6 USD per Day
Total Hours of Loading/Unloading = 24.8 + 33.1 + 12 = 69.9 Min. (1.165 Hrs)
Total Hours of Distribution = 3.6 + 1.165 x 2 = 5.93 (Hrs)
Overtime cost = 0 x $7.22 = $0 USD
Overall Total Cost of Transportation = $528.6
In such case, it is possible to say that in one day, 20 tons capacity truck will be able to distribute
demand of 2 days and as a result costs will be decreased more than the loss of profit from
omitting two very small markets. In this case, total monthly cost of transportation will be
$6871.8 and this approach will save almost $4737.2 USD from the monthly costs.
In this case, revised cost of 1 liter water will be $0.0822 USD but even this amount will not be
reasonable to enter the market because maximum sale price of a 19 liters Demijohn in the
market is 2.5 YTL in Nicosia and Kyrenia and with this amount of cost per liter, cost of one
Demijohn for the facility will be 2.34 YTL and with this price, even without adding any profit,
facility will be able to sell just in Kyrenia and Nicosia. For this reason, cost of per liter should
be taken to at least $0.04 per liters to be able to sell in all markets and price in Famagusta
cannot be higher than 1.25 YTL and in Kyrenia and Nicosia cannot be higher than 2.5 YTL.
At this point, it is possible to say that costs of the facility should be minimized and market share
of the facility should be at least 2.35% and sales price should be at most 2.5 YTL for Nicosia
and Kyrenia and 1.25 YTL for Famagusta. As a result it is possible to say that cost of producing
1 liter of water should be less than $0.04 and should be taken to at least $0.04 to have a profit
104
margin of 8.8% from Famagusta and with a competitive price of 2 YTL , a profit margin of
43% from Nicosia and Kyrenia.
CHAPTER VIII
CONCLUSION
From this report, it has been analyzed that for a water desalination plant in North Cyprus, a
Reverse Osmosis Desalination technology with a PV Solar Power Supply system will be the
best possible alternative to choose among the other existing and compared alternatives like
MVC or MED.
105
System will be constructed for a capacity of 468000 liters per month and will consist of
Demijohn and small water filling machines in it. From the analysis, it has been found that total
energy consumption of such system will be at most 450 Kwh and with a Solar PV system in
Cyprus, it is going to be the best and more economical way to supply such amount of electricity
consumption of projected facility.
From The Location Analysis, it has been found that constructing such desalination project in
Kyrenia will be least costly and will have more advantages than the other alternative locations.
In Kyrenia, desalination plant should be constructed in a point between Karsiyaka and Lapta
and it is known that currently there is an existing selected point by government for such project.
Constructing the projected facility will have advantages on being in a main market like Kyrenia
and having proximity to a biggest market Nicosia which has almost 90000 population and is the
biggest market of the Island too. On the other hand, because of the port opportunity and
existence of dual band roads, Kyrenia has highest points than the other considered alternatives
like Famagusta, Guzelyurt, Karpaz and Akdeniz.
Total cost of constructing such system in Kyrenia will be almost $335980 USD as an initial
investment and operating cost of such system will be almost $33417.78 USD in monthly basis.
But unfortunately, it has been found that with a maximum market share of 2.35% and full
capacity production, cost of water per liters from this facility will be almost $0.082 which is not
reasonable to enter market or reasonable to have a market share in existing market structure. As
a result, to have a feasible result from such project, target cost of producing 1 liter should be at
as low as $0.04 USD per liters and maximum profit margin should be 8.8% for Famagusta and
43% for Nicosia and Kyrenia. In such conditions, it is possible to say that such a project with
the projected capacity and market share, will not be a good investment to move forward and
from the planned projects of government, it is also possible to say that such a project will have
at most 10 years of life time and after 10 years, because of the high supply capacity of planned
projects of government and Turkey, facility will start to have low demands and as a result low
profits and in the end, there is a possibility to loss of profit and exiting from the market. As a
summery conclusion, facts sheet of the project can be given as in the following table;
106
Project Name Seawater Desalination Plant in TRNC
Location Lapta, Kyrenia
Area 4 Donums
Building Area 938 sqm
Capital Cost $335980 USD
Expected Monthly Cost $33417
Duration At least 18 Months
Date of Start February 2009
Date of Completion June 2010
Desalination System Reverse Osmosis Technology
Projected Capacity 468 m3 per Month
Power Supply Source 104 unit Solar Power Supplier (450 Kwh)
Expected Electricity Consumption per Hr. 411.88 Kwh
Main Machines of the System 2000 lt/hr Reverse Osmosis
Demijohn Cleaning, Filling and Capping
(Appendix M)
Small Bottle Filling and Capping
(Appendix M)
104 Units PV Solar Power Supplier
Expected Life of Project 15 Years
Table 8.1. Facts Sheet of the Seawater Desalination Project
References
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107
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Internet References
[W1] www.clockworkprojects.com.au
[W2] http://sts.bwk.tue.nl/artificial_light/
[W3] www.investinnorthcyprus.org
[W4] www.cyprus-weather.com/cytanet
[W5] www.esentepe-seaview.com/cyprus-weather.html
[W6] www.freemeteo.com
[W7] www.meteor.gov.tr
[W8] www.windfinder.com
[W9] www.kibtek.com
[W10] www.dieselserviceandsupply.com
[W11] www.gwec.net
[W12] www.devplan.org
108
APPENDICES
109
APPENDIX A
INCENTIVES GUIDE FOR INVESTORS
TRNC PRIME MINISTRY
STATE PLANNING ORGANIZATION
110
1. INCENTIVES FOR INVESTORS
1.1. Investment Incentives Applied Under The Incentive Law
The following incentives are applied to investments with Incentive Certificates, regardless of
whether an investor is local or foreign. Incentive Certificates are granted from the State
Planning Organization.
• Investment Allowance
Investment allowance is 200% on the initial fixed capital investment expenditure for the
investments in Priority Development Regions and in sectors with special importance.
Investment allowance is 100% on the initial fixed capital investment expenditure for the
investments in other sectors and regions. Güzelyurt and Karpaz were determined as Priority
Development Regions by the Council of Ministers.
111
• Exemption From Custom Duties and Funds
Import of machinery and equipments concerning the project are exempt from every kind of
custom duties and funds in accordance with Incentive Certificate. Regulations on importation of
raw materials and semi-finished goods are specified by the Prime Ministry and is subject to the
approval of the Council of Ministers.
• Zero Rate VAT
Zero rate VAT is applied for both the imported and locally purchased machinery and equipment
in accordance with the Incentive Certificate.
• State Owned Land and Building Lease
State owned land and building lease is possible for the investments that are granted Incentive
Certificate in accordance with the regulations in force.
• Fund Credits
Long term and low rate investment credits are available from the Investment and Export
Incentive Fund.
• Exemption From Construction License Fee
Investments that are granted Incentive Certificates are exempt from all kinds of taxes and fees
related with construction license.
• Reduction of Stamp Duty for Capital Increase
Reduction of stamp duty concerning capital increase is provided for the investments that are
granted Incentive Certificate.
• Reduction of Fee on Mortgage Procedures
Reduction of stamp and registration fees is applied on mortgage procedures necessary when
using bank credit for the investments that are granted Incentive Certificate.
1.2. Incentives Applied Under The Tax Legislation
112
Allowances are given for capital expenditure incurred on the acquisition of plant and
machinery, fixtures and fittings owned and used by a person or corporate body in trade or
business or scientific research.
These capital allowances are:
• Initial (Investment) Allowances

