Translation from Romanian ROMANIA GOVERNMENT OF … · 5.1. Complex project comprising design...

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Translation from Romanian

GOVERNMENT OF ROMANIA

NATIONAL COMMISSION FOR STRATEGY AND PROGNOSIS

ANNEX

Substantiation study

Ploieşti – Bra şov Motorway

August 2018

ROMANIA 1918-2018 | WE

CELEBRATE TOGETHER

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CONTENTS

1. General information on the investment objective

1.1. Designation of the investment objective 1.2. General description of the project 1.3. Opportunity to execute the project 1.4. Proposals in terms of public partners 1.5. Investment beneficiary 1.6. Project execution estimated duration

2. Current status and the need to execute the proje ct 2.1. Presentation of the current context 2.2. Analysis of the current status andidentification of deficiencies 2.3. Analysis of the demand for goods and services, including long-term prognoses

3. Current traffic analysis and future prognosis (t he length and type of roads within the areas crossed by the motor way, the number of vehicles passing through the area, etc.) 4. Main technical, financial and contractual featur es of the project (Ploieşti - Comarnic - Bra şov Motorway)

4.1. Technical description of the project (the motorway) 4.2. Current technical conditions (placing the objective under the general/sectoral/regional policies, current legislation, international agreements pursuant to which executing the investment objective is mandatory/implied etc.)

5. Studies and analyses regarding the manner of exe cuting the project

5.1. Complex project comprising design services, construction, maintenance and operation works under a toll motorway regime – Bucharest - Braşov (Râşnov)Motorway 5.2. Differences between PPP and a traditional public procurement 5.3. Project economic efficiency via the presentation of a cost-benefit analysis 5.4. “Value for money” analysis in both cases

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5.5. Option recommended by the study author and its advantages 5.6. Risk distribution structure for each option, quantification of risks and allotting alternatives among the contracting parties, depending on the risk management capacity 5.7. The project’s generic possibility of mobilising the financial resources required to cover the costs (the project’s degree of tolerance) 5.8. The road traffic monitoring system, other systems 5.9. The motorway toll and the toll charging system 5.10. Main contractual stages 5.11. Main activities conducted during each contractual stage/period 5.12. Presentation of project costs and incomes, the payment mechanism, the private partner’s incomes 5.13. Penalty system 5.14. PPP contract cessation and payable compensations

Ploieşti – Braşov Motorway Substantiation study

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1. General information on the investment objective 1.1. Designation of the investment objective

Ploieşti – Bra şov Motorway 1.2. General description of the project

General aspects

The Trans-European Transport Network (TEN-T) is a combined road, rail and maritime transportation network which integrates the European Union. It was initiated during the ‘90s, concurrently with the unification of Europe, and was developed based upon the existing transportation infrastructure, with the network of motorways.

The development of Europe’s network of motorways began, as an experiment, in the 1920s, in Italy, France and Germania. After the conclusion of the second world war, when Europe was divided into the western countries and the Eastern bloc states, the large-scale development of European motorways began in the western countries in the ‘50s.

The development of motorways was determined by the inherent

safety and economic advantages of an integrated road network.

The design and construction characteristics of these motorways required pioneering approaches in order to make sure that they were able to facilitate transportation in a safe environment, to withstand continuous operation and were visually integrated in the landscape.

The main developments of motorways took place in the western countries with the highest populations, such as West Germany, France and Great Britain. Considering that Germany is at the heart of Europe, many of the main TEN-T routes are those of West Germany’s post-war years.

In this context, Romania commenced, as well, at a fairly late stage and a timid pace, during the eighth decade of the 20th century, to lay down its own motorways.

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Strategies which mainly take into account road traf fic figures

“General study on the construction of motorways in Romania” -1967 -1970

The early studies that envisaged a network of motorways in

Romania were conductedby the engineers at the Design Institute for Road, Water and Air Transport (IPTANA), from 1967 to 1970, based on road traffic censuses carried out in 1965 and 1967-1968, and were included in a volume entitled“General study on the construction of motorways in Romania”. This basically foreshadowed a network of motorways approximately 3,200-kilometre long. Moreover, as early as 1977 the European programme for the construction of an integrated infrastructure (PAN-EUROPEAN transportation corridors) was elaborated, enjoying the participation of ten states, one of which was Romania. The study drawn up by theNational Institute for Transportation Design, an institute which subsequently became, after 1990, IPTANA S.A.

Decision no. 947 from August 14, 1990 on the “Modernisation of the existing road network and construction of motorways in Romania”, published in the Official Gazette no. 102 from 1990, also includes Bucharest - BraşovMotorway. (The study was drawn up by the National

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Institute for Transportation Design,an institute which subsequently became, after 1990, IPTANA S.A.)

Strategywhich mainly takes into account a National Territorial Set-up Plan that also included a “Traffic routes” Section

• Law no. 71/1996 on the approval of the National Territory Set-up Plan - Section I - Traffic routes Works stipulated in theNational Territory Set-up Pl an -

Section I -Traffic routes. Road network development (by way of prioritisation)

As one may notice, Bucharest - BraşovMotorway is included, as well

• Law no. 363/2006 on the approval of the National Territory Set-up Plan - Section I - Transportationnetworks

Developments pathways stipulated in theNational Territory Set-

up Plan - Section I - Transportation networks (by way of prioritisation).

PATN NATIONAL TERRITORY

SET-UP PLAN

SECTION I – TRAFFIC ROUTES

ROAD NETWORK

DEVELOPMENT

CAPTION

MOTORWAYS

EXPRESS ROADS

NATIONAL ROADS

BRIDGES

CURRENT | PROVISIONS

County capital cities Municipalities Cities County territory limit State border

Main border crossing points

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NATIONAL TERRITORY SET-UP PLAN SECTION I - TRANSPORTATION NETWORKS

A. ROAD NETWORK DEVELOPMENTS PATHWAYS

The inclusion of Bucharest - Braşov Motorway is visible on the map Strategywhich mainly takes into account the transpo rtation demand and supply

A. GTMP (General Transportation Masterplan) and LIOP (Large

Infrastructure Operational Programme) 2014

LIOP 2014 is the strategy guiding the contribution of the operational programme to the Union strategy focused on smart, sustainable growth favourable to inclusion and the achievement of economic, social and territorial cohesion.

Bucharest - Braşov Motorway is included in the National Motorway Programme Development Strategy, promoted in 2001 by MLPTL (Ministry of Public Works, Transportation and Housing) and falls under the National Territory Set-up Plan – “Traffic routes” Section, approved as per Law 71/1995.

This statement is valid given that the first Feasibility Study for

theBucharest - Braşov Motorway was elaborated in 2002. Thereafter,

CURRENT | PROVISIONS

CAPTION

MOTORWAYS EXPRESS ROADS NATIONAL ROADS

BRIDGES

4THPAN-EUROPEAN TRANSPORTATION CORRIDOR 9THPAN-EUROPEAN TRANSPORTATION CORRIDOR TEN-R NETWORK EUROPEAN ROAD COUNTY CAPITAL CITIES MUNICIPALITIES CITIES COUNTY TERRITORY LIMIT STATE BORDER MAIN BORDER CROSSING POINTS

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as the history above indicates, we find it consistently repeated in each of the subsequent strategies.

General Transportation Masterplan

The European Commission intends to develop and promote

effective, safe and sustainable transportation policies, to create the environment required for a competitive industry, capable of generating jobs and prosperity.

One mandatory requirement to be met (imposed ex-

anteconditionality) was the elaboration of a policy documentused to subsequently substantiate the necessity and opportunity of implementing investment objectives.

General description of the project The construction of Ploieşti - Braşov Motorway has been

identified as a priority objective following tests as part of the National Transportation Model, being earmarked for implementation in accordance with Romania’s General Transportation Masterplan.

From a geographic standpoint, it is located in the central area of

the Romanian Plain (Ploieşti Plain), it crosses Prahova Subcarpathians and the Eastern compartment of the Meridional Carpathiansalong Prahova Valley and Râşnoavei Valley. The northern sector of the corridor overlaps a compartment of łara Bârsei Depression.

Currently, the only section of Bucharest - Braşovmotorway to be

greenlit for construction is Ploieşti - Braşov (Râşnov). The Bucharest - Ploieşti section has been in operation since 2012 and, in relation to Râşnov - Cristian section, the performance of a related contract began in 2017.

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1.3. Opportunity to execute the project Historical context As we have mentioned above, the history of strategies for the development of the large infrastructure reveals that this motorway has been declared a necessary objective as early as the first strategies in the field, namely since 1970.

The matter in the European context and particularly after the accession to the European Union

EU Regulation no. 1316/2013 of the European Parliament and

the Council from December 11, 2013, on establishing the Connecting Europe Facility, amending Regulation (EU) no. 913/2010 and repealing Regulations (EC) no. 680/2007 and (EC) no. 67/2010, stipulates:

• In order to achieve smart, sustainable and inclusive growth and to stimulate job creation in line with the objectives of the Europe 2020 Strategy, the Union needs an up-to-date, high-performance infrastructure to help connect and integrate the Union and all its regions, in the transport, telecommunications and energy sectors. Those connections should help improve the free movement of persons, goods, capital and services. The trans-European networks should facilitate cross-border connections,

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foster greater economic, social and territorial cohesion, and contribute to a more competitive social market economy and to combating climate change.

• The aim of the creation of the Connecting Europe Facility (CEF) established by this Regulation is to accelerate investment in the field of trans-European networks and to leverage funding from both the public and the private sectors, while increasing legal certainty and respecting the principle of technological neutrality.

• In its Communication of 20 July 2010 entitled "Towards a European road safety area: policy orientations on road safety 2011-2020", the Commission set a framework for policy actions in favour of safe infrastructure as a key element to reduce road casualties by 50 % by 2020. The CEF should therefore ensure that requests for Union funding comply with the safety requirements, recommendations and targets established in all relevant Union road safety law. The evaluation of the performance of the CEF should take into account the reduction of casualties on the road network of the Union.

• On 28 March 2011, the Commission adopted the White Paper entitled "Roadmap to a Single European Transport Area - Towards a competitive and resource efficient transport system" (hereafter called the "White Paper"). The White Paper aims at reducing the greenhouse gas emissions (GHG) of the transport sector by at least 60 % by 2050 compared to 1990. As far as infrastructure is concerned, the White Paper aims at establishing a fully functional and Union-wide multimodal TEN-T “core network” by 2030. Interoperability could be enhanced by innovative solutions that improve compatibility between the systems involved.

Technical context

The road connection between Ploieşti and Braşov features the

following issues:

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• the road sectors whose cross-sections host2 lanes feature a significantly obsolete serviceability. We are dealing with a level F serviceability and a road traffic capacity exceeded by more than 100%; • the road sectors whose cross-sections host 4 lanes feature level D or E serviceability. Reaching these serviceability levels entails, according to the technical regulations in effect, a dire need of road traffic capacity increase by way of additional lanes; • the average cruising speed is between 58 and 65 Km/h, significantly below the minimum 100 km/h required for a road which is an integral part of the TEN - T network; • numerous areas with elevated car accident rates (black spots)

have been identified; • the coursecrosses urban areas and localities; this leads to pollution and a high level of discomfort for the inhabitants, all the more that this route is used by a high percentage of vehicles intended for freight transportation. Mention should be made that the major localities along this route lack any actual by-pass options. In the context of a present notorious issue with a significant

impact - trafficoverload on DN 1 and DN1A national roads, which currently host the road traffic –an issue constantly affecting both the population and the major road network, a definitive solution to it and fulfilling the objective of facilitating passenger and freight transportation along this route, under conditions compliant with the European safety, mobility and efficiency standards, are real necessities.

A decrease in the numberof car accidents subsequent to project

implementation, whose direct result would be to decongest a congested route (DN1), and providing road users with a safer alternative route (Ploieşti - Braşov motorway) would manage to save approximately 10 human lives a year, according to the studies previously conducted for this project.

A road trip duration decrease (accompanied trip duration cost

cuts) for passenger and freight road traffic crossing the area envisaged

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in the project, by providing a route alternative that allows higher cruising speeds, results in time savings estimated at approximately 30,000 hours a day for the users.Toexemplify, according to the previously mentioned studies, for the Comarnic – Predeal sector, one of the most congested road sectors as part of Ploieşti – Braşov route, in the absence of a motorway, estimates indicate that, in 2010, a vehicle would cross the respective sector in approximately 120 minutes, whereas a motorway section would allow that crossing in approximately 12 minutes, which means o trip duration decrease by up to 10 times.

In relation to the trip duration and reaching a level E and F

serviceability, as maximum serviceability levels, any traffic volume increase will only extend the trip duration, while having a constant presence of traffic congestions.

Another significant aspect refers to decreasing the road

infrastructure degradation in built-up areas of localities and slowing down the ever increasing degree of discomfort and pollution in the localities situated along the DN1 route, as well as along its alternative routes, particularly as a consequence of heavy traffic constant presence, but also of the impossibility of basically having any moving traffic, at any given time,in the perimeter of these localities.

The execution of Ploieşti - Braşov motorway will generate

significant benefits for users, both by reducing operating costs and allowing time savings.

According to statistics at a European level, road traffic

represents the greatest source of polluting emissions. Thus, in terms of greenhouse gases (CO2, N2O, NH4), according to the previously carried out studies, the implementation of the project would result in a decrease by around 63 thousand ton of CO2 emissions/year, and around 435 ton of NOx emissions a year, the higher cruising speeds on the motorway favouring the decrease of polluting emissions generated by road traffic.

Under these conditions, there is an obvious need to improve air

quality and, implicitly, the population’s health, by decreasing air pollution and noise levels within the localities situated along the alternative routes in relation to the project intended route.

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We shall exemplify with the numerous cases where we find

traffic congestions spanning over several kilometres, congestions which practically entail taking even 1-2 hours to drive a few kilometres, at very low speeds.

While having a lower impact in itself, during the execution works,

the motorway will represent a source of jobs as part of manufacturing bases, road-paving stations and concrete plants, work sites or gravel pits which mine for aggregates.

Moreover, after being commissioned, the crossed motorway

areas shall develop by providing adequate access to predominantly touristic areas, as well as locally via the construction of gas stations, charging stations for electric vehicles, motels, restaurants, etc.

These, too, will require additionalworkforce.

1.4. Proposals in terms of public partners The Ministry of Transportation 1.5. Investment beneficiary The project company – during the performance of the contract.

Upon the closure of the contract, the beneficiary – the public partner. 1.6. Project execution estimated duration

The design and construction period shall commence on the financial closure date (the date when financing is obtained for the entire project) and last 48 months, in which time the private partner is bound to finalise the construction of the entire motorway. 2. Current status and the need to execute the proje ct

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In relation to the opportunity and necessity of having this motorway, chapter 1.3. has already presented a state of facts.

In addition to it, we shall further on present the following aspects: 2.1. Presentation of the current context

Romania has the most unfavourable car accident statistics in the EU, as follows:

• deaths per one million inhabitants - 94, as opposed to the EU average of 60 – 24th place out of 28; • deaths per 10 billion passenger-kilometres - 259, as opposed to the EU average of 61 – 28th place out of 28; • deaths per one million motor vehicles - 466 as opposed to the EU average of 126 – 28th place out of 28.

Whereas motorways and express roads have a much lower

incidence rate of car accidents as compared to roads with a single traffic lane per direction of traffic, it is not feasible or economically efficient to replace the entire national road network with motorways or express roads.

Safety Romania is facing a major problem with regard to the number of

car accidents, as revealed by the EU’s comparative statistics. The Union uses three distinct indicators, as follows:

• number of deaths per one million inhabitants; • number of deaths per 10 billion passenger-kilometres; • number of deaths per one million motor vehicles. In this order, Romania’s scores and places are the following: • 24th out of 28 - 94 versus the EU average of 60; • 28th out of 28 - 259 versus the EU average of 61; and • 28th out of 28 - 466 versus the EU average of 126. According to this data, we can conclude thatRomania has the

highest fatal car accident rate in Europe. 30% of all road accidents in Romania and more than 50% of fatal accidents take place on the national road network.

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Safety on roads with a single lane per direction of traffic: A network of national roads must comprise roads at high quality

standards, capable of hosting, in safe conditions, freight transportation over long distances as well as passenger traffic, integrating the main urban and economic centres and connecting to other means of transportation in significant points, such as maritime ports and airports. The national network currently comprises a large number of roads with a single lane per direction of traffic–nearly 90% of the network is built at this standard.

A national network will inevitably host significant proportions of

freight-transiting vehicles which, on roads with a single lane per direction of traffic, limit overtaking possibilities within safety limits and, therefore, have a disproportionate impact upon the safety and operational capacity.

Roadswith a single lane per direction of traffic are known as the

most dangerous, as revealed by the studies conducted by EuroRAP, which indicates that fact that, in Europe, the traffic accident incidence risk on a road with a single lane per direction of traffic is four times higher than the risk posed by motorways. This is also reflected by local statistics, which indicate a significantly higher risk for roads with a single lane per direction of traffic: in the case of national roads the risk is six times higher than that posed by motorways and more than three times higher when only the national roads of rural areas are taken into account.

Lack of separation of vulnerable road users: Motorways account

for only 3% of the national network, as they are the only ones completely separated from vulnerable road users.

Approximately 28% of all fatal accidents occurring across the

national network are accompanied by “pedestrians on the road surface” as a causality factor. In numerous cases, the lack of adequate pavements or controlled passage facilities, within the safety limits, increases pedestrians’ risk in and exposure to road traffic. To the extent to which the national network generally crosses localities instead of by-passing them, settlements significantly contribute to a traffic accident risk increase and this lack of separation for vulnerable road users represents a serious matter.

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Traffic accidents involving a single motor vehicle have a high proportion (52%) of the total number of accidents occurring across the national road network, whereas in 39% of these pedestrians are involved. 2,200 pedestrians lost their lives and 2,900 were severely injured in car accidents that took place across the national road network between 2007 and 2012. For more than half (52%) the accidents that involved pedestrians, the cause was illegal road crossings, whereas 35% of them were caused by the drivers’ failing to observe road and traffic regulations. For the remaining traffic accidents with a single vehicle and no pedestrians involved, the major causes are excessive speed (48%) and “other driving errors” (31%).

Linear settlements: The issue of roads with a single lane per

direction of traffic is complicated even more, given the fact that linear settlements are predominant in Romania. In these areas, long sections of the national network are exposed to the development of perimeters in front of yards associated to a high level of pedestrian activity. There are speed limits within localities, but there are no speed control or traffic calming signs oron-site penalty measures. This is in the road accident statistics which indicate that more than 80% of accidents involving pedestrians, across the national network, take place outside rural areas.

The presence of lorries in urban areas: Following the

fundamental theme according to which any strategic network should keep traffic away from urban areas, wherever this is possible, to the extent to which freight-transiting vehicles have to pass through areas with high pedestrian density, this presence is a reason for concern. In addition to the negative impact upon the environment caused by freight-transiting vehicles (such as noise, air quality, etc.), there is also clear evidence that these vehicles are involved in a disproportionate number of traffic accidents in urban areas. The statistics regarding the national roads indicate that freight-transiting vehicles have been involved in almost 40% of all accidents in urban areas, which is a considerably higher figure than the freight transportation proportion within the general flow (usually below 15%).

Safety of lorries which transit freight under road transportation

conditions: The importance of servicing and parking spaces for lorries, in safe conditions, is acknowledged by the EU in Directive 2008/96/ECon road infrastructure safety management, which takes

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note of the importance of having a sufficient number of safe rest areas, so as to prevent criminality and road safety issues. This is also a priority of the following Operational Transport Programme.

