Toll Motorway Program in Poland

Marek ROLLADirector of Road Network Department

General Directorateof National Roads and Motorways

March 2006

Motorway ProgramPolish Toll Motorway Program includes:

A1Motorway:Gdańsk-Toruń-Łódź-Częstochowa-Gliwice-Gorzyczki(Czech Republic border) total length 564 km,

A2 Motorway: Świecko (German border)-Poznań-Warszawa-Siedlce-Kukuryki (Belarusian border) total length 651 km,

A4/A18 Motorway: Zgorzelec/Olszyna (German border)-Wrocław-Opole-Gliwice-Katowice-Kraków-Tarnów-Korczowa (Ukrainian border) total length 779 km.

• The Act dated 10th of April 2003 about the detailed rules concerning preparation and realization of investments regarding national roads.

• The Act dated 27th of October 1994 about Toll Motorway.

• The Adjustment to The Act about Toll Motorway and National Road Fund, dated 14th of November 2003.

• The Act dated 2nd July 2004 introducing freedom of economy which changes the Act about Toll Motorway and National Road Fund.

The legal base for Program

• Traditional financingFinanced from sources gained by the government: budget sources, PHARE grants, ISPA grants, other EU’s funds, loans from international financing institutions (World Bank, European Investment Bank, European Bank of Reconstruction and Development)

• Concession financing

financed from public - private sources in the proportion respecting the risk and the involvement of each partner. Can be carried out in the BOT, BOO, BOOT, DFBOT systems. Private sector brings its know-how, project management skills what will be occurred in the higher quality and efficiency of the investment.

• Traditional financingFinanced from sources gained by the government: budget sources, PHARE grants, ISPA grants, other EU’s funds, loans from international financing institutions (World Bank, European Investment Bank, European Bank of Reconstruction and Development)

• Concession financing

financed from public - private sources in the proportion respecting the risk and the involvement of each partner. Can be carried out in the BOT, BOO, BOOT, DFBOT systems. Private sector brings its know-how, project management skills what will be occurred in the higher quality and efficiency of the investment.

Toll Motorway FinancingToll Motorway Financing

National Road in Poland - National Road in Poland - 2005 2005

BOT (build, operate, transfer) – builder consortium constructs the motorway, operates and after specified period of time the concessionarie transfers the motorway to the public partner.

BOO (build, own, operate) – private partner executes the project of the motorway, within specified period of time performs the function of the administrator and operates the motorway

BOOT (build, own, operate, transfer) – private partner executes the motorway project, within specified period of time performs the function of the administrator and operates the motorway. When the concession is terminated the private partner transfers the motorway to the public sector.

BOT (build, operate, transfer) – builder consortium constructs the motorway, operates and after specified period of time the concessionarie transfers the motorway to the public partner.

BOO (build, own, operate) – private partner executes the project of the motorway, within specified period of time performs the function of the administrator and operates the motorway

BOOT (build, own, operate, transfer) – private partner executes the motorway project, within specified period of time performs the function of the administrator and operates the motorway. When the concession is terminated the private partner transfers the motorway to the public sector.

Concession financing systemsConcession financing systems

DFBOT (design, finance, build, operate, transfer) – private builder consortium designs, finances, constructs and operates the motorway and transfers to the public sector.

DFBOT (design, finance, build, operate, transfer) – private builder consortium designs, finances, constructs and operates the motorway and transfers to the public sector.

Concession financing systemsConcession financing systems

•From 1997 up to 2004 private investor (concessionaire) was granted a concession for construction and operation (or only operation) the motorway section

• The system covers almost all finance methods betweencompletely private financing and traditional financing.

• Financial sources for the motorway construction (excludingcosts of real estate and preparatory works which are financedby the General Directory - GDDKiA) the concessionaire has to gain on its own sphere.

• Share in the total costs of each partner depends on its risk and its duties in the investment.

• The whole process of constructing and operating is prepared and executed by the concessionaire on its own risk.

• Nowadays there are only agreements conceiving with construction and operation of motorways.

•From 1997 up to 2004 private investor (concessionaire) was granted a concession for construction and operation (or only operation) the motorway section

• The system covers almost all finance methods betweencompletely private financing and traditional financing.

• Financial sources for the motorway construction (excludingcosts of real estate and preparatory works which are financedby the General Directory - GDDKiA) the concessionaire has to gain on its own sphere.

• Share in the total costs of each partner depends on its risk and its duties in the investment.

• The whole process of constructing and operating is prepared and executed by the concessionaire on its own risk.

• Nowadays there are only agreements conceiving with construction and operation of motorways.