• Annual (Wear and Tear) Allowances
Allowances are also given on existing buildings or on the construction, extension or adaptation
of buildings owned and used by a person or corporate body. In total, tax allowance is given
equal to the cost of an asset plus the investment allowance.
• Initial (Investment) Allowance rate is 50%.
Investment allowance rate can be increased up to 100% or new rate, which is not less than legal
rate, can be determined by the Council of Ministers with the recommendation of Ministry of
Finance for the investments in Priority Development Regions and in sectors with special
importance specified under the Incentive Law and the Tourism Industry Incentive Law.
If there are regulations concerning investment allowances under special Incentive Laws, the
rates and principles are applied in accordance with Incentive Law concerned instead of
applying the allowance rates in accordance with Income Tax Law.
• Annual (Wear and Tear) Allowances:
 Machinery and Equipment :10%

 Saloon type motor vehiclesand motorcycles : 15%
 Motor vehicle with “T” licence : 25%
 Other motor vehicles (trucks, buses, vans etc.) : 20%
 Industrial Buildings and Hotels : 4%
 Shops and Residences : 3%
 Furniture and Fixtures : 10%
113
Initial allowances and annual depreciation allowances are deducted before setting net
chargeable incomes.
• Other Allowances:
 Expenditures on company formation are amortized in five years.