By assessing and auditing the impact upon road safety, this

legislation guarantees that fact that, when new road sectors are built, they are fitted with adequate and safe parking spaces. Moreover, Directive 2010/40/EU (article 3) defines the specifications for the provision of information and parking space booking services, wherebysafe and secured parking spaces can be obtained for lorries and commercial vehicles.

The lack of parking spaces for lorries in Romania is a serious

problem for freight forwarders. There are no provisions with regard to safety, even in the case of new motorway projects. This is a matter of safety and security for drivers, who are subsequently fined for illegal parking. There is also a commercial advantage resulted from managing parking spaces for lorries and general service areas, which is not being exploited.

Long trip durations: Leaving aside the low proportion of the

national network built at motorway standards (less than 3%), the average speed across the national network is approximately 66 km/h, for interurban trips. This is not considered sufficient for a national network in the case of which, as per international comparisons, the average speed should reach between 90 and 100 km/h, deemed reasonable figures. Although the traffic flow for most of the national road network is not elevated in comparison with the theoretical capacity, the effect of the proportion of roads with a single lane per direction of traffic is evident. Even under low flow conditions, the roads with a single lane per direction of traffic provide limited safe overtaking opportunities, particularly when the number of vehicles carrying goods is high.

Major problem : Long trip durations mirror the inefficient use of

time, while also having a negative economic impact by reducing opportunities of taking trips for persona or business purposes. In order to compete at a European level, the national road network requires a travel time decrease, both in absolute terms, as well as in terms of reliability.

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Moreover, mention should be made that the same data source reveals the fact that Romania places 7th out of 33 countries with regard to the proportion of roads designated as “national” within the total network. This indicates that the proportion of national roads in the entire network is high in comparison with most EU countries.

Lack of coordination in providing information to road users:

There is an information centre for national roads, although the ITS (Intelligent Transportation Systems) coverage is currently limited, however, there is no interaction or distribution of information among the similar systems operated by the police.

The collection of incomplete or uncoordinated information

concerning the operating conditions across the road network restricts efficiency in providing information to users. This leads to a lack of information about delays that should reach drivers, who are unable to choose alternative routes, for instance, when traffic accidents occur.

Romania holds the lowest number of motorway kilometres per

inhabitant in the European Union. A particular aspect which must be taken into account is that Romania has a major problem in regard to traffic accidents, in comparison with the EU countries, according to the results included in the General Transportation Masterplan. Relevant in that respect is the large share of roads with a single lane per direction of traffic, present in the national road network (90%).

A network of national roads must comprise roads at high quality

standards, capable of hosting, in safe conditions, freight transportation over long distances as well as passenger traffic, roads that integrate the main urban and economic centres and interconnect with other means of transportation in significant points, such as maritime ports and airports. The national network in Romania allows a significant amount of traffic by vehicles carrying goods which, on roads with a single lane per direction of traffic, limit overtaking possibilities within safety limits and, therefore, have a disproportionate impact upon the safety and operational capacity.

The main conclusions of assessing the current situation are as

follows:

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• Ploieşti - Braşov roadconnection is a part of the TEN – T network;

• the current road sectors operate close to maximum traffic capacity, in regard to sectors with 4 lanes, and with a very significant capacity deficit across sectors with 2 lanes; • DN1 crosses a large number of linear settlements; • the average share of freight traffic is significant, namely 15% of the Annual Average Daily Traffic. We should mention here that this share does not take into account the heavy traffic deviated onto the DN1A alternative route during summer. Thus, we gather from the DN1A traffic data that the freight traffic recordedon this road reaches 30% of the Annual Average Daily Traffic figure, namely 2000 units (lorries with 2-3 axes, lorries with 4 axes, road trains and heavy-goods vehicles); • average cruising speed below 65 de km/h (without

congestions); • long periods of time with congestions, particularly during summer and winter, when seasonal traffic reaches its maximum figures; therefore, leaving aside the average figure of 65 km/h, during congestions, we may even find 180-minute trips between Predeal and Ploieşti; we can thus extract an average cruising speed even lower than 35 de km/h; • there is a significant number of road accidents; • long trip durations and congestions lead to greatly increased

pollution; • negative effects are generated in the economy by the running costs specific to this connection between Bucharest and Braşov. Mention should be made that all these negative aspects overlap

a situation where, in terms of forecast, which we directly correlate with the car park density, there is a possibility of seeing a marked increase of such density, over extended periods of time, due to the low figure in comparison with other EU member states.

Car park density Whereas road transportationis one of themost important means

of transportation in Romania, one must also keep in mind the current

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car park densityand the manner in which it can change in the future, as it directly influences the choice of this means of transportation.

The car park density has witnessed a constant increase in

Romania, the long-term growth trend reaching around 5% a year. This increase must, nevertheless, be analysedin context, by

comparing it with the car park density in the rest of Europe. The comparison is presented in the figure below, the values for Romania being coloured in red. Figure 4.1 Comparison of the car park density figur es for the EU countries (2010)

Source: Eurostat

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Car park density in 2015 thousand

Source: Eurostat

Evidently, the car park density is relatively low in comparison with the other European countries.

This density is estimated to increase significantly in time, which will have a direct impact upon the possibility of road transportation becoming the preferred mode of transport for even more travellers than at present.

We shall also mention the fact that the road sector is the most

important element within the Romanian transportation system, with regard to the transit of passengers and freight. The road network covers approximately 75% of the total passenger-kilometres and nearly 50% of the total freight tonne kilometres.

In 2017, the gross domestic product of the counties crossed by

the motorway - Prahova and Braşov - increasedby 4.2% and 6.7%, respectively, and is estimated to increase, by 2021, at an average rateof 5.5% and5.9%, respectively. Mention should be made that, nationwide, the estimated average increase rate is around 5.6%.

The GDP figure (at current prices) reached by the two counties in 2017 accounted for 7.1% of the national GDP value.

In Prahova county,the GDP/inhabitant was 10,009 Euro, the unemployment rate 3.0%, and the net average monthly salary 2,213 lei/salaried employee.

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For 2021, the estimates are 13,942 Euro (+39.3%) for GDP/inhabitant, 3.1% for the employment rate and 2,875 lei/salaried employee (+29.9%) for the net average monthly salary.

In Braşov county, the GDP/inhabitant was 11,164 Euro, the

unemployment rate 2.8%, and the net average monthly salary 2,355lei/salaried employee.

The GDP/inhabitant is estimated for 2021 at 15,156 Euro

(+35.8%), the unemployment rate at 2.5%, and the net average monthly salary at 3,464 lei/salaried employee (+47.1%).

This medium-term development comes reinforces the fulfilment of the objective.

The population of the counties crossed by Ploieşti - Braşov Motorway, namely Prahova and Braşov, is approximately 1.4 million inhabitants.

Worth mentioning is the fact that, given the high level of development of these areas, the number of inhabitants, as opposed to 1992,has remained relatively constant in comparison with other regions.

From a touristic standpoint, Prahova Valley with its mountain resorts represents the tourist attraction most commonly chosen by Romanian and foreign tourists, both during the winter season for its numerous ski slopes, as well as in summertime, for its mountain attractions. Cities such as Sinaia, Predeal, Buşteni and, not least the renowned Poiana Braşov resort, are over the entire year almost 100% booked

2.2. Analysis of the current status and identificat ion of deficiencies

The current route that connects Ploieşti to Braşov comprises several road sectors, from various categories:

• Ploieşti - theentry in Comarnic locality - DN1 with two lanes; • Comarnic - Braşov DN1 with a single traffic lane, which crosses

several localities

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The road traffic deficiencies featured by the current connecting option between Ploieşti and Braşov consist in:

- largecosts for road infrastructure maintenance both outside and within localities (which would generate additional expenses for the local authorities) due to dense road traffic; - small cruising speed of motor vehicles, particularly in the area of mountain tourist resorts; - traffic bottlenecks, especially during school holidays, legal holidays, as well as in weekends; - trending downward figures for tourist traffic due to difficulties in reaching the resorts located along DN1; - greenhouse gas emission pollution and noise pollution; - elevated time requirements and fuel consumption.

2.3. Analysis of the demand for goods and services,

including long-term prognoses In order to determine possible traffic figures, as well as the

factors that might increase possible figures for road traffic forecasts, an analysis has been conducted on a series of summary statistical data concerning our country, such as: - evolution of the population; - GDP evolution (Gross Domestic Product); - evolution of the monitoring degree (expressed in vehicles/1000 inhabitants).

Taking into account the transportation model characteristics, its analysis uses a destination, instead of a 4-step model, as the base for the origin matrix. The analysis of demand for goods and services has been conducted based on the 3 elements defined and listed above. Basically, the aforementioned data has become a socioeconomic database that the forecast, among others, relied upon.

The latest data employed was:

• A population increase over the past 6 years In regard to the population, in relation to the nationwide

statistics, we are noticing a downward trend.

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Nationwide Population evolution, by residency, as a t January 1

Source: NIS (National Institute of Statistics) for 2015 – 2017

CNSP (National Commission for Strategy and Prognosis) for 2018 – 2021 We can see that, for the 2015 – 2021 period, the resident population has displayed/will display a slightly downward path, without major variations.

The table below presents the population evolutions, by

residence, as at January 1, in the counties covered by the sphere of influence of Bucharest - Braşov motorway, also including that of the counties crossed by the Comarnic – Braşov sector. 2015 2016 2017 2018 2019 2020 2021Bucharest 1853638 1844312 1826506 1816456 1809568 1801568 1792256Ilfov 430805 444226 460355 469689 478516 486897 494654Prahova 747634 740456 732582 728745 726874 725648 724546Braşov 551160 550784 550547 549890 549459 549112 548952TOTAL 1987554

2 1976031

4 1964435

0 1953612

3 1944932

5 1938214

9 1931625

8 Source: NIS for 2015 – 2017

CNSP for 2018 – 2021

• GDP evolution The growth of demand for transportation is due to the GDP

increase. The greatest economic growth took place before 2008. The 2008 - 2009 interval witnessed a 4% decrease of the GDP, caused by Romania having entered into recession. According to the figure below,

Years Total Percentage change as

opposed to the previous year

Differences ‘/-

2015 19,875,542 -0.4 -77,547 2016 19,760,314 -0.6 -115,228 2017 19,644,350 -0.6 -115,964 2018 19,536,123 -0.6 -108,227 2019 19,449,325 -0.4 -86,798 2020 19,382,149 -0.3 -67,176 2021 19,316,285 -0.3 -65,891

25

we can see that the gross domestic product of our country post-2009 and up to the present day has only achieved a slight increase.

GDP evolution in Romania

Bn Euro

Source: EU Reference Scenario

Between 1990 and 2010, restructuring the Romanian economy

and the transportation sector played a significant part, leading to higher usage figures for the road mode of transport as opposed to rail transportation. However, it is believed that the transition period, concerning both the general economic state, as well as the transportation sector, has ended and Romania is now acknowledged as having a functional market economy.

Nevertheless, mention should be made that, if demand increase relies on the GDP, there is a different elasticity of each mode of transport. These elasticity rates are probably similar to those recorded in the EU over the past 30 years. Moreover, it is worth stating that Romania has a relatively small economy, with a significant increase of international trade.

Further on, we see presented several references to the correlation between the GDP evolution and the growth forecasts in the field of transportation, as they are provided in the POS - T 2007 – 2013report, the January 2007 version. “During the 2000 – 2005 interval, Romania’s international trade increased from 24.4 billion Euro to 52.3 billion Euro, which is a 115% rise, whereas the GDP cumulatively rose by 28% over the same period.

The prospects are, therefore, closely dependent upon the GDP, with the following forecasts:

- increase rates slightly lower than the GDP for the road public passenger transportation, for rail and maritime transportation;

26

- increase rates higher than the GDP forroad transportation; - increase rates correlated with the international trade (much higher than the medium-term GDP), for the maritime and air transportation.

The values in the table below refer to the annual increase of the

actual GDP indicator for Romania.

GDP evolution during the 2015-2021 interval

Year 2015 2016 2017 2018 2019 2020 2021 Annual

increase 3.8 4.8 6.9 5.5 5.7 5.7 5.0

Source: NIS for 2015 – 2017 CNSP for 2018 – 2021

• Evolution of the motoring index According to the NIS data, at the end of 2017, in Romania, there

were 7,635,775 registered road-going motor vehicles, 1,339,507 units more than in 2014.

The evolution of the motoring index (number of road-going

vehicles per 1,000 inhabitants) at a national level and in the counties crossed by Bucharest - Braşov motorway is displayed in the table below: 2014 2015 2016 2017 Nationwide 314.3 332.1 354.8 388.7 Bucharest - 567.2 590.8 623.1 662.3 Prahova 276.6 291.4 310.7 334.0 Braşov 318.1 333.3 351.3 377.0

Based on the socioeconomic data, as far as forecasts are concerned, each portion included in the zoning process was attributed a unique growth value, according to its own characteristic data.

Over the past years, the development of financial schemes (leasing and bank loans) has led to a spectacular spike in the number of new vehicle purchases. Motor vehicle ownership is expected to continue its growth in the medium term, at consistent rates.

27

One may identify two main causes of this growth: the first consists in the GDP increase and the secondin the “catch-up” effect, which will lead to greater growth rates, keeping in mind that the general vehicle ownership rate is still low. Such an effect is visible in numerous countries: between 1990 and 2002, motor vehicle ownership increased by109% in Poland, by 58% in Bulgaria, by 51% in the Czech Republic, as opposed to 29% in EU15. This trend may be influenced in the short run by a series of aspects such as better job opportunities abroad, access to loans in anticipation of higher incomes, an increasing demand for personal transportation freedom and fiscal decisions made by the Government.”

Over the next period, considering the European Union’s involvement, the ample development projects envisaged for the economic, as well as the social and transport infrastructure areas, we may expect a notable growth, by the 2040 - 2045time frame, of the car park density.

In 2017, the car park density level ascertained for our country is approximately 390 road-going vehicles/1000 inhabitants, and the trend suggests a distinct growth.

Based on the statistical data on the estimated evolution of the car park density until 2045, while also taking into account other information on the vehicle purchase rates, evolution curves of the car park density by the 2045 time frame were emphasized.

Motoring index evolution forecast

Year

Fig. no. 2.3.3.2. Motoring index evolution forecast (motor vehicles per one thousand inhabitants) in Romania

• Other aspects concerning the demand for goods and services

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Road traffic evolution during the 2011-2016 period across the national road network

Year Total Passenger cars

Lorries HGVs Buses

AADT 2011 1.00 1.00 1.00 1.00 1.00 AADT 2012 0.98 0.84 0.86 0.89 0.92 AADT 2013 0.98 0.83 0.79 0.79 0.80 AADT 2014 1.01 0.92 0.90 0.92 0.90 AADT 2015 1.08 1.00 0.99 1.01 1.00 AADT 2016 1.15 1.09 1.06 1.04 1.08 (AADT - Annual Average Daily Traffic)

MONTHLY AVERAGE DAILY TRAFFIC – ROAD TRAFFIC METERING NETWORK

2015-2017 period Sta tion no.

Road no.

Pos. km MADT AADT Year

8 DN1 121,926 22355 22904 23251 21776 23658 23759 30182 31640 26158 25683 25481 25568 25201 2015

8 DN1 121,926 22753 24688 23144 25988 27311 27702 31375 32819 28581 25775 24708 24867 26643 2016

8 DN1 121,926 22261 25244 23399 24436 25322 28000 32190 34811 34970 32897 31064 31461 28838 2017

5481 DN1 139,702 14198 15830 14148 15464 16092 16538 20513 23390 18552 14345 16747 16950 16897 2015

5481 DN1 139,702 15311 16774 14840 16412 16556 18356 22465 24331 20193 17822 16721 15471 17938 2016

5481 DN1 139,702 15186 17009 15628 16924 17430 19631 23322 25127 20897 18712 17311 16945 18677 2017

537 DN1 149,450 10247 11544 11216 11838 12144 12866 15151 16783 14296 13228 12720 12512 12879 2015

537 DN1 149,450 10901 12280 11710 12555 12884 13779 16165 17561 14948 13388 12870 12581 13469 2016

537 DN1 149,450 10914 12482 12385 12955 13032 14860 17098 18067 15514 14199 13403 13136 14004 2017

Concerning the past 3 years, we see an annual average

increase of approximately 5.5%. 2017 2020 2025 2030 2035 2040 2045 2050 DN1 Max.

AADT 28838 33384 42607 51789 66097 69469 73012 76737

Comparing this year’s and the 2025 AADT values, we see that they are noticeably equal, confirming for this year a reasonably good correlation of the forecast values.

29

Table no. 5.3 - 1 - Motorway traffic forecast, 2015 Section Passenger

cars Lorries

with 2 axes Lorries

with 3 axes Lorries with

5 axes Buses Total

Bucharest - Snagov 47724 258 373 1894 241 50490 Snagov - Ploieşti Sud 49833 274 439 1948 205 52699 Ploieşti Sud - DN1 44639 174 308 1194 145 46460 Ploieşti beltway 44635 174 308 1194 145 46455 Ploieşti - Câmpina 39252 344 525 2862 176 43158 Câmpina - Comarnic 50033 401 684 3670 142 54929 Comarnic - Sinaia 49274 420 662 3630 217 54202 Sinaia - Buşteni 40359 368 560 3698 115 45099 Buşteni - Azuga -

31559 266 419 2910 97 35251

Predeal - Râşnov 24611 275 430 2906 103 28325 Râşnov - Codlea 27069 265 417 2560 271 30581

Below is the serviceability analysis based on the status provided by the 2015 traffic census. At present, the status is even worse.

Sectors with 2 lanes Road no.

Sector limits Observations Serviceability in 2015

1 DJ101R - Sinaia In top 3 national roads with 2 lanes, with a deprecated traffic capacity (2nd place among roads with traffic

F

1 Sinaia - DRDP Braşov In top 3 national roads with 2 lanes, with a deprecated traffic capacity (3rd place among roads with traffic

F

1 DRDP Bucharest - DN73A In top 25 national roads with 2 lanes, with a deprecated traffic capacity (21st place among roads with traffic

F

Sectors with 4 lanes

Road no.

Sector limits Observations Serviceability in 2015 1 DN1A - DN1B In top 11 roads with 4 lanes,

in terms of traffic density. 3rd D

1 DN1B - DJ100F (Băicoi) In top 11 roads with 4 lanes, in terms of traffic density. 9th

D

1 DJ100F - DJ101R (Câmpina)

In top 11 roads with 4 lanes, in terms of traffic density.

C

30

2015 census and traffic forecast for DN1 Pessimistic traffic evolution option

Sector limits (km) Unit code

Station no.

Road no.