Public-Private PartnershipPublic-Private Partnership

Possible sources of financing:•sources of the concessionaire (equity or loan for the equity)•loans from international financial institutions (EIB, EBRD) drawn by the concessionaire•loans from commercial banks drawn by the concessionaire.•funds from European Cohesion Fund and from European Regional Development Fund.•the State may give guarantee under the loans drawn by the concessionaire •financing project from National Road Fund:payment for accessibility and/or shadow tolls.

Possible sources of financing:•sources of the concessionaire (equity or loan for the equity)•loans from international financial institutions (EIB, EBRD) drawn by the concessionaire•loans from commercial banks drawn by the concessionaire.•funds from European Cohesion Fund and from European Regional Development Fund.•the State may give guarantee under the loans drawn by the concessionaire •financing project from National Road Fund:payment for accessibility and/or shadow tolls.

Public-Private Partnership - FundsPublic-Private Partnership - Funds

National Road Fund – Main Incomes•Petroleum Taxation.

•Vignette tolls

•Paying Interest on Fund’s sources.

•Incomes from holding and selling shares.

•Fees collected by General Directorate.

•Payments settled up by concessionaires.

•Incomes from rent buildings purchased in order of running the investments.

•Fees for specification preliminary tender condition.

•Loans drawn on behalf of National Road Fund.

•Incomes from fine papers.

•Incomes from obligations emitted on behalf National Road Fund by National Economy Bank (BGK).

National Road Fund – Main Purposes

•Co-financing of real estate acquisition, preparing of investment process, rebuilding process, renovation, maintenance and road investments protection

•Setting up payments for private partners in order carrying up duties definited in concession agreements, for instance:

a. Recovering of costs conceiving with keeping uninterrupted accessibility to motorway, its maintenance and serviceability

b. Changeable payment depended on definited conditions execution by concessionaire/ private partners

c. Allowances to cover actual financial deficiency in title of motorway exploitation in order keeping

financial liquidity in payments settled up in conceiving with motorway investment process

The basic tasks for private partner:• Collecting financial sources for the construction and

undertaking operating of the motorway• Preparing technical documentation required to

undertake the motorway construction, obtaining permission for the construction and other arrangements required by particular regulations

• Screening and monitoring technical- building and exploitation regulations concerning motorways, environment protection and relics protection

• Keeping the timing of the investment process• Maintaining the motorway according to standards

specified in the law and in the agreement as well

• Making possible to the General Director of National Roads and Motorways accomplishing, in the discretional period of time, controlling of the construction and operation of the motorway as well as submitting data and documents in this respect

• Maintenance of the motorway by conducting regular repairs and modernization works

• The tolls collection

• Traffic safety management by elaborating rescue service and controlling the technical condition of the motorway

• Making possible to the General Director of National Roads and Motorways accomplishing, in the discretional period of time, controlling of the construction and operation of the motorway as well as submitting data and documents in this respect

• Maintenance of the motorway by conducting regular repairs and modernization works

• The tolls collection

• Traffic safety management by elaborating rescue service and controlling the technical condition of the motorway

The basic tasks for concessionaries:The basic tasks for concessionaries:

Motorway Projects Implementation

Concessions already issued

A1 Motorway, Gdańsk - Toruń section, 152 km long

A2 Motorway, Świecko – Konin section, 255 km long

A4 Motorway, Katowice-Kraków section, 61 km long

A1 Motorway Gdańsk - Toruń Basic Data

Total length 151,9 km The concession issued on 25 August 1997 Concession period - 42 years Concessionaire – Gdańsk Transport Company S.A. Concession Agreement - initiated on 14 August 2002 signed on 31

August 2004 Total transaction costs aprox. 700 mln EUR Financial structure:

- equity 5%

- commercial credits 20%

- EIB credit 75% The guarantees of State Treasury required

• The cancelation 62,4km section Nowe Marzy – Toruń on 10 March 2006

A1 Motorway Gdańsk - ToruńMilestone part IMilestone part I

25 August 1997 Issue of Concession

14 August 2002 Preliminary sign of Draft Concession Agreement

March 2002 Parliament rejects the project of the Law on National Roads

August 2003 Government decides to continue the negotiations with GTC based on the Draft Concession Agreement

21-22 January 2004 Negotiation sessions with GTC

A1 Motorway Gdańsk - ToruńMilestone part IIMilestone part II

24 February 2004 GTC new price proposal (design and construction (EPC) price reduced to EUR 530 million)

4 March 2004 Submission to GTC a letter on further reduction of the EPC price

31 August 2004 Sign of Concession Agreement

October 2004 Financial Model Negotiations

3 December 2004 Completion of negotiations of annexes to agreements

Commencement of negotiations on Phase II Grudziądz-Toruń

21 January 2005 Memorandum of understanding on Phase II signed by Minister and GTC

A2 Motorway Świecko - Konin

Concessionaire Autostrada Wielkopolska S.A. Concession period 40 years ( up to 2037)Scope of works First Financing Segment ( Nowy Tomyśl-