 Expenditure on patent and patent rights
The purchased tools and fixtures which have the values not exceeding the monthly gross
minimum wage at the beginning of the year, may not be subject to depreciation and the
payments for these tools and fixtures may be immediately recorded as expense.
• Twenty percent of earnings of corporate bodies from exports of goods and services is exempt
from corporation tax. But the exempted amount can not exceed the amount equal to 80% of net
income which is obtained from exports.
• The exports of all goods and services are exempt from VAT. According to the legislation the
exporters can claim credits or refunds for the VAT paid on their inputs.
• Air, land and sea transportation services, from the TRNC to foreign country, from foreign
country to the TRNC or from foreign country to foreign country via the TRNC, except
passenger transportation services which are provided by transportation corporations in the
TRNC, are exempt from VAT. According to the legislation carrier can claim credits or refunds
for the VAT paid on their inputs.
• Services provided in ports or airports for the sea or air transportation vehicles used in the
production of income are exempt from VAT.
114
APPENDIX B
INTEREST RATES OF BANKS TO USD SAVING DEPOSITS
115
116
BANKS USD INTEREST RATE (17.11.2008)
Bank 1 Month(%) 3 Months(%) 6 Months(%) 1 Year(%)
Alternatif Bank 3,50 3,50 3,50 3,50
Ada Bank 1,50 2,00 2,25 2,50
Akbank 3,75 4,00 4,25 4,50
Anadolu Bank 3,00 3,00 3,00 3,00
Arap Türk Bankası 2,00 2,00 2,25 2,75
Bank Europa 4,00 4,25 4,25 4,25
Citibank 0,20 0,20 0,20 0,20
Deniz Bank 2,75 3,25 3,75 3,75
Fortis 3,75 3,80 4,10 4,45
Finans Bank 2,50 2,50 3,00 3,00
Garanti Bankası 2,00 2,25 2,75 3,25
Halk Bankası 2,50 2,75 2,75 3,00
HSBC Bank 3,65 3,80 4,15 4,50
Koçbank 2,25 2,25 2,75 3,25
MNG Bank 2,00 2,00 2,00 2,00
Oyak Bank 4,00 4,00 4,25 4,75
Oyakbank 3,25 3,25 4,00 4,00
Şekerbank 3,75 4,00 4,25 4,25
T. İş Bankası 1,50 1,75 2,00 3,25
TEB 3,75 3,75 4,00 4,10
Tekfenbank 3,00 4,00 4,25 4,50
Tekstilbank 3,25 3,50 4,50 4,50
Toprakbank 3,00 3,25 3,50 3,75
Turkishbank 3,25 3,50 3,75 4,00
Vakıfbank 2,25 2,75 3,25 3,50
Yapı ve Kredi Bankası 2,50 2,75 3,00 3,50
Ziraat Bankası 2,00 2,25 2,50 3,00
117
APPENDIX C
PHYSICAL CHARACTERISTIC FOR BOTTELED DRINKING
WATER
(Table I)
118
Physical Characteristic of Bottled Drinking Water
(Table I)
No Characteristics Max. Permissible Technique of the Method of Test

Level Method Reference
Colorimeter –
1 Color, Hazen Units 5 Tristimulus filter ISO: 7887 – 1994
Method
2 Odour Unobjectionable Sensory Evaluation -
3 Taste Unobjectionable Sensory Evaluation -
Turbidity Visual Method

4 NTU 0.5 candle turbidmeter ISO: 7027 – 1999
119
APPENDIX D
CHEMICAL CHARACTERISTIC FOR BOTTELED DRINKING
WATER
(Table II)
120
Chemical Characteristics for Bottled Drinking Water
Maximum Methods of Test

No Elements or Admissible Reference
Compounds Concentration Appendix
(ppm)
1 pH Range 6.5 – 8.5 H
Total Dissolved
2 Solids (TDS) 500 I
Nitrite (NO2) as
3 Nitrogen 1.0 J
4 Chloride 250 Will be researched
5 Sulphate (SO4) 250 Will be researched
6 Potassium (K) 10 Will be researched
7 Sodium (Na) 50 Will be researched
8 Magnesium (Mg) 50 Will be researched
9 Calcium (Ca) 100 Will be researched
10 Chlorine (Cl) 0.1 Will be researched
121
APPENDIX E
CHEMICAL CHARACTERISTICS/MICROORGANISMS FOR
BOTTELED DRINKING WATER
(Table III)
122
Chemical Characteristics / Microorganisms for Bottled Drinking Water
(Table III – Part I)
No Elements or Maximum Method of Test

Compounds Admissible Reference
Concentration
(ppm)
1 Antimony (Sb) 0.005 ISO 11885 – 98
2 Arsenic (As) 0.01 ISO 11969 – 96
3 Barium (Ba) 0.7
4 Borate (BO3) 0.3 ISO 9390 – 90
5 Cadmium (Cd) 0.003 ISO 8288 – 86
6 Iron as (Fe) 0.3
7 Zinc as (Zn) 3.0 ISO 8288 -86
8 Chromium (Cr) 0.05 ISO 9174 - 98
9 Copper (Cu) 1.0 ISO 8288 - 86
10 Cyanide (CN) 0.07 ISO 6703-1-84
11 Fluoride (F) 0.7 ISO 10359-1-92
12 Lead (Pb) 0.01 ISO 8288 – 86
13 Manganese (Mn) 0.05
14 Mercury (Hg) 0.001 ISO 16590 - 2000
15 Nickle (Ni) 0.02 ISO 8288 – 86
16 Nitrate (NO3) 10.0 ISO 7890-1-86
17 Selemium (Se) 0.01 ISO 9965 - 93
123
(Table III – Part II)

Concentration
(ppm)
18 Silver (Ag) 0.1 ISO 11885 – 98
19 Benzene 0.001
20 Benzo (a) Pyrene 0.0002
21 Bromate 0.01
22 Carbon Tetrachloride 0.002
23 Dichloromethane 0.003
24 P-Dichlorobenzene 0.02
25 1.2 Dichloroethene 0.02

Cis-1.2
26 Dichloroethene 0.07
Trans-1.2
27 Dichloroeathylene 0.1
28 1.2-Dichlorophropane 0.005
29 Eathylbenze 0.3
30 Monochlorobenze 0.05
31 Styrene 0.1
32 Tetrachloroethylene 0.001
33 Trichloroethylene 0.001
34 Toluene 1.0
124
(Table III – Part III)