Station km position de la la

Sector length

Year Total no. of vehicles

Sector limits Section cod

1 8 1 121,300 95,450 122,000 26,550 2015 23437 DJ101R - Sinaia 15

1 8 1 121,300 95,450 122,000 26,550 2020 15540 DJ101R - Sinaia 15

1 8 1 121,300 95,450 122,000 26,550 2025 19134 DJ101R - Sinaia 15

1 8 1 121,300 95,450 122,000 26,550 2030 23983 DJ101R - Sinaia 15

1 8 1 121,300 95,450 122,000 26,550 2035 29672 DJ101R - Sinaia 15

1 8 1 121,300 95,450 122,000 26,550 2040 36412 DJ101R - Sinaia 15

1 9 1 125,300 122,000 125,000 3,000 2015 11077 Sinaia - Sinaia (Exit) 15






1 2 1 132.100 125.000 138.000 13,000 2015 22563 Sinaia - DRDP Brasov 15

1 2 1 132.100 125.000 138.000 13,000 2020 14567 Sinaia - DRDP Braşov 15


1 2 1 132.100 125.000 138.000 13,000 2030 22369 Sinaia - DRDP Brasov 15



5 481 1 139.702 138.000 140.923 2,923 2015 15715 DRDPBucharest - DN73A

11


11


11


11


11


11

5 537 1 149.450 140.923 160.798 19,875 2015 11977 DN73A - M.Braşov 11

5 537 1 149.450 140.923 160.798 19,875 2020 7758 DN73A - M.Braşov 11

5 537 1 149.450 140.923 160.798 19,875 2025 9560 DN73A - M.Braşov 11

5 537 1 149,450 140,923 160,798 19,875 2030 11981 DN73A - M.Braşov 11

5 537 1 149,450 140,923 160,798 19,875 2035 14798 DN73A - M.Braşov 11

5 537 1 149,450 140,923 160,798 19,875 2040 18176 DN73A - M.Braşov 11

Average traffic evolution option Sector limits (km) Unit

code Station no.

Road no.


Sector length

Year Total no. of vehicle

Sector limits

1 8 1 121,300 95,450 122,000 26,550 2015 23437 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2020 26681 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2025 32894 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2030 34777 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2035 43355 DJ101R - Sinaia

31

1 8 1 121,300 95,450 122,000 26,550 2040 53194 DJ101R - Sinaia

1 9 1 125,300 122,000 125,000 3,000 2015 11077 Sinaia - Sinaia (Exit)






1 2 1 132,100 125,000 138,000 13,000 2015 22563 Sinaia - DRDP Braşov


1 2 1 132,100 125,000 138,000 13,000 2025 30552 Sinaia - DRDPBraşov




5 481 1 139,702 138,000 140,923 2,923 2015 15715 DRDP Bucharest - DN73A






5 537 1 149,450 140,923 160,798 19,875 2015 11977 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2020 13319 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2025 16425 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2030 17360 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2035 21638 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2040 26544 DN73A - M.Braşov

Optimistic traffic evolution option

Sector limits (km) Unit code

Station no.

Road no.


Sector length

Year Total no. of vehicles

Sector limits

1 8 1 121,300 95,450 122,000 26,550 2015 23437 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2020 30783 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2025 37896 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2030 47298 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2035 59120 DJ101R - Sinaia

1 8 1 121,300 95,450 122,000 26,550 2040 72490 DJ101R - Sinaia











32



5 481 1 139,702 138,000 140,923 2,923 2015 15715 DRDP Bucharest - DN73A 5 481 1 139,702 138,000 140,923 2,923 2020 20003 DRDP Bucharest - DN73A 5 481 1 139,702 138,000 140,923 2,923 2025 24618 DRDP Bucharest - DN73A 5 481 1 139,702 138,000 140,923 2,923 2030 30709 DRDP Bucharest - DN73A 5 481 1 139,702 138,000 140,923 2,923 2035 38370 DRDP Bucharest - DN73A 5 481 1 139,702 138,000 140,923 2,923 2040 47033 DRDP Bucharest - DN73A 5 537 1 149,450 140,923 160,798 19,875 2015 11977 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2020 15367 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2025 18921 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2030 23602 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2035 29504 DN73A - M.Braşov

5 537 1 149,450 140,923 160,798 19,875 2040 36169 DN73A - M.Braşov

3. Current traffic analysis and future prognosis (t he length and type of roads within the areas crossed by the motor way, the number of vehicles passing through the area, etc.)

In 2016, the length of public roads within the perimeter of Prahova and Braşov counties was 2,230 km (2.6 % of the total public roads) and 1,656 km (1.9% of the total public roads), respectively.

At the end of 2017 there were 7,635,775 registered road-going vehicles, showing an 8.9% increase of the previous year’s figure.

For the following period (in the medium and long term), we estimate a weighting of the number of road-going means of transportation, whose increase should have an annual average rate of4 - 5%.

It was measured that, of these means of transportation, a number of 10,956 units transited the Ploieşti - Braşov route on a daily basis, in 2015.

The estimate mentioned, in the previously drawn up studies, that by 2045 the number will reach 31,550 units.

Further on, most exemplifications will mainly make reference to the Comarnic - Braşov (Cristian) motorway sector, which is the most

33

congested and most difficult sector both in terms of traffic, as well as in terms of design and construction.

Traffic measurementsacross the Comarnic - Braşov (Cristian) motorway sector corridor, conducted in 2012 - 2013

In addition to the information in the General road traffic census of 2010 for the network of national and county roads, the most accurate estimate possible of the actual traffic conditions across the Comarnic - Braşov (Cristian) motorway sector corridor took into account additional traffic data. The additional data analysed was obtained from the Traffic Engineering Section, during the 2012 - 2013 interval, from the A3 motorway, the Bucharest - Ploieşti sector, and from the automatic traffic mileage meters fitted on the roads adjacent to the future route of theComarnic - Braşov (Cristian) motorway.

Traffic measurements were conducted within the corridor of

Comarnic - Braşov (Cristian) motorway, across strategic sections of the corridor, using totalling and classifying traffic meters, in 2012.

Sections where traffic measurements were performed (2012 -

2013) across the Comarnic – Braşov (Cristian) motorway sector. 2.2.2.2 Stations: DN1 km 149+450 - Timişu de sus. DN1A km 120+850 - Homoraciu, DN1A km 138+338 - Valea Popii. DN1A km 178+000 – Săcele, DN71 km 85+145 - Moroieni

Based on the diagram below, we can see that, in terms of average daily figures, the traffic recorded by these stations follows approximately the same trend, with maximum flows being reached in August, towards the 4 p.m. – 5 p.m. time interval.

34

Fig. 2.2.2.2.1 Monthly Average Daily Traffic figures – 2012

Fig. 2.2.2.2.2 Average Daily Traffic figures – 2012 Further on, we shall present a series of analysis data for traffic across various sectors:

TRAFFIC CONTROL ANALYSIS AT KM 139+702 PREDEAL

No. MONTH MADT DAILY HIGHEST FIGURE

DAILY LOWEST FIGURE

HIGHEST FIGURE DAY LOWEST FIGURE DAY

1 January 15311 21469 11688 Saturday Sunday

2 February 16774 22595 13518 Friday Tuesday

3 March 14840 18085 13029 Friday Tuesday

4 April 16412 20406 13906 Friday Tuesday

5 May 16556 21286 12933 Monday Sunday

6 June 18356 22754 15419 Friday Tuesday

7 July 22465 26138 18113 Friday Tuesday

8 August 24331 27524 17516 Saturday Wednesday

9 September 20193 23821 16427 Friday Tuesday

10 October 17822 22415 15373 Saturday Tuesday

11 November 16721 21453 14495 Friday Wednesday

12 December 15471 18430 4376 Friday Wednesday

35

Monthly traffic values / Monthly

l lowest and highest traffic values

Year 2016, Month

MADT Monthly highest daily traffic value Monthly lowest daily traffic value

Traffic analysis for 2016 – 2017

No. Month 2016 2017 % increases of

traffic values 1 January 15311 15186 -0.82 2 February 16774 17009 1.40 3 March 14840 15628 5.31 4 April 16412 16924 3.12 5 May 16556 17430 5.28 6 June 18356 19631 6.95 7 July 22465 23322 3.81 8 August 24331 25127 3.27 9 September 20193 20897 3.49 10 October 17822 18712 4.99 11 November 16721 17311 3.53 12 December 15471 16945 9.53 13 Year total 17938 18677 4.12

Physical vehicles Physical vehicles

36

2016 – 2017 traffic values

Axis Title

2016 traffic values 2017 traffic values % traffic increase in 2017

The analysis of the road network in the project area covered the

following: - DN 1A - basically, an alternative to DN 1 for heavy traffic in summertime, but also for motor vehicle traffic when traffic values reach very high values across DN 1; - DN 71 - itcan constitute an alternative, as well. Given its precarious technical state, and the fact that this road option increases the trip duration by at least one hour, DN 71 was subject to summary analysis; - DN 73 - anational road intersected by DN 1.

According to the current datapresented below:

ISAF (Rail Signalling and Automation Enterprise) (MCSD - data collection and storage module) METERS Annual summary by station–years 2013 – 2018

Station no.

Road no.

Position KM

MADT 1 MADT 2

MADT 3

MADT 4 MADT 5 MADT 6

MADT 7

MADT 8 MADT 9 MADT 10

MADT 11

MADT 12

AADT

Year

88 71 85.145 2437 2437 2383 2534 2854 3023 3115 3409 3681 3296 3121 3081 2948 2013

88 71 85.145 2372 2505 2745 2918 3080 3264 3589 4148 3656 3319 2918 2715 3102 2014

88 71 85.145 2551 2623 2632 3165 3255 3249 3699 4189 3558 3222 2928 3106 3181 2015

88 71 85.145 2554 2704 2860 3240 3399 3487 3994 4178 3656 3359 3055 3166 3304 2016

88 71 85.145 2800 2812 2861 3182 3279 3407 3729 4018 3175 3421 2080 3102 3156 2017

88 71 85.145 2766 2606 2715 2018

718 1A 120.850 3642 3742 3894 4547 5112 4923 5610 6341 5287 4899 4770 4324 4758 2013

718 1A 120.850 3746 4075 4517 4778 5108 5328 5734 6192 5545 5242 4626 4350 4937 2014

Traffic values in p hysical vehicles

Traffic values in pvehicles

37

• With regard to DN 71 road, we are noticing a lack of attractiveness caused, among others, by the precarious technical stateand the required trip duration, should it be considered an alternative to DN1; • With regard to DN 1A road, we shall mention the traffic composition which involves 25 - 35% heavy traffic. However, the most significant aspect is that this road hosts traffic loads above average that have been increasing by6-7%, on a yearly basis, since 2016; • With regard to DN 73 road, during the 2014 - 2016 interval, we also see a significant percentage growth of annual traffic, namely by 6%. For 2017 and 2018 there is no complete data as the road has been undergoing rehabilitation works.

► Transportation model - Visum. In order to elaborate long-term transportation strategies, CNAIR

(National Company for Road Infrastructure Administration), by means of CESTRIN (Centre for Road Technical Studies and Computer Technology) has commenced the creation of a road transportation model.

The current road transportation model is executed based on the transportation model that underpinned GTMP, using the transportation

718 1A 120.850 4327 4304 4349 5131 5336 5352 6210 6586 5505 5395 5055 5173 5227 2015

718 1A 120.850 4225 4476 4907 5492 5535 5865 6708 7347 6336 5507 5185 5163 5562 2016

718 1A 120.850 4716 4745 5172 5753 5927 6160 6959 8110 6509 6014 5304 5507 5906 2017

718 1A 120.850 5105 4875 4780 2018

120 1A 138.338 1212 1152 1126 1507 2035 2001 2302 2889 1909 1809 1719 1624 1774 2013

120 1A 138.338 1123 1396 1501 1568 1891 1905 2006 2167 1940 1767 1570 1477 1693 2014

120 1A 138.338 1232 1485 1397 1809 2038 2881 2168 1649 1710 1666 1672 1549 1771 2015

120 1A 138.338 1302 1420 1293 1550 1755 1999 2706 3317 2220 1816 1756 1623 1896 2016

120 1A 138.338 1577 1405 1413 1572 1619 1683 2302 1803 2583 2401 2077 2213 1887 2017

120 1A 138.338 2294 1919 1677 2018

489 1A 178.000 1286 1340 1353 1683 2018 1950 2213 2688 1949 1756 1737 1456 1786 2013

489 1A 178.000 1404 1656 1823 1796 1985 2055 2289 3235 3084 2175 1836 1619 2080 2014

489 1A 178.000 1675 1802 1773 1920 2143 2100 2568 2914 2113 2076 1963 1852 2075 2015

489 1A 178.000 1549 1849 1912 2031 2190 2327 2847 3351 2498 2114 1877 1956 2208 2016

489 1A 178.000 1713 1754 1908 2021 2147 2758 3004 3894 2778 2344 1976 2116 2368 2017

489 1A 178.000 1997 1924 1790 2018

38

demand and supply data specific to GTMP. It shall be made available to the interested parties in a controlled manner.

Further on, we have a general outline of the transportation model, followed by its more detailed description. Transportation model. Network

The model features:

39

Calibration and validation

Traffic databases:

• National road traffic census - CESTRIN • Origin-Destination surveys - CESTRIN • Data from traffic meters pertaining to the motorway network • Traffic data from traffic meters pertaining to the national road network

Correlation between the measured traffic data and modelled traffic data.

40

shar

e

km Initial Final

shar

e

km Initial Final

Caption Screenlines

Belts

41

Screen line

Modelled (vehicles)

Reviewed (vehicles)

Difference %

GEH

vehicles

Maximum difference % Modelled (vehicles)

g. Calibration, Validation ● Journey times validation

Measured values Modelled values Route Distance (km)

Duration (h:min) Average speed

(km/h)

Duration (h:min) Average speed

(km/h)

Time difference in percentages

Speed difference in percentages

Arad-Bucharest 564 8:02 70.2 7:55 71.2 -1.45% -1.45% Braila - Bra şov 261 4:30 58.0 4:28 58.4 -0.74% -0.74% Braila - Focşani 90 1:30 60.0 1:26 62.8 -4.44% -4.44% Braşov — Bucharest 179 3:11 56.2 3:20 53.7 4.71% 4.71% Braşov —Cluj Napoca 281 4:35 61.3 4:33 61.8 -0.73% -0.73% Braşov —Piteşti 140 2:39 52.8 2:41 52.2 1.26% 1.26% Bucharest - Constanta 230 2:29 92.6 2:26 94.5 -2.01% -2.01% Bucharest - Giurgiu 65 1:10 55.7 1:00 65.0 -14.29% -14.29% Bucharest - Sibiu 266 4:20 61.4 4:16 62.3 2.40% -1.54% Bucharest - Suceava 444 6:50 65.0 6:42 66.3 -1.95% -1.95% Cluj Napoca - Oradea 157 3:00 52.3 3:20 47.1 11.11% 11.11% Cluj Napoca - Satu Mare 176 2:48 62.9 3:00 58.7 7.14% 7.14% Craiova - Braşov 263 5:00 52.6 4:41 56.2 -6.33% -6.33% Craiova - Timi şoara 340 4:45 71.6 4:33 74.7 -4.21% -4.21% Iaşi -Tg. Mureş 322 5:29 58.7 5:49 55.4 6.08% 6.08% Braşov - Bacau 180 3:27 52.2 3:24 52.9 -1.45% -1.45%

Difference<15% 100% 100%

42

Flow-speed curves 5 such flow-speed curves have been used: - Motorways - National roads - Roads falling under other categories than motorways and national roads - 2 types of urban roads

Cur

ve s

peed

(km

/h)

saturation Network impedance Impedance as a function of Generalized Cost [time units]: = (time) + (vehicle operating cost per km x distance / value of time) + (road user charges / value of time) Assignment method: Equilibrium LUCE with a gap of 10-7 Forecast Elementstaken into account in formulating the traffic forecast

Flow - speed

Curve speed1 (M - motorway)

Curve speed2 (DN - national road)

43

Planning of future projects earmarked for implementation.

Population

GDP Passenger cars

Traffic

Lorries

Passenger no. evolution

44

Traffic values forecast based on the Transportation Model This data was used in the previous analyses. This model, as part of the procurement procedure, shall be made available to the tenderers at CESTRIN, in a controlled environment, so that they should not have to conduct their own traffic studies starting from scratch, thus saving time, providing evident transparency and gaining trust in the process.

Mean traffic values at a motorway level Ploieşti – Bucharest L = approx. 62 km

Year Car LGV HGV Bus Total 2020 8,098 1,170 1,942 144 11,353 2025 9,717 1,404 2,330 173 13,623 2030 11,661 1,684 2,796 207 16,348 2035 13,993 2,021 3,355 249 19,618

45

2040 16,791 2,425 4,026 299 23,541 2045 17,631 2,547 4,227 314 24,718 2050 18,512 2,674 4,439 329 25,954 2055 19,438 2,808 4,661 346 27,252 2060 20,410 2,948 4,894 363 28,614 2065 21,430 3,095 5,138 381 30,045 2070 22,502 3,250 5,395 400 31,547 2075 23,627 3,413 5,665 420 33,125 2080 24,808 3,583 5,948 441 34,781

Ploieşti - Braşov (Râşnov) L = approx.. 107 km

Year Car LGV HGV Bus Total 2020 0 0 0 0 0 2025 13,949 1,170 1,825 242 17,186 2030 16,739 1,404 2,190 291 16,980 2035 20,086 1,685 2,628 349 18,075 2040 24,104 2,022 3,153 419 18,820 2045 28,924 2,427 3,784 503 19,743 2050 30,370 2,548 3,973 528 37,420 2055 31,889 2,676 4,172 554 39,291 2060 33,483 2,809 4,380 582 41,255 2065 35,158 2,950 4,599 611 43,318 2070 36,915 3,097 4,829 642 45,484 2075 38,761 3,252 5,071 674 47,758 2080 40,699 3,415 5,324 707 50,146

4. Main technical, financial and contractual featur es of the Ploie şti - Comarnic – Bra şov (Cristian) motorway project

4.1. Technical description of the project (the moto rway) The mainobjectives thatunderpinned the definitive technical solution, as was also described in the previously drawn up Feasibility Study, took into account the following aspects:

• theoccupation of minimal land areas and removing from the entire chain poorly productive or unproductive lands;

46

• the demolition of existing buildings was avoided and, where this was not possible, the technical solutions adopted limited such demolitions to a minimum required amount; • preserving the connections between the motorway and the main traffic-generating areas, as well as the continuity of any sort of connections among functionally unified areas, disrupted by the motorway route; • the construction of additional access routes to the motorway for intervention teams deployed in emergency cases, from the existing road network; • assessing all factors with a negative impact upon the environment and adopting technically and economically feasible solutions intended to diminish the negative impact; • adopting solutions that would allow the future growth of motorway traffic capacity; • adopting, as far as works of art are concerned, building solutions that would allow inspections and the performance of maintenance and current repair works at minimal costs; • architectural blending within the area crossed by the motorway.

Brief description of the main intended works The motorway was divided into the following sectors: - Sector 1 - Ploiesti-Comarnic, km 0+000 - km 48+600, - Sector 2 - Comarnic-Predeal, km 48+600 - km 84+800, - Sector 3 - Predeal- Braşov (Cristian), km 84.4 - km 106.2.

Brief description of the technical features of sector1 – Ploieşti -

Comarnic

Across this sector, the motorway route generally follows the North - West course, running in parallel with and as close as possible toBucharest-Braşov railway, so as to reduce the impact caused by the defragmentation of agricultural lands.

The Ploieşti-Comarnic sector continues with the crossing of DN1 and

Ploieşti Vest switch yard, with an out-of-level passage about 1-km long. Further on, it runs in parallel with DN1, about 300 m away from

Ploieşti Vestdistrict. In thearea of km 6, the route runs about 250 m away from the Aero

Club near Strejnicu locality and by-passes the military firing range to the East. The distance between the motorway and Strejnicu is about 700 m.