Konin, 136 km length) execution and exploitation by Concessionaire,Poznań Bypass (13 km length) execution by State, exploitation by Concessionaire,Second Financing Segment (Świecko-Nowy Tomyśl 106 km length ) execution and exploitation by Concessionaire

Full Cost of 1st Segment 875 million EURODesign and Construction Works (lump-sum) 652 million EURO

Basic Data

A2 Motorway Świecko - Konin

10 March 1997 Issue of Concession

12 September 1997 Concession Agreement (first version)

July 1998 Annex No.1 to Concession Agreement excluding Poznań Bypass from Concessionaire scope of work

29 October 1999 Annex No.2 to Concession Agreement establishing final terms of the realization

30 October 2000 Financial Closing

Milestone part I

A2 Motorway Świecko - Konin

July 2001 Commencement of the work for First Financing Segment (Nowy Tomyśl-Konin, 136 km length)

21 December 2002 Start of operation for First Section (Września-Konin, 48 km length)

6 January 2003 Introduction of tolls for First Section

12 September 2003 Completion of Poznań Bypass, executed by State and transfer to Concessionaire for exploitation

Milestone part II

27 November 2003 Commencement of operation the Second Section (Poznań-Września,37.5 km

length)

1 December 2003 Introduction of tolls for passage through the Second Section (Poznań-Września, 37.5 km length+13 km length of Bypass = 50.5 km)

27 October 2004 Start of operation for the Third Section Section (Nowy Tomyśl-Poznań, 50km length).

3 November 2004 Indtroduction of tolls (Nowy Tomyśl-Poznań, 50km length)

27 November 2003 Commencement of operation the Second Section (Poznań-Września,37.5 km

length)

1 December 2003 Introduction of tolls for passage through the Second Section (Poznań-Września, 37.5 km length+13 km length of Bypass = 50.5 km)

27 October 2004 Start of operation for the Third Section Section (Nowy Tomyśl-Poznań, 50km length).

3 November 2004 Indtroduction of tolls (Nowy Tomyśl-Poznań, 50km length)

Milestone part IIIMilestone part IIIA2 Motorway Świecko - Konin

A2 Motorway Świecko - Konin

Second Financing Segment (Świecko-Nowy Tomyśl, 104,5 km length)

The negotiations have been resumed

Private partner presented the proposal of common financing of Segment I and II. This proposal is taken into account with participation of EBI and Department of Finance.

Commencement of works foreseen in 2007

Completion of the Second Financing Segment is predicted up to the end of 2009

To be executed next

Basic data

Total length 61 km

The concession issued on 15 of March 1997

Concession period 30 years

Concessionaire – Stalexport S.A.

since 28 July 2004 Stalexport Autostrada Małopolska S.A.

Concession Agreement – signed on 19 of September 1997

Construction capital costs:

- Phase I 109 mln PLZ

- Phase II(a) 126 mln PLZ

- Phase II(b) 139 mln PLZ

A4 Motorway Katowice - Kraków

A4 Motorway Katowice - KrakówTotal costs of completed Phase I

Construction of toll collection system:Toll Collection Point in Brzęczkowice

Toll Collection Point in Balice

Introduction of Motorway Maintenance Plaza in Brzęczkowice

Construction of telecommunication and traffic management and emergency call system

Implementation of traffic safety system

Closing of „Jeleń” interchange

Total 108,6 MPLZ

A4 Motorway Wrocław - Katowice Wrocław - Kleszczów already constructed -

traditional system - 144 km long

Total existing motorway construction costs - 1 833 mln PLZ

Expected GDDKiA toll system

Total length - 187 km

Tolls and Traffic on A2 and A4

Present Status

• A2 cars 3 x 11 PLZ, trucks 3 x 63 PLZ

• ADT 7,000 – 15,000 vehicles per day in 2005

• A4 cars 2 x 6.5PLZ, trucks 2 x 24.5PLZ

• ADT 21,000 vehicles per day in 2005

ADT 17,000 vehicles per day in 2001

Further PPP projects • A2 Motorway, Konin– Stryków sect., 94.5 km length,

operation only

• A2 Motorway, Stryków- Konotopa sect., 104.5 km length

• A1 Motorway, Stryków –Pyrzowice sect., 188.5 km length

• A4 Motorway, Kraków- Tarnów sect., 60 km length

agreements for construction and/or operation&maintenance

planned to be issued on 2006/2007