Concentration
(ppm)
35 1.1-1 Trichloroethane 0.03

1.1-1.2
36 Tetrachloroethane 0.04
37 Vinyl Chloride 0.002
38 Xylenes 1.0
39 Alachlor 0.002
40 Aldicarb 0.003
41 Atrazin 0.003
42 Carbofuran 0.04
43 Chlordane 0.002
1.2 Dibromo – 3
44 chloropropane 0.001
2.4 Dichlorophenoxy
45 acetic acid 0.07
46 Heptachlor 0.0004
47 Heptachlor & epoxide 0.0002
48 Lindane 0.0002
49 Methoxychlor 0.04
50 Pentachlorophenol 0.001
51 Simazine 0.004
52 Aldrin/Dieldrin 0.002
125
53 2,4,5-TP 0.01

(Table III – Part IV)

Concentration
(ppm)
Di (2-ethryloxy)
54 adipate 0.08
Di (2-ethylexy)
55 Phthalate 0.006
Total
56 Trichlorobenzenes 0.009
57 Hexachlorobenzene 0.001
58 Diquat 0.02
126
APPENDIX F
MICROBIOLOGICAL LIMITS
(Table IV)
127
Microbiological Limits
Table IV
No Organism Recommended Methods of Test

Value Reference
1 Total Coliform 0/250 ml ISO 9308-2-90*
2 E-Coli 0/250 ml
3 Feceal Enterococci 0/250 ml ISO 7899-2-00**
4 Pseudomonas 0/250 ml
Aeruginosa
Total viable count
5 Total Viable Count at <100/1 ml should be within 12
20 – 22 oC hrs of bottling
6 Total Viable Count at <20/1 ml

37 oC
* Water Quality – Detection and enumeration of Escherichia coli and coliforms bacteria part 2
** Water Quality Detection & enumeration of intestinal enterococci part 2
128
APPENDIX G
SCALE OF SAMPLING
(Table V)
129
Scale of Sampling
(Table V)
Number of Bottles in the Lot Number of Bottles to be selected
Up to 1000 15
1001 to 3000 17
3001 to 10000 18
10001 and above 24
130
APPENDIX H
DETERMINATION OF pH
131
Determination of pH
Measurement of pH is one of the most important and frequently basic used tests in bottled
water analysis. This parameter define a logarithmic activity of hydrogen ions is an indicator of
acidic or basic character of a water and is used for monitoring of bottling process, water
treatment carbon dioxide measurements, and many other acid-basic equilibria.
This determination is temperature dependent (0 0C to 60 0C) and can not be applied for water
samples with values of pH lower than 1 or higher than 11.
PRINCIPLE
The basic principle of pH measurement is the determination of the activity of the hydrogen ions
by potentiometry using a standard hydrogen electrode (generally a glass electrode) and a
reference electrode. The potential difference between these two electrodes both immersed in a
same solution is a linear function of this solution pH value.
This linear relationship is described by plotting the measured potential produced in the glass
electrode against the known pH of different buffers.
REAGENTS
• Potassium Chloride (KCl)

• Buffer solution 500 ml – pH 4.00*
• Thymol, crystals
• Potassium hydrogen phtalate (KHC8H4O4)
• Potassium dihydrogen phosphate (KH2PO4)
132
• Sodium borate decahydrate (borax) (Na2B4O7.10H2O)
*If these buffer solutions are not commercially available, you can prepare these standard
solutions as follows at 25 0C.
• Buffer solution pH 4.00 : Dry 10.12 g of potassium hydrogen phtalate (KHC8H4O4) at

103 0C and dissolve in 1 L distilled and degassed water.
• Buffer solution pH 7.41 : Dry 1.179 g of potassium dihydrogen phosphate (KH2PO4)

and 4.303 g of Na2HPO4 between 110 and 130 0C and dissolve in 1 l distilled and
degassed water.
• Buffer solution pH 9.18 : Dissolve 3.81 g of sodium borate decahydrate (borax)

Na2B4O7.10H2O in 1 litre distilled and degassed water.
Where preparing these buffer solutions make sure that the salts are completely dissolved and
store in polyethylene bottles at room temperature after adding one thymol crystal (8 mm
diameter) per 200 ml solution. In routine use, replace buffer solutions every four weeks.
APPARATUS
1- pH meter VTW Profiline pH 197 / pH 597 reference electrode Ag/AgCl with standard
combined glass electrode and integrated temperature or equivalent.
Technical data :
pH Range : 2.00 …. 16.00
Resolution : 0.01
Accuracy : 0.01 + 1 digit at operating temperature (-10 0C ... + 55 0C)
Measuring rate : 1.2 sec
133
Adjust ranges : Temperature: -20 0C … 130 0C
pH calibration : Assymetry of + 30 mV
Slope of – 50 mV/pH … - 62 mV/pH
One or two points calibration
2- A glass electrode
at 25 0C
Slope pH 4.00 … pH 7.00 :> 98 %
Zero point pH : pH 7.00 + 0.25
Response time : < 20 sec.
3- Electrode Stand RADIOMETER E 190