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Moving on, in the area of km 7, the motorway intersects Ploieşti – Târgovişte railway. In the area of km 8+300, the motorway crosses DN72, this being the point for which a proposal to set up a road node was launched.

Further on, the route runs across agricultural lands, in parallel with

Bucharest– Braşov railway. In the area of km 12, the motorway passes south of Buda locality, about 500 - 750 m away from it. I the area of km 13, the motorway intersectsDJ 1011, which it reinstates.

Over a distance of about 150 m, in the area of km 14+700, the

motorway runs in the immediate vicinity of Buda Forest. From this area, the motorway runs in parallel with Bucharest– Braşov

railway, to the left, and DN1, to the right (at distances between 200 m and 1 km).

From Băicoi (the area of km 21+500 - km 23), situated about 1 km

away from the motorway, the motorway route continues to run closer and closer to Prahova river course, which is to the left of the railway and the motorway. DN1 remains to the right of the motorway.

The lands rises to elevations of 300-400 m, across a landscape the

comprisescrops alternating with orchards. Between Km 23 and Km 25, the motorway runs to the east of Floreşti

locality, situated more than 1000 m away from the motorway. In the area of Floreşti, the route was deviated, moving away from Bucharest– Braşov railway so as not to affect the railway station and the other structures in the area.

In the area of km 26+100, to the right of the motorway, lies Cap Roşu

locality, about 200 m away from the motorway. Between Băicoi and Cap Roşu localities, the motorway route

intersects a series of local roads. To secure their continuity and not to disrupt the activities of riparian inhabitants, out-of-level intersections will be set up in places where the motorway runs into local roads: DC (communal road) 113 (the area of km 23+600), DJ720 (the area of km 24+350) and DC111 (the area of km 26+150).

From the area of Băneşti locality (km 32), the motorway route enters

Prahova Valley where, given the existence of numerous industrial facilities, utilities and built-up areas, but also the land with increasingly more off-road

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areas, the route generally runs along the floodplain of Prahova River. Băneşti lies to the right of the motorway, about 500 m away from it.

On the territory of Băneştitownship, before the entry in Câmpina

locality (km 31), a road node was designed so as to ensure access to and from the industrial area of Câmpina Municipality.

In the area of Băneşti locality, the motorway route was designed in a

manner that would not affect the designed landfill. Additionally, access to the landfill site shall be secured.

At the exit from Băneşti, the motorway route meets the confluence of

Prahova and Doftana rivers, which it crosses in the area of km 32 - km 32+700.

From the confluence with Doftana river, Prahova river bed adapts to

the Subcarpathian specific relief, with its elevated slopes and coarse riverwash, favourable to gravel pit exploitations, but with eroded banks poorly covered by vegetation, which require bank protections. This landscapebecomes more prominent towards Breaza.

In the Câmpina - Poiana Câmpina area, the route runs between

Prahova river and Bucharest– Braşov railway, along the river floodplain. Near Poiana Câmpina locality, the river bed narrows down, also displaying an old bank wall(currently degraded), near S.C. PITROUTILAJ S.A. and S.C. CIREX S.R.L. units.

The route area comprises several industrial units and numerous

network of facilities. In reply to the request to avoid any impairments of the industrial units,

filed by Poiana Câmpina Mayor’s Office, the designer proposed the construction of a bridge along Prahova River bed, about 900 m long (approximately at km 34+600 - km 35+500).

Poiana Câmpina locality is situated to the left of the motorway. For its

most part, it spreads beyond the railway, between km 32 and km 38. The motorway runs in the vicinity of built-up areas in Poiana Câmpina.

Câmpina Municipality spreads to the right of the motorway, beyond

DN1, between 200 m and 750 m away from the motorway. Between Cornu and Breaza localities, the route still runs in parallel

with DN1, between the railway and DN1, closer to the railway. Bordering the

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motorway we find Cornu (to the right, beyond DN1, at least 500 m away from the motorway) and Podu Vadului (to the left, beyond the railway, the inhabited areas lying in some places less than 100 m away from the motorway) localities.

Between km 42+590 and km 43+695, the motorway crosses, by

means of a bridge and an upper passageway, Prahova Rover andBucharest – Braşov railway. Breaza locality spreads to the left of the motorway, between a few tenths of meters and 300 m away from it.

Between Nistoreşti and Breaza de Sus localities, in the area of km

46+900 - km 47+500, the motorway route crosses once again Bucharest – Braşov railway and Prahova River. Nistoreşti lies to the left of the motorway, beyond DN1.

After the area where Prahova River is crossed, the route runs along

the corridor bordered by DN1 national road, Prahova River and the railway, in parallel with these up to the southern limit of Comarnic locality.

This is where the Ploieşti-Comarnic sector of the motorway comes to

an end. Ploieşti - Câmpina section: - platform width 26.00 m, - middle area 3.00 m, - road surface 4x3.75m, - emergency stop lanes 2x2.50 m, - shoulders 2x0.50 m, - guiding strips 4x0.50 m. Câmpina-Comarnic section: - platform width 23.50 m, - middle area 2.50 m, - road surface 4x3.50m, - emergency stop lanes 2x2.50 m, - shoulders 2x0.50 m, - guiding strips 4x0.50 m. Main intended works: ► Road nodes– Node on Ploieşti Vest Beltway at km 10 and Băneşti

Nodeat km 31; ►Bridges - 6 Bridges over Prahova river and SaruluiValley;

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► Passageways over the railway - 6 passageways at Ploieşti switch yard, CF (railway) 302 Ploieşti-Târgovişte, CF 300 Bucharest - Braşov; ► Passageways over classified roads - 12 passageways; ► Reinforcement works: - batter protection for embankment with a height in excess of 3.5 m; - anti-capillary layer from ballast, h=50 cm, for anembankment higher

than 3.5 m; - reinforcements of embankments with h=9-12m; - earth breast wall for embankments in the railway area, - buried foundations from concrete bulwarks in the railway area, - Câmpina - Comarnic section–reinforced earth and concrete batter walls, setup with gabions against torrents; ►Hydro-technical works A wall for the wet batter of the motorway embankment: - stone packing built of crushed stone onto a concrete girder; - stone packing with filled joints, made of prefabricated slabs onto a

concrete girder; - stone packing built of crushed stone, with a prism made of rockfill at

the foot of the batter; - stone packing with filled joints, made of prefabricated slabs and

concrete prefabricated slabs filled with ground cover; - protection with gabions; - breast wall with elevation and concrete foundation; - bottom sill made of gabions; - concrete chocking sill; - river bed closing dams; - river bed adjustment; - stone packing from monolithic concrete. Brief description of the technical features of sect or 2– Comarnic-

Predeal: • length: 36.20 km; • bridges, overpasses and viaducts over the motorway: 38; • speed, by design: 80 km / h and 120 km / h; • class change: E (V80; A30). Comarnic-Predeal section: - platform width 23.50 m, - middle area 2.50 m, - road surface 4x3.50m, - emergency stop lanes 2x2.50 m, - shoulders 2x0.50 m, - guiding strips 4x0.50 m.

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Main intended works: ► Road nodes – Comarnic Node km 49+600, Sinaia Node km 62 and Buşteni Node km 70+400;

► Bridges – 22 Bridges over water courses, the most important of which are: Prahova, Valea Seciului, Valea Măgarului, Valea Largă, Valea Câinelui, Valea Rea and Valea Grecului; ► Viaducts over valleys – 3 Viaducts; ► Passageways over the railway – 7 passageways over CF 300

Bucharest – Braşov; ► Passageways over classified roads - 4 passageways; ► Tunnels – 18 tunnels for a total length of approx. 2600 m; ►Reinforcement works: - earth breast walls for embankments, - concrete breast walls for embankments, - setup with gabions against torrents;

► Hydro-technical works Protection of batters against water-caused degradations: - Protection of batters with prefabricated slabs, - Protection of batters with stone packing with filled joints, - Protection of batters with gabions.

The route of Comarnic-Predeal sector from Ploieşti – Braşov (Cristian)

motorway starts in Comarnic town, at km 48 + 600. The route crosses Prahova river floodplain, with 4 river crossing points in areas where Prahova cannot be deviated due to land conditions (CF or slope). In order to avoid the very difficult course of Prahova Valley, the motorway route leaves Prahova floodplain and reaches the left flank, crossing the railway with overpasses.

Km 52 is the starting point of Sinaia town passageway towards the

motorway. The area at km 62 is the cross-section from the right flank towards the left flank of Prahova Valley. The passageway benefits from a bridge / crossing over Prahova river and CF, as well as an overpass on top of the motorway, leading towards National Road 1.

In the area of the passageway from Sinaia resort, the motorway route lies to the left of Prahova. Further on, up to the end of Sinaia area and into the subsequent Sinaia-Poiana łapului area, due to the newly built-up area, called Cumpătul, and the old and the new buildings, the route runs through Prahova river floodplain and then, by means of two passenger overpasses suspended above National Road 1, it aligns to the right flank.

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In the area where the motorway crosses Poiana łapului and Buşteni rivers, as the route goes through Prahova floodplain, the river water could not be deviated over extended areas. The route that resulted is difficult, particularly in the area of Buşteni Paper Factory, with curves having a 250-300 mspan and several bridges along Prahova river, one of which is 1,100 m long.

Further on, the motorway route crosses (by means of a bridge above the passageway) Prahova river, CF Bucharest-Brașov and DN1 and aligns to the right flank of Prahova Valley. Over a 1 km section, the motorway runs along the CF course, then switches to the flank, up to the final section, the motorway route falling between the Prahova river’s flank and bed. This part comprises the motorway section that crosses Azuga resort, as well as that between Azuga and Predeal. The final section, almost 1 km long, represents the portion where Ploieşti - Brașov (Cristian) motorway aligns towards the left flank of Valea Râșnoavei river, following the course of national road 73A Predeal-Râșnov. The motorway route alignment to Valea Raşnoavei makes use of a curve with a 300 m span.

The layout of the connections between theComarnic-Predeal sector

and the existing road network shall be carried out according to the feasibility study, in the vicinity of Comarnic, Sinaia, Buşteni - km 131, Predeal localities. The road interchanges are:

- Sinaia Interchange – Sinaia connection was built to allow access from the streets to the motorway;

- Buşteni – Buşteni connection - the exist towards Sinaia - was built, allowing vehicles to access the motorway; - Predeal –Predeal connection was built to allow vehicles to access the motorway.

The motorway route crosses a series of roads (lands, national roads),

thus disrupting their continuity. The total number of disrupted intersections from the current road network is three.

- Sector 3, Predeal- Braşov (Cristian). Brief description of the technical features of Predeal-Braşov (Cristian)

section: • length: 21.80 km; • bridges, passageways and viaducts along the motorway: 19; • speed, by design: 80 km / h and 120 km / h; • class change: E (V80; A30).

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Predeal-Cristian section: - platform width 23.50 m, - middle area 2.50 m, - road surface 4x3.50m, - emergency stop lanes 2x2.50 m, - shoulders 2x0.50 m, - guiding strips 4x0.50 m. Main intended works: ► Road nodes – Predeal Node ► Bridges – 5 Bridgesover water courses, the most important of which are: Râul Mare, Valea Golomos and Valea Drihiul; ► Viaducts over valleys – 11 Viaducts; ► Passageways over railways – 1 passageway over CF Braşov –

Zărneşti; ► Passageways over classified roads - 9 passageways; ► Reinforcement works: - earth breast walls for embankments, - concrete breast walls for embankments, - setup with gabions against torrents. The Predeal-Cristian motorway route starts after Predeal intersection

and runs as follows: - to the right of national road 73A; - to the left of national road 73A; - to the west of Pârâul Rece resort, to the right of national road 73A; - to the left of national road 73A up to the intersection with Râşnov

river; - between the populated area and the Chemical Factory in Râşnov; - the motorway shall unevenly cross national road 73A and CF Braşov

- Zărneşti; - outside Râșnov town, close to the intersection with county road 112B

(Cristian-Vulcan). This motorway sector route runs across the entire Braşov county. The

section length is 21.8 km. An analysis of the motorway execution has shown that the motorway

shall be built in Cristian village, where it will link to the existing road network. Linking the motorway to the existing road network has 2 mainelements, which are:

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- connecting belt–new road profile 7/12, which surrounds Cristian village and crosses County Road 112, National Road 73B and National Road 73; the connecting belt then splits away from the motorway over a radius of 1000 m. Further on, the route crosses a plateau area and Ghimbasel rivulet (21 m bridge) andnational road 73B at km 1 + 500, over a radius of 1000 m, after which it once again crosses a plateau area and connects to national road 73. - rehabilitation of national road 73B at the 7/12 profile, from the de la intersection of the lane with it at km 1 + 500 to the intersection with National Road 1, at km 4 + 845. Along the Predeal-Brașov (Cristian) section, there is: - Râşnov interchange-in order to allow vehicles to access the motorway, an intersection in Râșnov was secured, around the existing intersection between national road 73 and national road 73A; to create this interchange, a passageway was designed above the beltway, with a total length of 119.00m. For the Comarnic – Braşov (Cristian) section, land lot 2, Predeal –

Cristian sector, Braşov County Council issued in 2006 Town Planning Certificateno.1516/02.03.2006 with a 24-month validity. Consequently, Cristian and Ghimbav Mayor’s Offices within the territory of which these projects were to be developed issuedrelated permits.

In 2008, in compliance with Law no.198/2004 on certain measures

prior to motorway and national road construction works, as subsequently amended, GD no. 426 was issued, on commencing the procedures of expropriation in regard to the private residences located within the location of the public utility work entitled “Construction of Ploieşti – Braşov (Cristian) motorway, Comarnic-Braşov (Cristian) section”, on the territory of Râşnov and Cristian localities, Braşov county.

Pursuant to this decision, areas of land within Râşnov TAU (territorial

administrative unit) and Cristian TAU were expropriated. In 2014, in compliance with Law no. 255/2010 on expropriation on

grounds of public utility, required in order to execute objectives of national, county and local interest, as subsequently amended and supplemented, GD no. 73 was issued, on commencingthe procedures of expropriation in regard to the private real estate units located across the expropriation corridor of the public utility work of national interest entitled “Construction of Ploieşti – Braşov (Cristian) motorway, Comarnic-Braşov (Cristian) section + junction”. Pursuant to this decision, areas of land within Râşnov TAU and Cristian TAU were expropriated.

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In 2015 CNAIR commenced the public bid procedure in order to

award a works contract whose scope of works was “Design and execution of Bucharest – Braşov (Cristian) motorway, Comarnic – Braşov (Cristian) section, land lot 2: Predeal – Cristian sector, km 162+300 - km 168+600 and connecting road”. As a result of disputes, this procedure was finally completed in 2017, and on 02.10.2017, CNAIR SA concluded contract no. 92/75428/02.10.2017 with the joint venture between S.C. ALPENSIDE SRL and S.C. SPECIALIST CONSULTING SRL (insolvent).

The object of this works contract involves the execution of 6.3 km of

motorway and a connecting road that would link the motorway sector to the network of existing roads.

In September 2017 a new viewing of the future motorway layout was

carried out and meetings took place with representatives of Râşnov and Cristian Mayor’s Offices. Following these meetings:

- the representatives of Râşnov Mayor’s Office confirmed that no building permits were issued in relation to the expropriated corridor. - the representatives of Cristian Mayor’s Office reminded the fact that, across the connecting road sector, there are buildings that would be affected by the construction of the new road and, consequently,Cristian Mayor’s Office would no longer be able to support that endeavour. In order to clarify this situation, as early as 2015, CNAIR - SA

stipulated in the Tender Book pertaining to the bidding procedure for the works contract that the Contractor, if it were not possible to avoid exceeding the limits of the preferable route, should produce design solutions that take into account minimising the effects upon the buildings (dwellings, etc.).

On 11.04.2018, CNAIR - SA issued the Commencement of work

notice, subsequent to which the Contractor began the design stage (with a duration of 6 months). In order to solve the issues presented by Cristian Mayor’s Office, the Contractor adapted the technical solution in the area of the roundabout between the connecting road and DN 73B, so that the existing buildings in that area should no longer be affected.

Pursuant to the documentations submitted by the Contractor and

permits no. 6567/18.05.2018 and no. 3672/02.05.2018 issued by Râşnov Mayor’s Office and Cristian Mayor’s Office, respectively, Braşov County Council issued Town Planning Certificate no. 31/09.02.2018.

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In conclusion, following the on-site verification and all the information obtained, there are no other town planning certificates issued for other construction works within the 6.3 km of motorway.

Other intended works: TRAFFIC SYSTEM Several traffic system types were studied. The optimum one was

deemed the following: - 5 cm asphalt concrete as a wearing course, - 5 cm asphalt concrete as a connecting layer, - 7 cm asphalt mixture as a base coat, - 30 cm stabilised ballast, - 30 cm ballast, - layer with variable shape – thickness. WATER DRAINAGE SYSTEM: By design, the motorway shall benefit, over its entire distance, from

works were intended to ensure the drainage of rainfall. These are: reinforced and earth ditches and gutters and footbridges.

ITS An intelligent traffic system is set to be implemented over the entire

motorway span. SERVICE AREAS Along the course of Comarnic-Brașov motorway the following parking

spaces and complete service areas shall be set up: - a maintenance centre in the area that is part of the Raşnov

intersection, at km 62+150; - 2 maintenance bases, at km 30+950(Băneşti Node) and at km

62+145 (Râşnov CIC (Citizens Information Centre)); - 2 S3-type service areas - at km 25+550 and at km 36; these comprise: parking spaces, small tables and chairs, WC, a gas station, a motel anda restaurant; - 1 S1-type service area -at km 54+175. This comprises: parking spaces, small tables and chairs, WC, a gas station; - 4 short-term parking lots at km 16+100, 39+700,72+325 and

86+300.

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FENCING At the edge of the road territory, on both sides of the motorway and

exclusively excluding areas with bridges, viaducts or passageways, wire fencing shall be set up. The fence height shall vary between 1.4 and 2.6 m.

Environmental protection works

- Works were stipulated for the protection of water and soil quality: sediment basins, fat and hydrocarbon separators, dispersion basins, epuration facilities to be included in service areas, maintenance bases and coordination centres. - Works were stipulated for sound protection: protection screens. - Works were stipulated for the protection of fauna: fencing and

passageways. 4.2. Current technical conditions (placing the obje ctive under the general/sectoral/regional policies, current legisla tion, international agreements pursuant to which executin g the investment objective is mandatory/implied etc.) Historical context As we have also mentioned above, as part of the history of strategies

concerning the development of the large infrastructure, we see that this motorway had been declared a necessary objective to implement by Romania, as early as the first strategies of the kind, namely since 1970.

The following shall be reminded: � Decision no.947 from August 14, 1990 on the “Modernisation of the

existing road network and construction of motorways in Romania”, published in the Official Gazette no. 102 from 1990. Bucharest– Brasov Motorway was included, as well. (The study was elaborated by the National Institute for Transportation Design, an institute which subsequently becomes, after 1990, IPTANA S.A.).

� Law no. 71/1996 on the approval of the National Territory Set-up Plan - Section I - Traffic routes.

� Law no. 363/2006 on the approval of the National Territory Set-up Plan - Section I - Transportation networks. In the current context

� Ploiesti – Brasov motorway is comprised in the policy document entitled GTMP – General Transportation General, a document approved as per a Government decision, as well as in Law no. 363/2006 on the approval of the National Territory Set-up Plan - Section I - Transportation networks.

