Executive summary of the desalination project in Cyprus

1.

Executive summary of the desalination project in Cyprus.

2. Market Description

1.
The volume of water consumed in Cyprus 220 million tons per year.
2.
60% of consumption is irrigation and agriculture.
3.
The annual shortage of water according to EUROSTAT is 770 million tons of water per year.
4.
Desalination plants produce up to 80 million tons of water per year.
5.
All enterprises work according to the BOT system (construction-management-transfer to the
property of the client), i.e. governed by the state.
6.
7.
The main price of water desalination at existing enterprises has reached 1.8 euro / ton today.
8.
Arbok Company operates according to the BOOM (construction-management-ownershipmaintenance) scheme, i.e. It does not transfer the equipment to the property of the client, and
profits are derived from the sale of water (and not equipment). According to this scheme, there
are no working competitors in Cyprus.
Sales prices for water in the range from 0.51 euro / ton (irrigation) to 5 euro / ton (hotels with
consumption over 40 tons / month).
9.
The order from WDD (Water Development Department of Agriculture, Rural Recourses and
Environment) to Arbok is currently 170 million tons per year.
10.
Water prices are rising at a rate of 5% per year (according to EUROSTAT - 10% every 2
years).
11.
Cyprus is an island. Imported fuel. There is not enough electricity to use desalination
technology other than Arbock in Cyprus.
12.
Desalination technology Arbock is the only one in the world that does not discharge brine into
the sea, which kills the ecology

3. Brief Description of Desalination Technology

• The basis of technology is the use of the
principle of “cold boiling”. Untreated seawater is
fed into a closed container, in which a deep
vacuum is created. As a result, water begins to
boil at its own temperature (regardless of its
value). The resulting steam is bland and with no
impurities. The resulting steam is transported to
a separate container, where it is condensed into
clean, fresh, sterile, low-mineralized usable
water. Salt is removed and used as a separate
item.

4. Principal differences and advantages

1.
Arbok technology consumes on average 3 times less electricity than reverse osmosis to
produce 1 ton of water.
2.
Arbok technology costs less droplets, on average, cheaper by 1 euro / ton compared to
reverse osmosis and 3 euro / ton relative to industrial distillers.
3.
The technology does not use filters, inhibitors, catalysts, decalcators, membranes, UV lamps
and UV disinfectants. The preparation of the conduit is not required to discharge the brine into
the sea (there is no brine).
4.
The technology does not use filters, inhibitors, catalysts, decalcators, membranes, UV lamps
and UV disinfectants. The preparation of the conduit is not required to discharge the brine into
the sea (there is no brine).
5.
Arbock’s technology is the only brine that does not dump into the sea.
Salt is an additional manufactured product.
6.
The cost of producing water depends only on the cost of electricity and the cost of labor. Under
ideal conditions of location of the enterprise and the use of alternative power sources, the
production cost may be less than 0.1 euro / ton.

5. Description of implemented projects

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2.
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4.
In 2014, a pilot plant was launched for private
consumers at 37,000 tons per year.
In 2015, the municipal desalination plant was launched
for 131,000 tons of water per year in the city of
Aradippu.
In 2016, a mobile plant was launched under a contract
with a state of 200,000 tons of water per year in Kuklia.
During 2019, all enterprises will be brought together
into a total plant of 20 million tons per year in the city
of Limmasol at Vasiliko TPP.
Within a few years, Arbock plans to commission
desalination facilities for 170 million tons of water per
year.

6. Logistical needs of the project

Required explanation:
The volume of kapex for the construction of desalination capacity will
be 802 million euros. This project is planned to be implemented
through the construction of 4 large desalination plants in 4 main
regions of Cyprus. Each object will have a capacity from 60 to 80
million tons of water per year. The investor, partner, lender is
offered to place funds of one or all enterprises in any acceptable
amount - the investor, partner, and lender do not need the full
amount to start the enterprise. An appropriate amount of
desalination capacity will be built on the invested (credited)
amount, which can be allocated in a separate legal structure, but
included in the total production complex.
The requirements of the entire project will be described below.
The amount of data of interest for a specific investment amount or
the amount of equipment produced can be obtained by linear
approximation.

7. Logistical needs of the project

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2.
3.
4.
5.
6.
The specific layout of the location of the enterprise takes place according to the
formula 1000sq.m per 1,000,000 tons / year. Thus, the total volume of plots will be
170 000 sq. M. The size of the plot can be reduced due to the number of floors of
construction, but at this stage we do not plan to reduce the required space.
The total project volume is 170 million tons of water per year. Taking into account
the reserve production modules, the total production volume of equipment will be
10,000 desalination modules of the Arbock standard (20-foot container, 50 tons /
day of productivity)
The order and production of the equipment for today is made in the Czech
Republic and Latvia. In the Czech Republic, KOVOSTR and NATE are engaged in
production, in Latvia - LUMEN. There is also an agreement with the Chinese EPC
company CGGC and ICBC Bank for the production and financing of equipment. If
there is an adequate investor (partner, lender), we plan to consider the issue of
organizing production in Cyprus.
The specific energy consumption of the enterprise is 2 kWh / ton. To produce 170
million tons of water per year, enterprises will consume 340 GWh / year. We plan
to produce 100% of the electric power on our own alternative energy facilities,
which are included in the capital expenditure plan.
The company has already received all the necessary permits and licenses for its
period of existence since 2013. The approval of the town planning commission for
the use of some sections will be required. On average, this question takes about a
month from the start of active financing of the project.
The necessary personnel, in sufficient quantities and already trained, are
available. Since 2013, more than 60 people have been through the work with
equipment, manufacturing, repair, operation.

8.  Proposed legal framework for cooperation between Investors and the Project Initiator

Proposed legal framework for cooperation
between Investors and the Project Initiator
Prospective cooperation schemes:
Attracting loan capital with a fixed interest lender.
Attracting a partner to the operating business at a convenient amount for
the Investor.
For option 2:
Investor and Arbock are part of a 50/50 partnership equal relationship.
With the appropriate distribution of posts (two CEOs, two CFOs, an equal
board of directors, etc., etc.)
The investor makes a reasonable amount of investment for him, Arbock
builds the appropriate equipment conceptually at the rate of 3.8 euros for
1 ton of productivity per year.
The option to purchase individual modules is no longer considered.

9. Calendar schedule of the project.

1.
2.
From the moment of receipt of funds to the account of
the legal structure of capacity up to 50 million tons per
year will be produced during the year.
The production scheme is as follows: after 3 months,
the first desalination modules are empty, which are
immediately included in the work and begin to produce
water for sale. For capacities up to 50 million tons, the
full-power output will be 12 months from the moment of
receipt of funds, for capacities up to 170 million tons
per year, the full-capacity output will be 24 months
from the start of financing.