4- Magnetic stirrer
5- Polyethylene or Teflon beakers
PROCEDURE
Instrument calibration
• Follow manufacturer’s instructions for putting into operation pH meter and for storage
and preparation of electrodes.
• Generally saturated KCl solution is used for storage of reference electrode.
• Follow manufacturer’s instructions for maintaining level of saturated KCl solution.
Demineralized water or buffer solution pH 4.00 or pH 7.00 are recommended for short-term
storage of glass electrode. Anyway, keep electrodes wet by returning them to storage solution
whenever pH meter is not in used.
Select calibration mode on your apparatus (one or two points calibration) and the two buffer
solutions for pH range (4.00 to 7.41 or 7.41 to 9.18 or 4.00 to 9.18).
134
Remove electrode from storage solution, rinse with distilled water, blot dry with a soft paper,
immerse in the first standard buffer solution (pH 4.00 for example) with stirring and start
measurement. Never touch the membrane surface with fingers nor scratch the electrode. Avoid
high temperature variation.
Remove electrode, rinse and dry it as described above, immerse into the second standard buffer
solution (pH 9.18 for example) and start measurement.
Read displayed electrode slope and asymmetry values or zero pH and verify that these values
are in the manufacturer’s admissible range.
Use the third standard buffer solution with pH value generally close to pH of samples (pH 7.41
for example) to verify the calibration with a measurement.
DETERMINATION
Rinse electrode with sample and establish equilibrium between electrode and sample by stirring
to insure homogeneity. Stir gently to minimize carbon dioxide entrainment.
For buffered samples or those of high ionic strength, condition electrode after cleaning with
sample by dipping it into sample for 1 minute. Blot dry, immerse in a fresh portion of the same
sample and read pH after stabilization of displayed value.
With dilute, poorly buffered solutions, equilibrate electrode by immersing in three or four
successive portions of sample. Take a fresh sample to measure.
Measure pH on fresh samples or at the opening of bottles. Avoid to work close to contaminated
atmosphere (ammonia, acids, gas vapors,….).
135
UNITS
pH values are expressed in pH unit at 25 0C with generally a precision of ± 0.02 and an
accuracy of ± 0.05 pH unit depending on manufacturer’s technical data and ionic strength of
samples.
QUALITY CONTROL
• Make initial calibration of pH meter every two months.
• Write down electrode slope and asymmetry values or zero pH after each buffer
calibration and pH value of the buffer standard solution used for verification.
TROUBLE SHOOTING AND MAINTENANCE
Glass electrodes can fail because of scratches, deterioration or accumulation of debris on the
glass surface causing drifting or instable values. If any problem occurs, rinse with distilled or
warm water with detergent or soak in pH 7.00 buffer solutions overnight.
Reference electrode troubles are generally traceable to a clogged junction. Interruption of the
continuous trickle of electrolyte through the junction causes increase in response time and drift
in reading. Follow manufacturer’s instructions for clearing the junction.
136
APPENDIX I
DETERMINATION OF TDS
137
Determination of Total Dissolved Solids (TDS)
INSTRUMENT
Total Dissolved Solids Meter :
Conductivity / TDS probe
RANGE
mg/1 0.0 to 199.9

mg/1 0 to 1999
g/1 0.00 to 19.99
ACCURACY: (at 20 0C)

± 1 % Full Scale (excluding probe error)
CALIBRATION
Manual singly point through trimmer (trimmer is on the right hand side)
For best results in calibrating your meter, choose a TDS solution that is closest in value to the
sample to be measured.
For accurate calibration, use two beakers for each solution : the first one for rinsing the probe
and the second one for calibration. In this way the contamination of the calibration solutions is
minimized.
Use plastic beakers wherever possible.
Procedure for calibration :

Fill a beaker with 8 cm (3 ¼") of conductivity calibration solution.
Immerse the probe into the beaker. The level of solution must be higher than the holes on the
PVC sleeve.
138
Turn the instrument ON by pressing the ON/OFF button and press the appropriate range of
button (e.g. 1999 mg/1 button).
Tap the probe repeatedly on the bottom of the beaker and stir it to ensure that no air bubbles are
trapped inside the sleeve.
When the reading stabilizes, turn the calibration trimmer until the display reads the proper
conductivity value at 25 0C.
The calibration is now complete and the instrument is ready for use.
Calibration solution the TDS are 1382 mg/1 at 25 0C.
MEASUREMENT
• Switch on the instrument by pressing once the ON /OFF button.