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In an European context and especially after the acc ession to the

European Union (EU) REGULATION NO. 1316/2013 OF THE EUROPEAN

PARLIAMENT AND THE COUNCIL from December 11, 2013, on establishing the Connecting Europe Facility, amending Regulation (EU) no. 913/2010 and repealing Regulations (EC) no. 680/2007 and (EC) no. 67/2010, stipulates:

• In order to achieve smart, sustainable and inclusive growth and to stimulate job creation in line with the objectives of the Europe 2020 Strategy, the Union needs an up-to-date, high-performance infrastructure to help connect and integrate the Union and all its regions, in the transport, telecommunications and energy sectors. Those connections should help improve the free movement of persons, goods, capital and services. The trans-European networks should facilitate cross-border connections, foster greater economic, social and territorial cohesion, and contribute to a more competitive social market economy and to combating climate change.

• The aim of the creation of the Connecting Europe Facility (CEF) established by this Regulation is to accelerate investment in the field of trans-European networks and to leverage funding from both the public and the private sectors, while increasing legal certainty and respecting the principle of technological neutrality.

• In its Communication of 20 July 2010 entitled "Towards a European road safety area: policy orientations on road safety 2011-2020", the Commission set a framework for policy actions in favour of safe infrastructure as a key element to reduce road casu alties by 50 % by 2020 . The CEF should therefore ensure that requests for Union funding comply with the safety requirements, recommendations and targets established in all relevant Union road safety law. The evaluation of the performance of the CEF should take into account the reduction of casualties on the road network of the Union.

• On 28 March 2011, the Commission adopted the White Paper entitled "Roadmap to a Single European Transport Area - Towards a competitive and resource efficient transport system" (hereafter called the "White Paper"). The White Paper aims at reducing the greenhouse gas emissions (GHG) of the transport sector by at least 60 % by 2050 compared to 1990. As far as infrastructure is concerned, the White Paper aims at establishing a fully functional and Union-wide multimodal TEN-T “core network” by 2030. Interoperability could be

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enhanced by innovative solutions that improve compatibility between the systems involved. Basically, implementing the Project does not require fundamental

changes from an institutional standpoint. The PPP contract is virtually considered a PPP contract for public

works, considering that its scope of works is, essentially, the conclusion, early during the contract term, of a contract for works with a significant value, and the services to be rendered by the statutory undertaker (motorway operation and maintenance) can only be provided after the completion of these works and not by exclusively using the current facilities.

As regards the institutions playing a part in signing and the

performance of the contract, in accordance with the legislation in force, with reference to the contracting authority, the PPP contract shall be concluded by the Ministry of Transportation.

The process of monitoring the contract development shall mainly be

carried out by the National Commission for Strategy and Prognosis. Regarding the private partner’s capacity, in accordance with

international practice, it shall be undertaken by a special purpose vehicle (SPV) of Romanian residence, set forth by the individual tenderer or the consortium the contract shall be awarded to, following the awarding procedure.

The private partner shall secure 75% of the project funding (by way of

contributions to the registered capital/loans from shareholders and loans from credit institutions) and shall manage the construction and operation activities, mainly by way of subcontracting to another contractor / operator.

The environmental permit for Ploieşti - Brașov (Cristian) motorway

was issued by the National Agency for Environmental Protection on March 20, 2007. 5. Studies and analyses regarding the manner of exe cuting the project

5.1. Complex project comprising design services, co nstruction, maintenance and operation works under a toll motorw ay regime – Bucharest - Bra şov (Râşnov) Motorway The duration of the services and works pertaining to the Project is 50

yearsand further on entails the same strategy we find in the previous Substantiation Study, namely an extended period of time intended for the recovery of investment-related costs, using an approach that is logic and

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correlated with the extended duration required to repay these types of investments that involve very high costs.

The duration of the services and works pertaining to the Project

entails going through 2 stages, namely: STAGE 1 Design services, maintenance and operation works under a public-

private partnership regime–Contract duration - 24 years STAGE 2 Maintenance and operation works under a toll motorway regime over

a 20-year period. This division into 2 stages focuses on the following aspects:

• The design and construction of the motorway over a 4-year period, followed by a 20-year maintenance and operation period. Given the average depreciation period for construction works related to motorways, which is 50 years, we ascertain that, at the end of the contract term, the motorway will retain a residual value of approximately 60% of the cost required by the construction works; • Considering the depreciation period of approximately 29 years after the end of the contract and a much longer life span for most of the works (predominantly of those with the highest costs),project sustainability in continuation of stage 1 is being explored by means of anew stage, stage 2, during which the motorway should be exploited as a toll motorway, so that a cost depreciation should also affect the residual value of the construction at the end of stage 1, without the latter being borne during stage 1, a stage when traffic values are not elevated yet, whereas the construction would require an immediate budgetary effort without the subsequent recovery of the invested amounts; • The financial closure of stage 1 can be achieved using the residual value of the investment at the end of the contract term, but not via the total depreciation of the investment. A proposal was made, in that respect, to introduce an annual payment over the period corresponding to stage 1, in order to contribute to the investment depreciation, a payment intended to cover as much as possible of the

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residual value at the end of the contract so that the private partner, in a scenario with traffic values below the stage 2 traffic values, should be able to obtain a reasonable profit and, not least, these payments/contributions should be recovered during stage 2; • As also detailed in the diagram below, conducting a 50-year depreciation over a 20-year period is not desirable, given that traffic values will increase significantly beyond 2043; • Traffic values at the end of stage 2 entail a slight recovery of the residual value at the end of the contract term, during stage 1, even if a possible tax loosening is considered for the 2043 – 2068 period; • These payments that contribute to the investment depreciation and are recovered during the second stage will also dramatically reduce the traffic risk, whose variations affect approximately 40% of the investment value instead of the entire investment; • This strategy relies on the fact that current traffic values are unable to fully support the depreciation of the construction works required by Ploieşti – Bucharest motorway and, in any case, the 20-year period does not cover the standardised depreciation interval, namely 50 years.

Linear depreciation versus the traffic increase forecast

Res

idua

l val

ue in

T

raffi

c va

lues

AA

DT

Axis Title

At the end of the contract term, during stage 1, we have a

residual value of the motorway-related construction works of 60% of their value. In this context, we deem it suitable to introduce the

Maintenance and operation Maintenance and

STAGE 1 Operation STAGE 2

Residual value

AADT physical

vehicles

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depreciation contribution so that the private partner should be able to obtain a profit. At the same time, having a stage 2 in continuation of stage 1 means, for the financial model, that over the period following stage 1 the investment depreciation will continue until the 50-year mark after the start of operation.

Practically, stage 1 will have its financial closure with a residual value of the construction at the end of the contract (but not with 0 depreciation), whereas the construction will be subsequently exploited under a toll regime, so that the contribution considered to aid investment depreciation, as well as in terms of residual life span at the end of the contract, during the first stage, should be recovered in the second stage.

The following aspects are taken into account for the public-private partnership:

a) Bucharest - Ploieşti Motorway – maintenance and operation 2019-2043 - the public partner contributes with 25% of the maintenance and operating costs;

Initial maximum tolls(to subsequently be subject to indexation according to the contract)

Toll/100 ALLOWED MAXIMUM Car LGV HGV Bus

Toll (Euro)

6.3 8.8 12.6 12.6

b) Ploieşti - Braşov (Râşnov) Motorway – design and execution - 4 yearsand maintenance and operation - 20years, 2019-2043. - The public partner contributes with 25% of the investment cost and the maintenance and operating costs; - The private partner contributes with 75% of the investment cost and the maintenance and operating costs; - An annual payment during the operation period, not exceeding 55 mil./Euro. This payment is a contribution aiding investment depreciation, given that the traffic volume and an operating period of only 20 years, in comparison with the average 50-year duration required to allow the depreciation of motorway-related construction works, will not allow full investment depreciation over the

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term of the contract, while also securing a reasonable profit for the private partner; - A residual value of the works, at the end of the contract term, amounting to 607 mil. Euro. - Initial maximum tolls (to subsequently be subject to indexation according to the contract)

Toll/100 km

ALLOWED MAXIMUM Car LGV HGV Bus

Toll (Euro)

6.3 8.8 12.6 12.6

5.2. Differences between PPP and a traditional publ ic

procurement In order to set forth the relative merits of the project development alternative methods, the method employed as part of the substantiation study relied on comparing the project development costs in a PPP scenario with the project development costs in traditional public procurements. This analysis will generally follow the previously used methodology to generate a comparison that is relevant enough to adequately conform the results obtained in the past.

Mention should be made that these alternatives are part of a

conjecture/state of facts which nowadays entails that: - There is already an excess contracting of funds for the 2014-2020 LIOP period,which makes it practically impossible to rely the investment on non-reimbursable European funds; - The large infrastructure projects within the General Transportation Masterplan are very costly, meaning that only a portion of these projects can be implemented using non-reimbursable European funds; - The projects that are not eligible to receive non-reimbursable European funds and are undertaken by Romania as achievable by means of the GTMP may benefit from one of two implementation methods. These methods are: funding from the state budget or a public-private partnership; - The pressure exerted upon the state budget and the budget deficit caused by the provision of funding from the state budgetare not bearable at present; - There is a critical need to implement the project as has been stated above as part of the present study; - In the Master Plan strategy,the implementation of Ploieşti - Braşov (Râşnov) motorway is stipulated as achievable by means of a public-private partnership.

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Thus, we apparently find ourselves, given the above constraints, in a situation which provides us with two general options to execute Ploieşti - Braşov (Râşnov) motorway:

a) the public procedurefor the procurement of design services and execution works specific to the construction of motorways, followed, upon completion, by the conclusion of maintenance contracts with funding from the state budget;

b) the procedurefor securing design services and execution works specific to the construction of motorways, under a public-private partnership regime, a partnership based on which the private partner, once the motorway construction is complete, would operate the motorway as a toll motorway over a period stipulated in the contract.

Moving on and analysing the public procurement procedure for design services and execution works specific to the construction of motorways, followed, upon completion, by the conclusion of maintenance contracts funded by the state budget, we find out that binding such expenses to the state budget places us in a scenario where the pressure upon the budget and the budget deficit would increase to unbearable levels, in comparison with Romania’s commitments to the European Union. Therefore, this alternative, though actually available, is in the end a pseudo-alternative taken into account so as to comply with the legislation in force.

In regard to the public-private partnership, considering the above mentions about the pressure upon the budget and the budget deficit, we have only taken into consideration, according to Emergency Ordinance no. 39/2018 on the public-private partnership:

,,Art. 10. - The funding of investments carried out as part of public-private

partnership contracts can be secured, as the case may be: a) entirely from financial resources provided by the private partner; or b) fromfinancial resources provided by the private partner, together

with the public partner.” option a), namely funding entirely provided by the private partnership.

Moreover, considering the budget deficit which is affected by availability-based payments, as per Emergency Ordinance no. 39/2018on the public-private partnership: Art. 14. - (1)By means of a public-private partnership, the public partner will be able to transfer or constitute, in favour of the project company, the right to collect and use, in order to execute the project, fees from the beneficiaries of the

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good(s) or the public servicerepresenting the scope of works of the public-private partnership contract. The types and amounts of these fees shall be regulated according to the law (2)The project incomes resulted from the project company collecting the fees shall be supplemented with the public partner’s payment obligations to the project company or the private partner, as the case may be, as per the provisions of the public-private partnership contract.

The project incomes resulted from the collection of motorway tolls shall be supplemented with payment obligations of the public partner, so as to ensure a reasonable profit for the Private Partner.

In order to aid the investor, according to Emergency Ordinance no. 39/2018, in securing a reasonable profit, and to allow for reasonable and bearable toll-related fees, a 25-year contract term was stipulated, 21 of which would be intended for operation. Art. 33. - (1)The term of a public-private partnership contract is set forth mainly based on the depreciation period of the investments to be made by the project company and depending on the manner of financing these investments. (2)The contract term shall be set forth in manner that would: a)avoidthe artificial limitation of competition; b)securea reasonable profit for the respective field of activity, following the exploitation of the good(s) and the operation of the public service comprised in the project scope of works; c)ensure reasonable and bearable pricesfor the services comprised in the project scope of works, prices to be paid by the beneficiaries of the services.

Selecting either of the two options relies on an analysis (a substantiation study) set to reveal whether the execution of the project under a PPP regime is more economically efficient than executing the project as a classic public procurement.

The following sections present the differences between the two procurement options, as well as a brief overview of the methodology employed, according to the international standards, in order to determine the opportunity of executing a project under the PPP regime, currently designated the “Value for Money” analysis (analysis of economic and financial benefits) included in the previous studies, as well as those conducted as part of the present substantiation study.

Therefore, in general, there are two options for executing Ploieşti - Braşov (Cristian) motorway:

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a) theawarding of a contract for the design and execution of works specific to the construction of motorways and, subsequently, of maintenance and rehabilitation contracts; b) the awarding of a PPP contract for public works, set to cover the life span of the project pertaining to the contract term, from carrying out the design and securing the funds to the execution of the works and the subsequent maintenance of the infrastructure, in the form of a public-private partnership structure.

Selecting either of the two options relies on an analysis (a

substantiation study) set to reveal whether the execution of the project under a PPP regime is more economically efficient than executing the project as a classic public procurement.

The following sections present the differences between the two procurement options, as well as a brief overview of the methodology employed, according to the international standards, in order to determine the opportunity of executing a project under the PPP regime, currently designated the “Value for Money” analysis (analysis of economic and financial benefits).

The traditional method for public procurements In the field of infrastructure, depending on the specific infrastructure a

public authority intends to build/rehabilitate, the said public authority must take into account Decision no. 1/2018 on the approval of the general and specific conditions for certain categories of procurement contracts specific to investment objectives financed from public funds.

The implementation can be carried out in two ways: 1. A single public procurement procedure–the launch of a public procurement procedure for design services focused on a Technical Execution Project and execution works. 2. Two public procurement procedures. - the launch of a public procurement procedure for design services focused on a Technical Execution Project, followed by the launch of a public procurement procedure forexecution works as per the Technical Execution Project. The second option offers, however, the most remote perspectivein

terms of implementation, in relation to the critical need to implement, a need which would also have to observe the commitments related to the implementation period made to the European Union and theGeneral Transportation Masterplan strategic document,approved as per Decision no. 666/2016 for the approval of Romania’sGeneral Transportation Masterplan strategic document.

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For Ploieşti – Braşov Motorway, in the case of the traditional method (a public procurement regime), the comparison was made in relation to the contractual conditions, according to Decision no. 1/2018 for the approval of the general and specific conditions for certain categories of procurement contracts specific to the investment objectives financed from public fundsreserved for design and construction. This method is, at the same time, the closest to the PPP structure (given that the design risk is taken over, in both scenarios, by the contractor) and is used for generic purposes by the Ministry of Transportation in procurement procedures for design and construction of motorways, mainly used in the case of large infrastructure works with a severely delayed implementation.

Nevertheless, we should mention that, in the General Transportation Masterplan strategic document,approved as per Decision no. 666/2016 for the approval of Romania’s General Transportation Masterplan strategic document, the implementation of this project is mentioned as achievable based on a public-private partnership, the actual notion of traditional public procurement somehow forcing us to exit the scope of the GTMP and the government decision approving it. We shall mention here: “Art. 1. - An approval is issued for Romania’s General Transportation Masterplan strategic document, stipulated in the annex*) which is an integral part of the present decision, the objectives of which are to be fulfilled in accordance with the law.

*) The annex shall be published in the Official Gazette of Romania, Part I, no. 778 bis.” “Art. 2. - (1) The 2014-2030 strategy for implementing Romania’s General Transportation Masterplan, stipulated in the annex to the present decision, represents the general framework for prioritising and implementing transportation infrastructure projects, drawn up based on the estimated values required in the execution of works. (2) The strategy stipulated in par. (1) shall be updated on a regular basis so that the funding of transportation infrastructure projects should be secured within the limits of the commitment appropriations and the budget appropriations approved as per the annual budgetary laws.”

Mention should be made that, to date, this strategy has not been updated. Unfortunately, an update set to take place approximately 5 years after drawing up the GTMP will only be able to reveal very extensive implementation delays of large infrastructure projects, whereas the lack of contracted non-reimbursable European funds will practically indicate that the

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funding of projects for which contracting European funds was desirable will consequently have to resort, in the future, to two possible financing sources for ever more numerous large infrastructure projects: funding from the state budget or a public-private partnership.

a) The design and construction stage

- approximately three of four design and construction contracts would be awarded, following bidding procedures, for separate portions of the road infrastructure in question, depending on the budget allotted for the project; - considering the historical database, the period preceding the launch lasts approximately 12 months - a fixed nominal price for the planned design and construction period, but only for the initially planned construction stage; - the procedures for awarding public procurement contracts are initiated on condition of securing a financing source. In this case, we are dealing with the state budget; - the payments are made depending on the progress of works and require, therefore, public funds that are sufficient to carry out the design and construction stage, which might lead to a limited availability of funds for works that are required as part of other public projects; in short, there is pressure exerted upon the budget and the budget deficit over a complicated period of time, in terms of observing the commitments to the European Commission, also in regard to the budget deficit; - unlikethe option under a PPP regime, the risks pertaining to the interface among the various parties involved in the project are borne by the contracting authority. - the Contractor shows no interest in executing works that are sustainable, easily and ideally maintainable from a cost perspective.

b) The maintenance and operation stage

- the maintenance and operation works would be purchased separately from the works in the construction stage / would be purchased by oneself, depending on the yearly allotted budget, and not necessarily based on performance criteria; - in the case of maintenance and operation works, pursuant to the purchase of these services and the work itself, the public procurement procedure takes place and may lead to gaps and delays in the performance of such works. No long-term strategy

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is taken into account that would correlate with the initial design stage. - as the case may be, the payments are made depending on the progress of works or are comprised in the CNAIR budget in regard to works carried out by oneself;even if the decision to make and conceive other investments (in terms of scope, schedule, technical specifications) is made by the contracting authority, the maintenance of the respective road sections may not take place based on technical optimisation grounds, but on grounds related to prioritising the use of available funds, in case there are road projects with immediate or more pressing investment requirements.

c) Financing

- the financing source would be the state budget and, therefore, any loan would ultimately be contracted at a state level, the costs being immediately recorded in the public sector balance sheet, thus contributing to a budget deficit increase; -significant funding needs of the contracting authority, particularly during the actual investment execution stage; -in order to make the payments related to the construction works, the maintenance activities, etc., the contracting authority requires a high amount of loans, which leads to an elevated debt level for the Romanian Government; on the other hand, if the project is approached under a PPP regime, the payment requirements are broken down into periodic instalments distributed over the exploitation stage according to the PPP contract, therefore, only after the motorway has been opened for traffic, these requirements will depend directly on the private partner’s performance, reflected in the level of services provided to the users (for instance, a road surface of superior quality, an elevated degree of road safety, the swift processing of transactions at toll booths, service areas along the motorway, etc.).

A schematic presentation of the contracting method under a public procurement regime is rendered in the diagram below:

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Public-private partnership

According to Emergency Ordinance no. 39/2018 on the public-private partnership, “the public-private partnership mechanism features the following main elements:”

a) “cooperation between the public partner and the private partner for the purpose of implementing a public project;” The Ministry of Transportation makes available a project and

well-established location for the execution of the works. The project and the execution works will be carried out as per the provisions of the law and the technical regulations valid in Romania. During the contract term, the income from the toll, the public partner’s participation and the payments set to contribute to depreciation shall account for the only form of income by means of which the private partner will recover the investment and secure profit.