• Press the TDS/TEMP. button to toggle between the TDS display or the temperature
display in 0C.
• Adjust the temperature of water sample to 25 0C.
• Dip the probe into water sample to be tested with the holes completely submerged. Tap
and stir the probe to remove all air bubbles that may be trapped inside the PVC sleeve.
• Press the button mg/1 to take the TDS (Total dissolved solids) reading.
• After recording the TDS reading, press the ON/OFF button to switch off the instrument.
CLEANING
Wash the cell with distilled water.
STORAGE
Wash the cell with distilled water, and dry after measurements.
PRECAUTIONS
• Put freely in air. (No need to keep it dipped in water during storage).
• Do not use the meter to measure TDS of any liquid / beverage other than water.
• Do not expose the probe to temperature above 60 0C (do not dip in hot water).
139
BATTERY CHANGE
The battery is supplied with the instrument. When the display shows low level. Replace with a
new battery of 9 volts (size 9 V).
PROBE MAINTENANCE
Rinse the probe with tap water after every series of measurements. If more cleaning is required
remove the PVC sleeve and clean the probe with a nonabrasive detergent. When reinserting the
sleeve always makes sure that the four holes are towards the cable end. After cleaning the probe
recalibrate the instrument.
140
APPENDIX J
DETERMINATION OF NITRITE
141
Determination of Nitrite
SCOPE AND APPLICATION

Nitrite (NO2) is an intermediate oxidation state of nitrogen, both in the oxidation of ammonia to
nitrate (NO3) and in the reduction of nitrate. Such oxidation may occur in wastewater treatment,
water distribution systems, and natural waters. Originating from the decomposition of living
materials or bacterial oxidative chain, nitrite is a contaminant or an incompleted nitrification
process indicator.
PRINCIPLE
After a colour reaction where nitrite is converted into a violet-red dye molecule (magneta azo
dye), measurement of nitrite concentration is based on a measure of this dye with a pronounced
absorbance maximum at 525 nm.
Reaction of nitrite with sulfanilic acid forms the 4-diazobenzenesulfonic acid which
subsequently condenses with N-1-naphtylethylenediamine dihydrochloride to produce the
magenta azo dye. The analytical chemical grade reagent NO2-AN is the combined mix of the
sulfanilic acid and N-1- naphtylethylenediamine dihydrochloride compounds.
REAGENT
Potassium nitrite (KNO2)

Spectroquant nitrite test containing a reagent NO2 - AN.
APPARATUS
• Photometer with cells corresponding to specific measuring range :

0.015 - 0.65 mg/l NO2 50 mm cell
0.1 - 3.0 mg/l NO2 10 mm cell
• Pipette 10 ml
• Test tubes
142
PROCEDURE
1- Calibration
Follow manufacturer’s instructions for putting into operation the spectrophotometer.
Preprogrammed method is generally used but you can check or correct the performance of the
apparatus with a blank and a reference standard like potassium nitrite (KNO2) as an adapted
dilution of a daily prepared 100 mg/l standard solution (0.185 g/litre) kept in a brown-glass
bottle filled to the brim and tightly closed.
2- Sample measurement
Sample pH must be between 2 and 10.

Wherever possible, samples should be analyzed soon after being taken.
The aliquot amounts of sample (5, 10 or 20 ml) determine the quantity of reagent NO 2 – 1AN to
be added. For a 10 ml sample :
• Pipette 10 ml of the sample into a test tube.
• Add 2 blue microspoonful of reagent NO2 – 1 AN and mix.
• Check the pH, specified range : pH 2.0 – 2.5 : If required (for mineral water for
example), add dilute sodium hydroxide solution or sulfuric acid drop to adjust the pH.
• Set aside for 10 min.
• Filter turbid sample.
• Transfer the solution into a corresponding cell.
• Select method with auto selector
• Place the cell into the cell compartment
UNITS
Nitrite concentration values are expressed in N or NO2 mg/l with at least one decimal
depending on the measuring range.
143
QUALITY CONTROL
To check the measurement system (test reagents, measurement device and handling), a ready-
for-use nitrite standard solution (potassium nitrite for example) can be used after diluting
accordingly.
TROUBLESHOOTING AND MAINTENANCE

• Follow manufacturer’s instructions for maintenance and selectivity of the kit.
• Avoid measurement of samples at very different temperatures below or higher than 25
0
C.
• Use the same vessels clean only with distilled water without cleaning agents
144
APPENDIX K
Demand Forecast Analysis