There will be permanent assurances that the private partner, during the operation period stipulated in the contract, will maintain the motorway within certain quality parameters, based on defined performance criteria defined in the contract.

In line with the provisions of Law no. 363/2006 on the approval of the National Territory Set-up Plan - Section I - Transportation networks, there is a reserved corridor for this motorway. The public partner will be the one to carry out the expropriations and the related payments, making them available to the private partner.

b) “the relatively long duration of carrying out contractual relations, in excess of 5 years, that would allow the private

Company I Company II Company III

Company A Company B Company C

Public Authority Financers

Contracted loan

Interest and reimbursement

Contract for any operation & maintenance works not executed

by the Public Authority

Contract for any operation & maintenance works not executed

by the Public Authority

Contract for any operation &

maintenance works

Operation and Maintenance (O&M)

Design and Construction

Design & Construction contract for a portion of

the road


the road


the road

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partner to recover the investment and secure a reasonable profit;” 24-year proposed contract term. This stage will be preceded by

stage 2, as one shall take into account the period of time and the works depreciation period, estimated at approximately 50 years, according to the Catalogue with the classification and normal operating durations and fixed assets, dated 30.11.2004, approved by the Romanian Government as per Decision no. 2139/2004 from November 30, 2004.This would undoubtedly secure a profit for the private partner, proportionate to the undertaken risks.

c) project financing, primarily from private funds and, as the case may be, by pooling the private and the public funds; Project financing, primarily from private funds, given the absence

of any other form of funding at present. This financing need emerges from a dire need to execute the motorway, as demand practically fails to be matched by the project funding availability from non-reimbursable European funds or the state budget.

d) “fulfilment of the purpose pursued by the public partner and

the private partner;” The public partner must execute this motorway, as an absolute

requirement, and can only do this at present with the help of a private partner. The private partner, by means of the long contract term and the payments contributing to depreciation, shall fulfil their objective as far as securing a profit is concerned.

e) distribution of risks between the public partner and the private partner, depending on each contracting party’s capacity to assess, manage and contain a particular risk. The substantiation study intends to produce a risk matrix, to be

discussed in detail over the period of competitive dialogue with the parties that chose to take part in the dialogue

In the case of the PPP contract, the private partner is bound to secure road construction and financing from their own resources (75%), without the direct implication of the public authority. Since the current data analysis indicates the fact that motorway tolls will not be sufficient to cover all the capital, funding and maintenance costs, there will be a depreciation-contributing payment, covered by the Government, intended to secure a reasonable profit for the private partner.

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For that matter, according to art. 13 par (3) in Emergency Ordinance no. 39/2018 on the public-private partnership, in order to create and use public funds required to make payments to the project company or to the private partner, as per the provisions ofpar.(2), in line with the performance of public-private partnership projects approved by the Government, the Special fund for financing public-private partnership contracts will be set up. the Special fund for financing public-private partnership contracts will comprise public income originating from fiscal and non-fiscal financial resources, including subsidies, stipulated in the normative based on which the respective special fund is set up.

The direct cash flows borne by the Government will, therefore, be annual expenses that occur during the operation period of the PPP contract. For comparison purposes, the analysis runs with the assumption that there isno deduction to accommodate a private partner underestimation, the Government being thus bound to pay an annual fixed nominal amount.

Nevertheless, the project company/SPV providing the service will generate profits, to be distributed to equity providers and will thus generate a cash flow back to the public authority in the form of income tax. Although there clearly are, across the entire economy, other potential effects caused by the project upon the collection of taxes, it was assumed that these effects are generally specific to both purchasing methods and, therefore, unable to generate differences between the two.

The model compares the net cash flows in the case of PSC (Construction Trade Association)and PPP, expressed as total NPV of the total cash flows, for each category of costs.

Since the model uses nominal cash flows, the nominal discount

rate employed for income and expenses is 8%. Therefore, the significant differences between purchasing under

a PPP regime and the traditional public procurement method consist in: - the responsibility of conducting the maintenance and operation works belongs to the same company in charge with the design and construction, which leads to streamlining these two activities during the project life span;

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- the private partner is a project company (designated in the literature “Special Purpose Vehicle” - SPV) whose objective is to fulfil the obligations deriving from the contract; - the funding of this company is non-recourse or limited recourse and exclusively relies on the future estimated cash flows to be obtained from the activity conducted by this company for the sole purpose of implementing the contract and used to reimburse the funds made available (equity plus the contracted loan); - the involvement of the project company’s shareholders is generally limited to funding the project company by way of contributions to the share capital and shareholder loans; - the actual design, construction, operation and maintenance activities are conducted by subcontractors, project company affiliates, acting as performance endorsers in favour of the project company; - the payments to the private partner are made exclusively based upon and depending on the road availability and the quality of the services rendered during the contract term, construction quality being thus secured based on the commercial interest; the availability-based payment to be made by the contracting authority is known, from the awarding procedure phase, as part of a competitive selection process, also based on price; as a consequence, when the PPP contract is signed, the road use and maintenance costs are known, unlike the traditional public procurement procedure, where decisions on the performance of operation and maintenance activities are made at future points in time, after the infrastructure has already been set up, thus resulting for a PPP a much higher cost predictability than in the case of a project carried out as a classic purchase; - the availability-based payments to be made by the public authority are made during the operation period / at the end of construction and take into account the private partner’s performance level in rendering the services;

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- most risks are allotted to the private partner, the rule being that the public partner shall exclusively bear the risks expressly allotted to them according to the contract.

- in comparison with the traditional purchase process, the private partner’s financing costs are higher in the case of a PPP project; on the other hand, the purchase of servicesspecific to a road sector under a PPP regime, as opposed to the purchase of distinct contracts for the same road sector (broken down into several land lots) will, accordingly, lead to a high level of risk transfer, and savings, to and for the private partner, which can translate in bidding with prices deemed competitive by the contracting authority, as well as in the existence of adequate incentives for the private partner to perform the contractwithin the contractual deadlines and costs set forth (otherwise their capacity to reimburse the loan being jeopardised due to the lack of income and the project fails to advance to the exploitation stage within the deadlines set forth with the contracting authority and the financers), which would also make it possible to obtain the intended economic and social benefits.

Design, Construction, funding, Maintenance and Operation

Public Authority

Investors

Main financers

Subcontractor for construction works

Subcontractor for maintenance & operation works

Own funds

Shares in the Romanian company

Construction contract

Maintenance and Operation contract

PPP contract / concession

Reimbursements+interest

Main debt contracting based on future

estimated cash flows

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- considering the focus laid uponthe private partner’s performance in providing services during the entire operational stageof the project, as per the nature of PPP contracts public-private partnership, it is essential to pay attention to the investment end user. Beyond these differences, determining advantages in favour of

either of the two options makes use of an economic and financial analysis, known in the literature as “Value for Money” (chapter 5.3.).

5.3. Project economic efficiency via the presentati on of a

cost-benefit analysis Previous studies According to the transportation Masterplan, both Ploieşti –

Comarnic Motorway and Comarnic - Braşov (Cristian) Motorway have anIRR of 12.5% and 9.6%, respectively, much higher than the regular one.

The model used to elaborate the cost-benefit analysis is the DCF

(Discounted Cash Flow) model, which quantifies the future expenditure/costs and income/benefits generated by a projectduring the implementation and the exploitation stages; the difference between them is discounted (“brought” to the present day) in order to ensure data compatibility, according to the “time value of money” principle.

The main results obtained from the cost-benefit analysis refer to: ■NPV (net present value): it indicates whether the current value - at present - of the income/benefitsexceeds that of expenditure/costs; ■IRR (internal rate of return): it is the discount rate for which NPV equals 0, representing the minimum rate of return allowed for the project; consequently, it must exceed the discount rate; ■B/C: the benefit-cost ratio compares the current value of future income/benefits with that of the expenditure/costs required to implement and operate the project. The previous cost-benefit analysis was elaborated in accordance

with the European Union methodological guides for drawing up cost-

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benefit analyses of investment projects and envisages a 25-year time frame starting from 2014.

In terms of economic return, the following factors were analysed: ■road accidents - asignificant impact of rehabilitating or building a new road is upon road safety; this impact translates into a decrease/increase in the number of road accidents following the implementation of a project; the number of accidents depends on the road type (motorway, express road, national road), the volume of traffic and the length of the road. ■VOTs – the value of time in relation to trip duration –the assessment of this impact intends to determine the extent to which the construction of a new infrastructure may or may not lead to time savings for the road users; this benefit depends on speed (which, in turn, depends on traffic and the road type), the motor vehicle categories, the purpose of the trip (business or personal interests), the length of the road. ■climatic changes - the assessment of this impact intends to determine whether CO2 emissions (greenhouse gases with a negative influence upon climatic changes) increase or decrease (within the entire network subject to analysis) after the rehabilitation of a road or the construction of a new road; accordingly, the immediate impact – the CO2 emissions – depend on speed, motor vehicle category, road length and technological changes occurring in time. ■air pollution: this impact manifests itself as an air pollution level increase/decrease, following the rehabilitation or construction of a new road; air pollution by motor vehicles depends on speed, motor vehicle category, road length and technological changes occurring in time. ■VOCs–vehicle operation costs –this impact translates into savings or additional expenses for the users of a new infrastructure (for example, the rehabilitation of an existing road leads to better infrastructure conditions and, therefore, to lower vehicle operating expenses; the choice of a different route with similar or better road conditionsmay lead to the decrease,

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stagnation or even increase of vehicle operation expenses, as these may vary with distance, as well); these costs depend on vehicle category, road conditions, road length. ■ noise - this impact translates into an increase or decrease of noise pollution levels following the rehabilitation/construction of a road; it depends on vehicle category, road length, road type (urban/rural, in this context “rural”means outside the locality) and the time of day when it occurs (daytime/nighttime). Following the calculation of the previously mentioned indicators,

the economic return of the project obtained positive results, showing the fact that the proposed investment is socially and economically feasible.

The social gains resulted from implementing the Ploieşti - Braşov

(Cristian) motorway project, according to the previously conducted studies, demonstrate the significant impact is has upon people’s lives: saving 10 human lives each year, time savings of up to 100 minutes per vehicle across the most congested section between Ploieşti and Braşov (Comarnic-Predeal), air quality improvement via pollutant emission decreases of up to 63 thousand ton CO2 a year and 435 ton Nox a year, respectively,the creation of new jobs during the motorway execution and operation stages.

The situation today Ploieşti – Bucharest Motorway Determining an IRR value is not required, considering that the

financial flows do not entail making an investment, as well, meaning that the flows are almost totally positive, and their purpose is to contribute with positive values in the context of Ploieşti - Braşov (Cristian) motorway, so that in general and for both sectors the private partner should be able to secure a reasonable profit.

Ploieşti – Bra şov (Cristian) Motorway Without payments contributing to depreciation, the financial flows

are negative. Determining an IRR value is not required. After applying

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the maximum payments the Government is bound to make, as contributions to depreciation, IRR reaches 30%. 5.4. “Value for money” analysis in both cases According to the applicable legal provisions and the international practices in the field, to determine whether the purchase under a PPP regime of design, financing, construction, operation and maintenance activities pertaining to Ploieşti-Brasov (Cristian) motorway will provide the contracting authority with “Value for Money”, two different scenarios were compared: the first is the traditional public procurement and the second is the PPP option.

Thus, a comparison of the estimated payments (including the anticipated risk values) was made for both procurement options, from the public authority’s perspective, based on the net present value (the discounted cash flow method).

As part of the traditional public procurement scenario, assessments were made of the planning, construction, maintenance and operation costs in the case of a purchase according to the procedures stipulated by the national legislation on the procurement of a works execution contract, in line with the “FIDIC Yellow Book” contractual conditions (construction and design contract), followed by the performance of operation and maintenance activities by the national specialised company, either directly and/or by means of specialised contractors selected according to the same procurement procedures.

As part of the PPP option scenario, assessments were made of the payments made to the private partner, who shall use them to cover their planning, construction, maintenance, operation and financing costs, as well as of the availability-based payments made by the public authority (a fixed, partially indexed amount). The direct cash flows borne by the public sector are the annualavailability-based payments occurring during the PPP contract operation period, after the infrastructure has been fully completed and commissioned. On the other hand, the project company shall generate profits to be distributed to the shareholders, thus generating a cash flow back to the public sector in the form of corporate tax.

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The activities taken into account for the “Value for Money” analysis included, in particular, the planning/design activity (in terms of execution details) pertaining to the road project, the construction of road sectors (keeping in mind the planned period of time stipulated in the draft concession contract), the maintenance and operation of the road sectors, from the opening for traffic to the end of the contract term.

Depending on the project bidding procedure, the profile of cash distributions is conceived differently, in time, for each of the two possible options. The payment flows in the case of a project awarded according to the traditional procurement procedures are elevated during the construction period and significantly diminished during the maintenance and operation period, varying with the costs required by these activities (many times, sized according to the available budget, without necessarily reflecting the actual needs). The payment flows in the case of a project awarded under a PPP regime reply on the availability level of the infrastructureset forth in the contract and comprise amounts paid on a periodic basis (partially indexed) for each year of road use and maintenance, minus any deductions applicable in cases of unavailability or availability not complying with the serviceability stipulated in the contract. Schematically, the two possible scenarios appear as follows:

Typical profile of the flow of payments made by the contracting authority, in time, in the case of a traditional procurement

amount

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Typical profile of the flow of payments made by the contracting authority, in time, in the case of procurement under a PPP/concession

regime

amou

nt

One notable difference regarding the distribution of the payments made by the contracting authority in time, in the case of the two procurement options,consists in the contracting authority financing costs, which are affected by the maturity dates by which these payments have to be made to various contractors.

In the case of the PPP option, the private partner must obtain

and secure project funding over a much longer period of time, unlike the traditional procurement, in which the payments made by the public partner take place at an early stage. From the public partner’s perspective, in the case of the PPP option, the financing costs specific to public funds have a different distribution in time as opposed to the traditional procurement.

When analysing the option of carrying out an investment project

under a PPP regime versus a traditional procurement, a fundamental tool in determining the best option is the financial model employed in order to calculate the net benefit (“Value for Money”). For each of the two procurement options of the project one shall estimate all the cash flows, including the costs and income generated by the project. Considering that the profile of the payments made in these two options differs, as well as the extended duration (30 years) required by the analysis, the methodology used to compare the two project execution options relies on the so-called net present value (NPV), which basically indicates the value, at present, of all the cash flows planned for the following 30 years of the project.

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The assessment based on the net present value is a standard

assessment of project-based financing structures (“project finance”), in the absence of which comparing the execution options of the analysed projects would not be able to yield fundamental results in selecting the best implementation option.

In order to make a comparison of the procurement options, taking into account the different distribution of the payments in time, depending on the respective procurement option, all the relevant payment sources in both procurement options (including the anticipated monetary values of the relevant risks) were compared based on the net present value.

In calculating the net present value, “discounting a payment” means, for instance, that a payment due one year after the reference date shall be reduced with the discount rate (for example, 6%) to calculate the net present value as at the reference date, a payment due two years later is reduced by 6% twice, and so on.

The monetary consequences, if certain risks do occur during project execution, can also be different from the public authority’s perspective, depending on the procurement option employed.

Consequently, the “Value for Money” analysis also included a quantification of the monetary differences in the event that the risk borne by the public authority should differ depending on the procurement option.

The analysis of these risks was carried out as part of an ample risk assessment procedure in which the relevant risks were identified, quantified and allotted to the contracting parties.

Considering that the “Value for Money” analysis relies on comparing all the costs generated by the project, both for the traditional procurement option and for the procurement under a PPP regime, financing costs are included in the calculated estimates, as well. Given that discussions with potential financers represent a long-lasting process at the end of which financing terms and conditions are set forth, the “Value for Money” analysis was carried out by studying

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several hypotheses concerning the financing terms, and the results obtained were positive in each studied scenario.

A positive cost-benefit (Value for Money) ratio was previously obtained for each of these options, within a range of values between approximately40 million Euro and up to approximately 240 million Euro.

Once the financing terms have been completed, the analysis shall be updated, as well.

One must also keep in mind the fact that, as per the current legal provisions, the public partner may contribute with up to 25% of the project value.

At the same time, there are other additional benefits, as well, from the use of the PPP method, the most important of these being:

- the public partner shall not initiate the payments for the services rendered by the private partner until the motorway sections have been opened for traffic; - the payment structuring method facilitates the execution of projects that entail significant capital costs and that could not be otherwise covered by the state budget; - the public authority obtains the benefits for a lower cost, as well as more efficient and more innovative services provided by the private sector; - the private partner takes upon itself most of the project risks; - PPP projects encourage a long-term approach to the creation and management of assets in the public sector, whereas the latter enjoys end ownership over the assets created; - the public sector obtains economic and financial benefits (“value for money”) from the provision of those assets, including maintenance and replacement during the life cycle, services that are rendered by the private sector at the requested standard, at the lowest possible economic cost in the long run; the private sector, in charge with the construction of the assets, is also

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responsible for maintaining them in the long run, which leads to an enhanced quality of public sector assets; - if the private partner fails to comply with the minimum performance standards stipulated in the PPP contract, financial penalties shall be imposed upon it, by way of deductions from the availability-based payment made by the public authority; - statistically speaking, in terms of project execution efficiency, the international practice revealed that there is a much higher likelihood that projects carried out under a PPP regime would be executed within the implementation budgets and schedules initially set forth, the private sector covering most risks and a control upon project financers being decisive elements in that respect, in comparison with traditional public procurement projects.

Comarnic - Bra şov (Cristian) sector

If the public partner obtains incomes from road tolls, but also

from availability-based payments, the study update shows that, by using an 8% nominal discount rate, which is the discount rate recently used for similar projects in Romania, the operating costs provided by the feasibility study revised in November 2012, the traffic forecasts and the toll figures provided by the traffic study in March 2013, the design, funding and construction of Comarnic-Braşov (Cristian) motorway do offer value for money, defined as the optimum combination over the entire life span. Hence, there are benefits for the Government if the project is carried out by means of a public-private partnership, as compared to a traditional public procurement.

Regarding the net present value (NPV) of Government cash

outputs, the relative benefit provided by a PPP, in this basic case, is estimated, according to the previously conducted studies, at 188 million Euro, as follows:

- thousand Euro 2000 - PSC PPP NPV Capital expenses (745,456) Operating and maintenance costs

(155,807)

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Income from road tolls 147,085 Basic expenses (754,178) (1,143,765) (389,587) Road tolls - 26,990 - Risk-related costs (643,575) (93,467) 550,108 Total (1,397,754) (1,210,242) 187,512 Source: the consultant’s estimates and the calculations based on technical standards, existing studies and previous experience Therefore, the value obtained falls within the previously mentioned value range. 5.5. Option recommended by the study author and its advantages According to the results of the studies and the economic and financial analyses, including the analysis in chapter 5.3., the viable solution for fulfilling the investment objective is the public-private partnership.

5.6. Risk distribution structure for each option, quantification of risks and allotting alternatives among the contracting parties, depending on the risk manageme nt capacity

In their analysis, the consultant elaborated a risk matrix in accordance with the legal provisions in force and relied on the guidelines provided in the PPP Toolkit for public works and service concessions in Romania. The consultant used the best international practices and their experience to list the main possible risks faced by the project, to allot each risk to the parties best prepared to manage that risk and capitalise on such risks.