And
Regression Graph
145
Demand Forecast Analysis via Excel
(Part I)
Expected Demand
Monthly Demand in
Year Population Months Days Ratio for Facility in
liters
liters
2004 262730 January 31 2,10 17103723 376282
February 28 2,03 14933573 328539
March 31 2,10 17103723 376282
April 30 2,10 16551990 364144
May 31 1,88 15311904 336862
June 30 2,10 16551990 364144
July 31 2,03 16533599 363739
August 31 2,10 17103723 376282
September 30 2,03 16000257 352006
October 31 2,08 16940830 372698
November 30 2,08 16394352 360676
December 31 2,02 16452153 361947
2005 263912 January 31 2,10 17180671 377975
February 28 2,03 15000758 330017
March 31 2,10 17180671 377975
April 30 2,10 16626456 365782
May 31 1,88 15380791 338377
June 30 2,10 16626456 365782
July 31 2,03 16607982 365376
August 31 2,10 17180671 377975
September 30 2,03 16072241 353589
October 31 2,08 17017046 374375
November 30 2,08 16468109 362298
December 31 2,02 16526169 363576
2006 265100 January 31 2,10 17258010 379676
February 28 2,03 15068284 331502
March 31 2,10 17258010 379676
April 30 2,10 16701300 367429
May 31 1,88 15450028 339901
June 30 2,10 16701300 367429
July 31 2,03 16682743 367020
August 31 2,10 17258010 379676
September 30 2,03 16144590 355181
October 31 2,08 17093648 376060
November 30 2,08 16542240 363929
December 31 2,02 16600562 365212
146
Demand Forecast Analysis via Excel
(Part II)
Expected Demand
Monthly Demand in
Year Population Months Days Ratio for Facility in
liters
liters
2007 266293 January 31 2,10 17335674 381385
February 28 2,03 15136094 332994
March 31 2,10 17335674 381385
April 30 2,10 16776459 369082
May 31 1,88 15519556 341430
June 30 2,10 16776459 369082
July 31 2,03 16757818 368672
August 31 2,10 17335674 381385
September 30 2,03 16217244 356779
October 31 2,08 17170573 377753
November 30 2,08 16616683 365567
December 31 2,02 16675268 366856
2008 267491 January 31 2,10 17413664 383101
February 28 2,03 15204188 334492
March 31 2,10 17413664 383101
April 30 2,10 16851933 370743
May 31 1,88 15589375 342966
June 30 2,10 16851933 370743
July 31 2,03 16833209 370331
August 31 2,10 17413664 383101
September 30 2,03 16290202 358384
October 31 2,08 17247820 379452
147
E x p e c t e d M o n t h ly D e m a n d
390000
380000
370000
360000
350000
Demands (in liters)
340000
330000
320000
y = 1 5 7 ,5 3 x + 3 5 9 6 3 2
310000
300000
1 3 5 7 9 1 11 31 5 1 71 92 12 32 52 72 93 13 33 53 73 94 1 4 34 54 7 4 95 15 35 5 5 7
M o n th s
148
APPENDIX L
Construction Costs in TRNC
Architects and Engineers Association
149
Architects and Civil Engineers Association
Designated by Board of Directors
01 TEMMUZ 2008 - 30 EYLÜL 2008 TARİHLERİ
ARASINDA
Construction Unit Costs
S. NO: Type of Structure Unit

Costs
1 Residence (IV. Class) 616.-YTL./M²
2 Residence (III. Class) 1155.-YTL./"
3 Residence (II. Class) 930.-YTL./"
4 Yardımcı Binalar (I. Sınıf) 595.-YTL./"
5 Apartment Type Residence 908.-YTL./"
6 Sendeli Shop 908.-YTL./"
7 Sendesiz Shop 792.-YTL./"
8 School 808.-YTL./"
9 Dormitory 994.-YTL./"
10 Office Type Buildings (Standart) 774.-YTL./"
11 Office Type Buildings (Featured) 974.-YTL./"
12 Yanları Kapalı Garaj 616.-YTL./"
13 Factory (Atölye Tipi Binalar) 616.-YTL./"
14 Süthane, Salhane 697.-YTL./"
15 Bakery 932.-YTL./"
16 Hotel I 1154.-YTL./"
Hotel II 1320.-YTL./"
Hotel III 1473.-YTL./"
17 Bungalow 980.-YTL./"
18 Swimming Pool 1074.-YTL./"
Swimming Pool Olympic 1186.-YTL./"
19 Cinema, multi purpose Saloon 1297.-YTL./"
20 Casino, Restaurant 1106.-YTL./"
21 Fuel Station 764.-/YTL./"
22 Car Mechanic Garage 616.-/YTL./"
23 Sheep – fold 306.-/YTL./"
24 Coop 306.-/YTL./"
25 Çatısı saç veya atermit türü duvarları yığma basit yapılar ....................................... 591.-YTL./"
26 Car Park (Yapıları Açık) ........................................................................... 570.-YTL./"
27 Basement (Otopark,depo) ........................................................................... 615.-YTL./"
28 Sığınak Amaçlı Bodrum ................................................................................. 764.-YTL./"
29 Sığınak (Blok) .................................................................................................. 646.-YTL./"
30 Parselasyon ............................................................................................................... 215.-YTL./"
31 Telleme ............................................................................................................ 113.-YTL./"
32 Bahçe Duvarı .................................................................................................. 260.-YTL./"
33 Kapalı Havuz .......................................................................................... 1618.-YTL./"
150
APPENDIX M
Bottle Filling Machines
Spectrapak 3000 and Spectrapak 5000
151
These systems are designed to give the option of buying the full line at one time, or adding
components as business grows.
1- Spectrapak 3000 (See Figure 13)
Produces up to 50 bottles (Small Bottles – PET) per minute
1. 48" Feed Table