The results of the consultant’s previous calculation indicate that,

for the basic cost of the project, approximately 980 million Euro in nominal terms (approximately 910 million Euro in real figures), required by Comarnic - Braşov (Cristian) sector, the risk associated to this project amounts to approximately 565 million Euro, which is 58% of the

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total estimated capital value. This risk, in the traditional works procurement case, would be borne by the state. Risk matrix for Comarnic - Bra şov (Cristian) sector

Risk Allotment of risks Impact Allotment of risks Authority

(%) Private partner

Total Authority Private partne

Risks related to the location and additional aspects - location conditions 0 100 (16152) - (16152- general permits 100 0 (7455) (7455) - - specific permits 50 50 (7455) (3727) (3727 - location preparation 0 100 (7455) - (7455 - ownership title 100 0 (7455) (7455) - - environment - 50 50 (7455) (3727) (3727 - environment - otherissues 0 100 (7455) - (7455 - environment - fossilsand (1242) (621) (621 - accessto the location 50 50 (1242) - (1242 - protests 0 100 (1242) 621) (621) - offenders 50 50 (1242) (621) (621) Design and construction - design/construction price 0 100 (43485) - (43485- events leading to delays in completing the works

0 100 (16152) - (16152)

- project and work compatibility with the

0 100 (16152) - (16152)

- approval of traffic signs 50 50 (16152) (8076) (8076) - approval of the technical 50 50 (16152) (8076) (8076) - geologic and geotechnical 0 100 (16152) - (16152- compliance with environmental requirements

0 100 (16152) - (16152)

- project changes carried out by the private partner

0 100 (16152) - (16152)

- sanitary and safety 0 100 (16152) - (16152- design errors 0 100 (16152) - (16152- project set to include the life span of its elements

0 100 (16152) - (16152) - project management and 0 100 (16152) - (16152

- design costs 0 100 (16152) - (16152Specific construction risks - construction according to the project specifications, the

0 100 (16152) - (16152)

- compliance with permits and 0 100 (16152) - (16152- health/environment/safety 0 100 (16152) - (16152- state safety/quality 0 100 (16152) - (16152

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- construction and 0 100 (16152) - (16152- reconstruction of pipelines 0 100 (16152) - (16152- work force 50 50 (16152) 8076 8076 - unfavourable climatic 50 50 (16152) 8076 8076 - project management and implementation

0 100 (16152) - (16152)

- issueswith the supply of 0 100 (16152) - (16152Operation and maintenance General risks - increase of 0 100 (10387) - (10387- services not provided in due time and according to service

0 100 (10387) - (10387)

- motorway not available for 50 50 (10387) 5194 (5194) Specific operating risks - leadershiptaken over by 0 100 (10387) - (10387- monitoring of service requirement fulfilment

(10387) - (10387)

- impossibility of providing adequate and experienced

0 100 (10387) - (10387)

- equipment employed 0 100 (10387) - (10387- third party liability 0 0 (10387) (10387- latent defects 0 100 (10387) - (10387- responsibility for motorway quality when in use, after the operating stage

0 100 (10387) (10387)

Market risks 0 100 - decreasein the number of 0 100 9806 9806 - existence of a competing 0 100 9806 9806 - road toll income decrease 0 100 9806 - 9806 - decrease of third party income

0 100 9806 - 9806

Financial risks - financial closure 0 100 - maintaining availability for the debt service responsibility

0 100

- additional financing 50 50 - negative changes under 50 50 - refinancing 50 50 - inflation 50 50 - failure in allotting funds required to make payments

100 0

- currency exchange rate risk 50 50 - toll method change 0 100 - statutory undertaker 0 100 - subcontractor insolvency 0 0

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Legislation changes - general legislation changes 0 0 (10387) - legislation changes between the contract conclusion date and the service provision

0 0 (10387) (10387)

- involving capital costs 100 0 (10387) (10387) - not involving capital costs 0 100 (10387) (10387- discriminatory legislation 100 0 (10387) (10387) - specific legal changes 100 0 (10387) (10387) Third party actions - closure of adjacent roads 0 100 - other actions/omissions of third parties (state authorities/local government bodies, other than the private

50 50 (5194) (5194)

Force majeure* - force majeure events with consequences upon the

50 50

Project -related general - compensation events 100 - relief events 50 - changes of authorities 100 - insurance 50 (10387) (5194) (5194) TOTAL (643.575) (93.467) (518.9

*One shall take into account the definition of force majeure as it is stipulated and defined in art. 1351 of the new civil code, in addition to that of “Act of God”.

Analysing the risk matrix for the same sector, carried out beforehand, in the case of a PPP-based procurement, reveals that the total risk represents only around 52% of the project total current value, that is around 505 million Euro, approximately 60 million Euro less.

Moreover, it is noticeable that most of the risks comprised in the risk matrix (as values) are to be transferred to the private partner.

The calculation of risks employed the methodology of three-point

estimate, based on the previous experience or the best assumptions: - a – best case estimate, - m – most likely estimate, - b – worst case estimate. The values resulted were used to calculate an E value as the

estimate and a standard deviation SD: - E = (a+4m+b)/6,

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- SD = (b-a)/6. E is a weighted average which takes into account both the most

optimistic and most pessimistic estimates, whereas SD measures variation or estimation uncertainty.

The same risk distribution mechanism is considered for Ploieşti /

Comarnic section, as well. 5.7. The project’s generic possibility of mobilisin g the financial resources required to cover the costs (th e project’s degree of tolerance) There is an entire history of public-private partnership attempts

for this motorway section. Each and every time, these procedures failed to be conducted.

Therefore, it is important to find out the reasons for which they failed. These are:

1. 2002 -the Government’s decisions required according to the

law for the approval of contracts were not promoted and adopted. 2. 2007 -the concession contract was awarded to the

Consortium comprising Vinci Concessions, Aktor Concessions, Vinci Construction Grands Projets and Aktor, however, the project did not reach its financial closure.

3. 2012 -the provider, Luis Berger, drew up the documentation required to implement the investment pursuant to a concession-based project(in reality, a public-private partnership instead of a concession).

We shall mention as follows: ► In order to increase the investment objective sustainability, we have to demonstrate, in relation to public-private partnership elements (namely, the avoidance of risks related to traffic values, which would be borne by the private partner and would lead to significant annual payments made by CNAIR if the traffic failed to reach the declared forecast values), that FS (feasibility study) procurement procedures were launched for Fagăraș - Sibiu Făgăraş - Braşov and Braşov - Bacău, the intent being basically to create a funnel that would attract traffic towards Comarnic – Braşov motorway. Mentioned should be made that the execution

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of Sibiu - Piteşti Motorway had not been taken into account at the time. These hypotheses are only partially valid nowadays. ► The route of Comarnic-Braşov (Cristian) motorway was changed approximately one month before the winner of the concession contract was announced. Thus, the section will no longer run “close to the centre of Buşteni town", the option adopted being that of building approximately 10 km of tunnel along the 58 km of motorway, as CNADNR (Romanian National Company of Motorways and National Roads) management stated at the time in the press. ► Additionally, another mention was that, as part of the same competitive dialogue procedure, a decision was made to increase the speed by design from 80 km/h, formerly stipulated for most of the route of Comarnic-Braşov (Cristian) motorway, as per the feasibility study, up to 100-120 km/h. “It mostly indicated the idea of a national road, but we determined that a motorway was going to be built” (but it did fall within the limits of the 2002 motorway normative, still valid at present, and could have led, by maintaining the speed by design, to a much better sustainability), stated the head of CNADNR. These requests based on the limitation on site represented another stage of cost increases and expropriations of new areas/demolitions of dwellings. ► The additional cost of tunnels and geometric enhancements overlapped a period of time specific to short-term concession, namely 30 years. ► Between 2013 and 2015 a procurement procedure with eligibility criteria a competitive dialogue took place. The procedure halted and was cancelled on the grounds that government guarantees were being requested, guarantees that involved exceeding the 3% deficit (an aspect pointed out by the Ministry of Finance). Based on the above aspects, we conclude that, at present, a

PPP can be an option, in the sense that the financial resources required to cover the costs do exist, only if the following apply:

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► The route defined in FS 2002-2006 is kept. The previously proposed option with 10 km of tunnels and 20 km of galleries, plus the enhancement of geometric elements so as to render an unnecessary speed, also from the point of view of regulations, caused a construction cost increase by more than 600 million USD. ► A maintained estimate value for this route, set to decrease the pressure upon the budget deficit (waiving the 10 km of tunnels and increases of speed by design, useless and significantly higher than the minimally admissible ones for mountain relief conditions); the speed limitation pursues the reduction of costs, which increase dramatically in mountain relief areas. ► An increase of the commissioning period from 30 years to a maximum of 49 years, depending on the investment depreciation and the private partner’s profit percentage negotiated as part of the awarded contract, all leading to a minimum pressure upon the budget deficit, a reasonable road toll amount and, consequently, an attractive investment from a financing standpoint. The duration of 49 years at the most is argued for with the provisions of the General Transportation Masterplan: “The General Transportation Masterplan will not manage to fulfil its objectives if there is no general support from the stakeholders for its medium- and long-term implementation program. This applies not only to organisations in charge with implementing projects, but also to the successive governments and the key ministries, such as the transportation, European funds or public finance ones. Major investments in the transportation infrastructure take a long time to be implemented, 6 to 10 years, including their planning and actual execution, and have an economic life span of 30-50 years, rendering a long-term political and institutional commitment consequently essential. In conclusion, the life cycle of a transportation infrastructure project is 40 – 60 years, also including the economic life span reserved for the use of the purpose it was executed for. ► The European experience comprises the construction of motorways in urban areas. A motorway crossing an urban area

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is not an abnormality. In fact, due to environmental constraints, we see that, in order to obtain the environmental permit, we either have to cross Buşteni urban area or run the motorway underground. The underground motorway option is far too expensive in relation to the traffic values, although the highest traffic values after those of Bucharest Beltway are provided by a 2-lane road in Comarnic – Predeal, rendering, in the end, far too significant pressures upon the budget deficit.

Aspects with a potentially negative impact upon the

financial resources required to cover the costs: ► Lessons were learnt from the history of failures, as seen in the statements above, so that such failures may be used to guide our success in finalising the investment. ► Aggressiveness in tacking certain urban spaces, which entails the actual impairment of the dwellings built illegally across the corridor reserved for the motorway. These dwellings lead to issues in terms of expropriations. However, this risk shall be borne by the future Beneficiary and can be significantly diminished by way of an adequate management. ► The vicinity of a 4-lane road versus motorway toll is a situation in which the toll that could be charged is drastically limited, meaning that the execution costs have to be minimal, as well, whereas the period in which the Contractor could recover their costs should be longer. This risk can be dramatically reduced via the above mentioned measures, measures that lead to a reasonable toll and the avoidance of traffic migration from the motorway to the national road. One argument intended to secure the mobilisation of financial

resources required to cover the costs , we shall mention that, in accordance with the General Transportation Masterplan, both Ploieşti-Comarnic Motorway and Comarnic – Braşov (Cristian) Motorway feature, as previously presented, an IRR in excess of 5.5%, making the project undoubtedly sustainable.

5.8. The road traffic monitoring system, other syst ems

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Other main elements stipulated along the motorway sector are: - the signalling and labelling system –it was designed both for the motorway and the lower roads which will cross the motorway, as well as for the road network along the motorway route, where road signals were designed to guide traffic towards the motorway; - the system which guides traffic towards the motorway and the adjacent roads was supplemented, coordinated and harmonised with vertical signals (alert, compulsoriness, information and orientation signs, in addition to the other indicators, etc.); - anti-noise measures - in areas where the motorway route runs close to populated areas or areas requiring anti-noise protection, sound-absorbing screens were fitted; during the preliminary design and the final design stages, detailed calculations must be provided concerning the introduction of sound-absorbing screens intended to keep noise down to the environmental standards. 5.9. The motorway toll and the toll charging system The toll can be included among the duties of the private partner,

who shall consider the proposal that the toll strategy and management should be left to the tenderer.

The motorway toll value can be a form scoring the stakeholders,

and can also be assigned a maximum figure, if that is the aim. The motorway toll, to be paid by a motor vehicle for 100 driven

km of motorway, is limited to 6.3 Euro, VAT-exclusive, and may be subject to indexation on March 1st of each year using the net average salary increase rate of the previous year. The level of the fee charged is set forth depending on the distance covered by the vehicle.

The amount to be paid for a vehicle in the LGV category, for

each 100 km of motorway, is 8.82 Euro, VAT-exclusive, whereas for an HGV and a Bus the amount of 12.6 Euro, VAT-exclusive, shall be paid.

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The fee level for each vehicle category closely resembles the average value of the tolls charged in the European Union.

The tolls shall be introduced during the completion of the

motorway sections, whereas the estimated nominal value of the income to be obtained from charging the toll and rents for service areas shall be in direct relation to the traffic values recorded across the motorway, the toll/axis ratio, the motorway availability, the traffic mix, etc.

If we consider an analysis of the traffic along Ploieşti - Braşov

(Cristian) motorway, approximately 107 km long, previously elaborated, as well as a forecast of this traffic until 2045, as well as the distribution of vehicles within the daily average value based on the number of axes and keeping in mind the minimal value-based quantifications of the tolls, VAT-exclusive, proposed to be charged, we have a resulted estimate of the annual amounts that would be collected by the operator as follows (6.3 Euro per vehicle, 8.82 Euro per LGV and coaches, 12.6 Euro for HGVs and Buses, for each 100 km portion of motorway, all VAT-exclusive):

Year Car LGV HGV Bus Total Annual incomes

(mil. Euro) 2019 0 0 0 0 0 0 2023 12.652 1.062 1.655 220 17.186 44,013 2030 16.739 1.404 2.190 291 20.624 58,230 2035 20.086 1.685 2.628 349 24.748 69,876 2040 24.104 2.022 3.153 419 29.698 83,851 2043 26.105 2.190 3.415 454 32.164 90,812

The calculations reveal that, for the 2023 – 2043 period, for Ploieşti - Braşov (Cristian) motorway, the minimum gains resulted strictly from the motorway toll charged for this sector will reach approximately 1.375 million Euro. This may increase following annual indexations, traffic growth and, not least, the completion of the design and construction within less than 48 months, the deadline provided in ch. 5.9.

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In regard to the traffic across Bucharest– Ploieşti section approximately 62 km long, according to the data estimated by the traffic forecast, the estimated minimum incomes appear as follows:

Year Car LGV HGV Bus Total Annual incomes

(mil. Euro) 2019 8.693 1.111 1.845 137 10.785 18,835 2025 9.717 1.404 2.330 173 13.623 23,791 2030 11.661 1.684 2.796 207 16.348 28,549 2035 13.993 2.021 3.355 249 19.618 34,259 2040 16.791 2.425 4.026 299 23.541 41,111 2043 17.631 2.547 4.227 314 24.718 42,145

The calculations reveal a total minimum income, strictly from the toll charged for Bucharest - Ploieşti motorway sector, for the 2019 – 2043 interval, of approximately 750 mil. Euro.

Mention should be made that the calculation for the annual

values of the tolls used a rate/vehicle proportionate to the motorway sector length, namely 6.3 Euro/passenger car, 8.82 Euro/LGV and 12.6 Euro/HGV and Bus, for a 100 km distance.

Therefore, the total minimum value obtained strictly from the toll

charged for Bucharest - Braşov (Cristian) motorway, for the 2019 - 2043 interval, is estimated at 2.125 million Euro.

We shall mention that vehicle passes can be issued, as well, over various periods of time, and their value shall be determined by the project company depending on the time interval and the vehicle category.

The motorway shall be fitted with a “semi-closed” toll system, with barriers and toll booths, as the case may be.

However, this system has to comply with the European normatives applicable at the time of its conception, whether it is fitted along Bucharest– Ploieşti section or Ploieşti - Braşov (Cristian) section.

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For example, for Comarnic - Predeal sector, toll charging systems shall be fitted in Câmpina, Comarnic, Sinaia-Buşteni and Predeal. The motorway toll shall be charged as various sectors are completed and become operational.

An analysis was carried out in order to identify the most adequate toll options for Ploieşti - Braşov (Cristian) motorway.

The premise was that the toll system should include electronic and manual toll booths

To the extent to which it is possible, a closed toll system is

preferable, provided that it complies with the European requirements, as mentioned above, as this optimises the load proportionate to the distance driven and eliminates delays in the even collection of tolls.

The design of motorway toll collection points must ensure traffic safety conditions at any time and should provide sufficient distances for the traffic to slow down or speed up from/on the motorway and other roads where the visibility line is adequately visible.

The proposed toll system may be summarised as follows: - two barriers placed between entry and exit points to and from

the motorway, - booths at each intersection.

5.10. Main contractual stages

In order to implement the public-private partnership contract, the

project company is set up according to the provisions of Law no. 31/1990, republished, as subsequently amended and supplemented.

The public partner’ cash contribution to the share capital of the project company amounts to 25% of the project value.

The PPP contract is structured into two main stages, as follows: - the design and execution period, lasting no more than 48 months after the signing of the contract, namely the year 2019 ;

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- the operating stage, lasting 20 years after the construction period completion date, except for Bucharest - Ploieşti sector, the use of which can commence at once, but after the toll system has been fitted by the private partner.

If the works are completed before the end of the 48-month

period reserved for the design and execution works, the private partner shall receive from the public partner a successful completion bonus equivalent to the one-year share of frontloading period, the total amount of the successful completion bonus being 100 million Euro/year.

If the completion of the design and execution period is marked by delays, the private partner shall pay the public partner a fine corresponding to the one-year share of the delay period, the annual fine amounting to 100 million Euro.

5.11. Main activities conducted during each contrac tual stage/period

Preliminary period

During the preliminary period the following categories of activities shall take place:

a) Land investigations and design activities Considering the changes carried out in order to optimise the

alignment and the technical solutions as compared to those in the feasibility study, it is necessary to perform adequate land studies across the new alignment for the purpose of adjusting the motorway construction price, set forth based on the geotechnical conditions resulted from specialised investigations to be carried out on site.

The land studies are to be conducted by a specialised entity under the control of both parties to the PPP contract –the public partner and the private partner, whereas the amounts due to it shall be paid by both parties, in equal proportions, to ensure impartiality in the performance of its activities.

After the performance of land investigations and updating the environmental permit, the construction cost shall be updated, as well.

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The update is a mathematical process, is not subject to

negotiations between the parties and is conducted by applying the unit prices in the final quotation, specific to the land conditions ascertained (difficult, intermediate, easy), depending on their share.

The construction price quoted by the winning company/consortium was set forth by means of quoting unit prices based on the above mentioned land conditions and established by the public partner. Therefore, the construction price shall be adjusted by:

- applying the unit prices quoted by the winning tenderer to the actual land conditions determined as a result of investigations, - automatically recalculating the construction total price.

The initially presumed land conditions were determined by the

public partner so as to better compare the tenders by taking into account pessimistic scenarios (for example, the predominant land categories taken into account were difficult land types, for which the unit prices are higher), so that grounds should exist for any possible reduction of the construction final price following this process.

Not all elements based on which the construction price quotation was formulated, elements set forth by the contracting authority, are subject to the revision process, but only those likely to depend on actual land conditions, such as embankment works (including reinforcement works), bridges, viaducts, passageways, tunnels and buildings.

The final price of the construction, determined based on the previously mentioned algorithm, shall be set forth by an independent engineer, a specialised entity independent of the two parties, in charge with monitoring the private partner’s execution of the PPP contract.