2. BR3000 Rinser
3. BF3000 Filler
4. LC3000 Labeler/Capper
5. Ink Jet Date Coder
6. DC3000 Cap Tightener
7. 24' Conveyor
8. 10' x 12" Collection Conveyor
Spectrapak 3000, Produces 50 Bottles per minute
See Figure 1 for the layout of Spectrapak 3000
152
Figure 1. Layout of Spectrapak 3000
153
2- Spectrapak 5000 (See Figure 2)
Produces up to 80 bottles (Small Bottles – PET) per minute
1. 48" Feed Table
2. BR 5000 Automatic Bottle Rinser
3. BDF 5000 Bottle Filler
4. LC5000 Labeler/Capper
5. DC5000 Cap Tightener
6. 24' Conveyor
7. 12' x 12" Collection Conveyor
Figure 2. Spectrapak 5000, Produces 80 Bottles per minute
See Figure 3 for the layout of Spectrapak 5000
154
Figure 16. Layout of Spectrapak 5000
Figure 3 for the layout of Spectrapak 5000
155
3. BF150 Bottle Filler
The BF150 was designed for ease of operation! The actual bottle filling mechanism is
controlled by a combination timed/pressure method- and when set properly; the bottles are
filled accurately and automatically. See Figure 4
Features:
• Up to 189 (3 or 5 gallon) bottles per hour

• Pneumatically Driven "Ram" Capper
• Small Bottle Adapter Kit available for filling small bottles
• Optional small bottle cap tightener
Figure 4. 3 or 5 Gallons (13 or 20 litters) Bottle filler – BF 150

4. TritonLine 900 Large-Bottle System
TritonLine 900 automatically washes, fills and caps 3-to-5-gallon bottles of virtually any style
simultaneously, without the need for any hand-sorting or equipment adjustments. The
TritonLine 900, shown here, washes, fills and caps up to 900 bottles an hour. See Figure 5
TritonLine 900 System Features:
1. 900 bottles per hour capacity

2. Handles multiple-sized bottles simultaneously with no manual adjustments.
3. Easy to hook up: just two supply water connections and two drains.
4. Both washer and filler use the same electrical connection.
5. Stainless steel piping used throughout helps provide longevity, durability and virtually
eliminates maintenance.
6. Pre-stretched stainless steel drive chains ride on self-lubricating UHWM support guides
to eliminate risk of grease contamination.
Figure 5. Automatic Large Bottle Washing and Filling Machine

APPENDIX N
Brochure of Wind Turbine
(450 Kwh)

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CHAPTER I

2.1. Alternative Desalination Technologies for North Cyprus

2.1.1. Reverse Osmosis Technology

2.1.2. Multiple Effect Desalination (MED or MEE)

2.1.3. Multi Stage Flash Desalination (MSF)

2.1.4. Vapor Compression (Thermal and Mechanical)

2.1.5. Electro Dialysis (ED)

2.1.6. Comparison and Elimination of Alternatives

Electricity Very Low Low Very High Very High

2.1.7. Financial Comparison of Thermal and Membrane Alternative

Factors Type Cost

Factors Type Cost

A. Maintenance & Parts cost for RO

A = $1155 USD in every 3 months

PV = $1146 .5 + $1138 .06 + $1129 .69 + $1121 .38 = $4535 .63

 0.002465 (1.002465 )12 

B. Polishing Cost for RO

A = $19414 .46 x0.08467457 = $1643 .911 per month

C. Parts & Supplies and Maintenance & Operations for MEE

A1 = $250 USD in every five months

Initial Investment = $16500 USD

PV = $16500 + $19926 + $24063 + $29062 = $89551

In this case, it is possible to say that

NPV = Present Value of All Inflows – Present Value of All Outflows

2.1.8. Financial Comparison of RO and MVC

Table 2.6. WHO Standards for Portable water.

Opportunity Factors RO MVC

Factors Type Cost

Factors Type Cost

A. Maintenance & Parts for RO Alternative

A = $1649,91 in every 3 months

$1155 $1155 $1155 $1155

 0.002465 x(1.002465 )12 

B. Polishing for RO Alternative

A = $13200 USD in every 4 months

A = $13200 USD in every 4 months

$13200 $13200 $13200

C. Replacement Cost of RO Alternative

Initial Investment = $33000 USD

E. Polishing for MVC Alternative

A = $9504 USD in every 4 months

$9504 $9504 $9504

F. Replacement Cost of MVC Alternative

Cost Factors MVC RO Incremental

NPV = Total Inflows - Total Outflows

3.1. Electricity Demand of Facility

Table 3.1. Daily Minimum Average Electricity Consumption / Demand of Facility

3.2. Selection of Area Deed (Buy or Lease)

3.2.1. Financial Analysis for Famagusta (Buy or Lease)

Free Hold Land Lease Hold Land Incremental

Step I. Calculation of Monthly fee in yearly basis

(1 + i ) n −1  (1.004868 )12 −1 

Step II. PV Calculation of Sale Price

Step III. Incremental Analysis

NPV = Total Inflows - Total Outflows

Free Hold Land Lease Hold Land Incremental

Step I. Calculation of Monthly fee in yearly basis

(1 + i ) n −1 (1.004868 )12 −1

Step II. PV Calculation of Sale Price

Step III. Incremental Analysis

NPV = Total Inflows - Total Outflows

3.2.3. Financial Analysis for Karpaz (Buy or Lease)

Free Hold Land Lease Hold Land Incremental