Moreover, as opposed to the investigations carried out in order to adjust the construction cost, one shall also conduct all the land investigations required for the detailed design and to obtain the permits and approvals necessary in the execution of the works.

b) Activities performed to obtain funding for the entire project

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At the time of concluding the PPP contract, the private partner shall have secured private funding in order to carry out the activities of the preliminary stage.

Considering the new alignment and the new technical solution resulted from the dialogue stage and the land investigations conducted during the preliminary stage, a fixed firm construction price shall be set forth by applying the adjustment mechanism based on these aspects, at the end of this period, whereas funds from financers would subsequently be obtained in that respect.

Therefore, chronologically speaking, the activities directly aimed at obtaining funding are to be carried out during the preliminary period, after the previously mentioned land investigations have been performed, and shall focus on supplying the construction price resulted by applying the adjustment algorithm.

Similar to the land conditions, the funding conditions were initially established by the public partner in order to better compare the quotations, and were taken into account and included as such in the winning tenderer’s financial model.

The financing structure of the entire project shall be set up as part of a competitive funding that is to take place according to the rules provided in the PPP contract and will aid in setting forth the effective financing costs provided by the financial markets at that time.

Competitive financing is a process in the performance of which the funds required to implement the project are to be obtained at the most convenient available financing cost, under current market conditions. The procedure will be carried out by the private partner, under the public partner’s supervision. The procedure shall comply with the principles and practices of project funding on the European market and shall secure a fair and transparent competition among the financing sources available on the European market in the area of funding infrastructure projects.

At the end of the competitive financing, subsequent to the existence of an agreement regarding the financing structure, the financing contracts for the entire project shall be signed between the private partner and the financers. The procedure applied in order to

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sign the financing contracts, that is to initially draw the funds based on the financing contracts, is generically called the financial closure procedure.

Considering that the candidates’ tenders relied on the financial hypotheses taken into account, the PPP contract includes a detailed procedure which comprises the mechanism for adjusting the availability-based payment in relation to the differences in funding costs between the costs presumed by the public partner and the costs actually resulted from the competitive financing process.

The general purpose of the adjustment procedure is that the amount of the availability-based payment be adjusted in such a manner that any change in the costs related to external funding, when placing the initial hypotheses of the contracting authority in relation to the actual funding conditions, valid on the financial closure date, should not lead to a profit increase for the private partner and any savings achieved should be transferred to the contracting authority. This adjustment procedure will provide assurances that the contracting authority and the private partner will not find themselves, at the time of the financial closure, on inferior or superior positions, in terms of project financial balance, than those at the time of the final bid.

In addition to the adjustment based on a comparison with the financing costs, the availability-based payment shall be adjusted at the end of the preliminary period, by being compared to the actual construction cost produced by the land investigations.

c) Construction activities In parallel with the activities mentioned at letters a) and b)

above, the private partner shall commence during the preliminary period actual motorway construction activities.

The solution focuses on optimising the motorway construction programme so that the private partner should benefit from the funds already made available.

The results of the activities from the preliminary period shall be entered in the private partner’s financial model, a model which displays the private partner’s cash outputs and inputs and based on which the availability-based payment is calculated.

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To the extent to which the availability-based payment would

increase after the preliminary period, the public partner is entitled to terminate the PPP contract.

Moreover, if the private partner fails to obtain funding for the entire project, the PPP contract shall be terminated.

The construction period

The construction period commences on the financial closure date (the date when funding is obtained for the entire project) and lasts 48 months at the most, in which time the private partner is bound to finalise the motorway construction in its entirety.

The operation period

The operation period commences, for Bucharest– Ploieşti section, after the PP contract has been signed, after the toll system has been installed (this must be executed in compliance with the European normatives in the field, valid at the time) by the private partner, whereas for the remaining sections is commences as they are completed. This period shall last 24 years, including the design and construction for Ploieşti - Braşov (Cristian) section. During this period, the private partner is bound to operate and maintain the motorway in accordance with the performance standards stipulated in the concession contract.

The private partner’s obligation to operate and maintain the

motorway comprises all the activities required to permanently render a motorway fully functional, safe and high-quality for its users. These activities include the removal of snow and ice from the road surface, cleaning operations, attending the vegetation on the side of the motorway, carrying out repair works of the road surface, the service areas and the parking spaces, monitoring the occurrence of deteriorations (burnished, worn-out surfaces) and their prompt repair, as well as periodic rehabilitation works intended to maintain the motorway and the related works in good conditions. Moreover, they are bound to collect transit tolls and operate and maintain the toll-collecting system. The penalty system provided in the body of the contract particularly emphasizes the minimisation of any non-fulfilments of

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these obligations that might disturb the proper progression of road traffic flows. The private partner must provide users with a wide range of options concerning the toll payment methods, both electronic and manual (in cash), and provide user assistance for any aspects related to them, among which is making available a 24/7 call centre.

The private partner must demonstrate frequently, during the contract term, that the operation and maintenance requirements are met. To that end, objective methods are employed to determine the state of the road surface and the structures, according to the international and national standards, sensors are used to control the functionality of toll booths, a video monitoring system (CCTV), as well as other detection mechanisms are used to monitor the quality of the service made available to users, both along the motorway route and within the service areas and parking spaces, all of these being added to the frequent inspections that the monitoring staff are to conduct.

If the personnel should fail to meet the requirements stipulated for the motorway operation and maintenance, they shall be penalised by the authority, according to the provisions detailed in section 5.12.

The activities carried out by the private partner are intended to ensure:

- the safety of users and road traffic, - the monitoring and the systematic preservation of the performance of all systems and facilities (ventilation, lighting, fire prevention, etc.) during the normal usage process and their adequate adjustment, to the necessary extent, in emergency cases, - the compliance of the use and maintenance system with all the safety rules, applicable at any moment during the project term, - the project safety and sustainability in time.

5.12. Presentation of project costs and incomes, th e payment mechanism, the private partner’s incomes

The project costs shall be borne by the private partner and

consist in the following:

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- costs pertaining to the construction works (feasibility study, design, project organisation, project management, land studies and the actual works); - costs pertaining to the operation and maintenance activities, including operating costs, current, periodic and major maintenance costs, toll charging equipment maintenance, service areas and parking spaces, the maintenance centres; - funding costs over the entire project duration, consisting in costs required by long-term loans, the costs of shareholders’ equity contribution, bank fees, hedging costs related to the interest rate, etc.

The construction costs cover not only the road surface, namely

the visible part of the motorway, but also various other works helping this road surface display a high quality level. We are referring to significant embankment and slope reinforcement works, given the geologic and geotechnical profile of the area crossed by the motorway, works whose durability is directly influenced by the execution of a vast and thoroughly elaborated system designed to take over and remove rainfall or infiltration water.

The project stipulates, for Ploieşti - Braşov (Cristian) sector, important works of art, among which14 viaducts and 33 bridges with a total approx. length of 3 km, as well as 2.6 km of double-gallery tunnels, representing one of the most complex engineering challenges. At the same time, road nodes and access roads to the motorway are included, and continuity is secured for existing roads that the motorway might disrupt, the relocation of the rich network of utilities affected by the motorway, works of a hydrotechnical nature and intended to reduce the environmental impact.

Moreover, there is a variety of other works specific to a motorway project, such as the traffic monitoring and road marking and signalling system, the emergency phone call system, the ITS (Intelligent Traffic System) system, the toll charging system, the maintenance centres, the service areas and parking spaces.

The private partner receives three categories of income:

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a) availability-based payments from the Special fund reserved for financing public-private partnership contracts; b) income from use of the secondary infrastructure (for example, rents or royalties paid by entities that operate gas stations or other service areas) - 60% of it shall be paid to the public partner and deducted from the availability-based payment, c) income from the toll paid by the motorway users (this income shall be deducted from the availability-based payment), d) any possible percentages from the current road tax.

The availability-based payments made by the public partner to

the private partner are subject to penalties if the services are not rendered at the level of quality stipulated in the contract (based on the performance specifications) or if the motorway is not available to the end users (that is, if closures of road sections were to occur).

According to the availability-based payment mechanism, regular payments are made to the private partner for the service provided, namely the motorway availability and operation within the technical and qualitative parameters imposed by the contract. These payments are to be made as per the winning tender submitted as part of the bidding procedure.

The principle is that the authority shall make full availability-based payments, for a certain period, only if the assets are fully available and adequate over the respective period, as defined in the contract (100% availability - 100% payment, 0 availability - 0 payment).

In a case of unavailability, the contracting authority shall apply deductions to the availability-based payment, pursuant to the PPP contract. In order to calculate the amount of deductions, one shall multiply the deduction points by the value per deduction point (the “value of deductions per unavailability point”). This value specific to the points is transformed (based on the availability-based payment, as it is indicated by the tenderer) so that, if the entire road section is unavailable over a certain period of time, the deductions shall be at least sufficiently high so as not to be paid any type of income, over the respective period, for the section in question.

In the case of Ploieşti - Braşov (Cristian) project, the availability-based payment represents a payment that is set forth and partially

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indexed. The annual availability-based payment consists in three elements, as they are indicated by the tenderer in their tender (a non-indexed amount in Euro, an indexed amount in Euro and an indexed amount in lei, all these amounts being set forth in Euro). The annual availability-based payment, if stipulated in the contract to be awarded, shall be paid as monthly payments. The amounts pertaining to each of the three elements, in their respective currencies, shall be assessed on a yearly basis and shall constitute the annual maximum availability-based payment (indexed),in Euro and in lei, respectively.

The availability-based payment set forth for each period as per the contractual rules is the main income source of the private partner, who needs to cover all of their costs (construction, maintenance, operation, funding, etc.) with such income.

The amount of the current availability-based payment shall be adjusted and finalised following the construction cost adjustment and the actual funding costs being set forth of at the time of the financial closure.

The actual amount of the availability-based payment made by the contracting authority shall be reduced as opposed to the value adjusted and finalised as per the provisions above, as follows:

a) the availability-based payment made by the public authority to the private partner shall be reduced with the value of the latter’s receipts from the motorway toll; b) the availability-based payment made by the public authority to the private partner shall be reduced by 60% of the latter’s receipts from the use of the secondary infrastructure; c) the availability-based payment made by the public authority to the private partner shall be reduced when deductions are applied for failure to comply with performance standards / unavailability cases.

However, the traffic-related risk may be translated into either

availability-based payments or a contract term extension if, at the end of the 24 months, the private partner has not managed to obtain, due to lower traffic figures, the envisaged profit.

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For Comarnic - Braşov (Cristian) sector of Ploieşti - Braşov

(Cristian) motorway, the estimated execution costs were updated in 2012. In regard to updating the technical and economic indicators, the price index was taken into account.

The calculations revealed an investment execution cost(the procurement of lands, which is not the private partner’s responsibility, was not taken into consideration) of around 985 million Euro (VAT-exclusive), out of which 910 million Euro for C+M (construction+maintenance). C+M costs are distributed as follows: approximately 590 million Euro for Comarnic – Predeal sector and 325 million Euro for Predeal - Braşov (Cristian) sector.

The investment costs (C +M) for Comarnic - Braşov (Cristian) sector consist in:

- construction costs - 875 million Euro, - costs for toll systems - 30 million Euro, - costs for security systems - 5 million Euro.

Security systems are provided for each of the two road sections

(Comarnic-Predeal and Predeal - Cristian). In comparison with the similar systems installed along A1 and A2 motorways, the total estimated cost of these systems is 4 million Euro, VAT-exclusive (2.5 million Euro for Comarnic- Predeal section and 1.5 million Euro for Predeal-Cristian section).

Additionally, a toll system was fitted within each road section, based on the number of transit points:

- Comarnic-Predeal section - 20 booths, - Predeal-Cristian section - 10 booths.

A unit cost of 1 mil. Euro / toll booth was estimated. This average

unit cost includes 500,000 Euro for the toll booth and the related systems, and 500,000 Euro for the road infrastructure.

Updates were also brought to the use, maintenance and repair costs.

The maintenance costs are those resulted from the economic analysis as part of the previously performed Feasibility study.

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In addition to the usage and maintenance costs presented

below, the financial model also includes an annual estimate of the insurance costs, of around 1 million Euro.

The costs required to maintain roads and equipment (different from the toll system) were estimated based on the activities required by the current and periodic maintenance of the roads, the surface pertaining to each section and the unit prices currently used as part of the maintenance contracts signed by the client with various private enterprises in charge with the performance of such works and services.

In addition to the main O&M costs, borne with the infrastructure maintenance (including the maintenance centres), estimates were made for the following expenses:

- lighting, utilities for the toll charging and the maintenance centres, other administrative costs – these costs were estimated at 9,800 Euro / km; - toll charging equipment maintenance - approximately 50% of the total investment costs for the toll system (1 million Euro/transit point) - estimated at 3% of its value, per year (no increase of these costs is envisaged); the following were considered: ■ replacing the equipment every 15 years; ■ the number of transit points - for Comarnic- Predeal section: 20 (10 of which are movable), for Predeal – Cristian section: 10 (5 of which are movable); - the amount of personnel–these expenses were estimated based on the following number of employees: ■ management and administration - 10 persons; ■ permanent personnel for ITS and administration(3 shifts) - 9 persons; ■ permanent personnel for maintenance centres (3shifts) –13.5 persons / maintenance centre (the equivalent of three permanent employees in each maintenance centre); ■ permanent personnel for toll booths (3 shifts) – 4.5 persons / managerial toll booth. (1 permanent person per centre);

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- personnel remuneration– calculated for the above listed personnel, with the following monthly salaries (including all taxes and contributions): ■ management and administration – 2,850 Euro/month; ■ ITS and administration – 1,900 Euro/month; ■ maintenance centres (one for each of the two sections) –

1,330 Euro/month; ■ toll charging: 760 Euro/month.

Mention should be made that all the costs/incomes presented

below do not include the value added tax.

According to the calculations performed for Bucharest– Ploieşti section, 62 km long, its average maintenance and operating costs can be estimated, for the 2019 – 2043 period, at approximately 17 million Euro/year. The total operating and maintenance cost is estimated at 427 million Euro.

To give an estimate, the operating and maintenance costs for Ploieşti - Braşov (Cristian) sector, for the 2019 - 2043 interval, amount to approx. 670 mil. Euro.

One must also take into account the design and execution costs for Ploieşti - Braşov (Cristian) motorway, previously estimated at approximately 1,360 million Euro.

Taking into account the incomes obtained strictly from the

motorway toll (not including incomes resulted from the use of the secondary infrastructure and any possible percentages of the current road tax), calculated in chapter 5.8, with a total amount of approximately 2,125 million Euro, of which 750 million Euro originating from the toll charged for Bucharest - Ploieşti sector for a 24-year period and 1,375 million Euro originating from the toll charged for Ploieşti - Braşov (Cristian) sector.

Mention should be made that the figures presented in this material are estimates calculated based on the previously conducted studies, following the traffic forecasts elaborated using the latest measurements, the current normatives in the area of maintaining and operating national roads and motorways, as well as certain motorway tolls proposed by the collective who drew up the substantiation study, a

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study that took into account both the Motorway toll tolerance study, carried out in 2013 at the request of the Ministry of Transportation, as well as the tolls applied by various European Union countries.

Moreover, the estimates were made without keeping in mind the consumer-price index evolution over the time interval passed since the latest update of all costs, the possibility of having the motorway tolls updated on an annual basis, etc.

We shall mention that traffic forecasts are handled as any forecast and shall be changed following each traffic measurement.

5.13. Penalty system

The payment mechanism of the PPP contract contains provisions which entitle the public partner to benefit from deductions to the availability-based payments.

Three types of penalties that can be incurred are stipulated: first of all, deductions can apply if the motorway is not fully opened to road traffic, with no restrictions; second, deductions can be applied when the private partner fails to fulfil their obligations stipulated in the contract (non-fulfilment of serviceability according to the contract provisions), and, finally, the public partner can apply penalties if the motorway is opened for road traffic but this entails considerable works which are yet to be completed.

The penalty system is conceived in a manner that encourages the private partner to carry out the necessary maintenance works with as few traffic flow disruptions as possible - the longer the traffic disruption or impairment of end users, the higher the deductions from availability-based payments. The penalties will be higher during the summer and winter seasons, on Fridays, Saturdays, Sundays and legal holidays, as well as during daytime (between 6 a.m. and10 p.m.). The wider the closure of a road section, in terms of the number of lanes left available or depending on the locations of closures, the higher the deduction; similarly, the amount of deductions shall increase for extensive traffic constraints, both in terms of duration and radius.

Here are some examples of the ways in which the private partner is encouraged to minimise the discomfort caused to users:

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• no deductions shall be incurred if the works are carried out at night, whereas two lanes per direction of traffic are opened, but the emergency lane is not available. • the performance of necessary works during daytime increases the level of applicable deductions per hour by a multiple of 3, as compared with deductions applicable for works during night time. • the performance of works during the winter and summer seasons doubles the level of applicable deductions per hour as compared with the works carried out in the spring or in autumn.

The private partner shall observe the requested level of the

service, both in relation to the road end to the authority, otherwise the authority is entitled to apply deductions to the availability-based payments. The service rendering obligations consist in the management, exploitation and maintenance of the motorway based on the following two categories: • non-compliances regarding the performance requirements, which affect the users’ safety; • non-compliances regarding the performance requirements, which affect the users’ safety.

In most cases, the private partner benefits from a time interval to remedy the non-compliance case occurred, before being subject to “service points” applied for each day in which the respective non-compliance remains unsettled. The more serious the non-compliance, the higher the number of service points applied (to exemplify, the non-removal of dangerous objects from the road surface within 30 minutes from their detection - 5 points; non-functional traffic metering system over a period longer than 7 days - 1 point).

As part of a motorway management, exploitation and management activities one may reasonably expect the occurrence of cases in which the private partner, for various reasons, is unable to fulfil, in full or in due time, all their obligations without causing the use of a very significant level of resources likely to lead to excessive costs being borne by the authority, an such a conservative approach would not bring economic and financial benefits (“Value for Money”) for the latter. Consequently, the principle employed is to allow the private partner to “accrue” a certain number of service points each month, up to the threshold beyond which financial penalties start being incurred, representing for them a “red flag” and an incentive to promptly rectify

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any non-compliances, otherwise ending up incurring the said penalties. At the same time, in order to deter any attempt the private partner might make to overlook the fulfilment of their obligations, once the respective threshold has been reached, the amount of deductions shall progressively increase, as the number of accrued points increases, as well.

The deduction point value was an element of the tender, proposed by each candidate preselected during the bidding procedure, all of them being provided with a range between 100 and 120 units.

The value quoted by the wining tenderer was the maximum one, 120 units, and was included as such among the contract provisions. The deduction mechanism was conceived on grounds that, if a road section is unavailable over a certain period of time, the deductions shall be calculated so as to eliminate any payments that would have been allotted for the respective section over the relevant period of time (in other words, an extreme example would be that, if the entire motorway were to be unavailable to traffic across its entire length, during the entire year, the statutory undertaker would not receive any annual availability-based payment for the respective year). Moreover, the PPP contract contains provisions according to which, in the case of long-lasting infringement-type events (a case equivalent to the accrual of a certain number of deduction points), the contracting authority may initiate the contract termination procedure by fault of the private partner.

Moreover, one must consider, as the case may be, the penalty system stipulated at item 5.10.

5.14. PPP contract cessation and payable compensati ons

Upon the cessation of the PPP contract, the results of the activity carried out by the private partner (for example, technical project, the construction and its status at the time of the cessation, the actual motorway if the cessation takes place during the operation period) remain with the public authority. Considering this aspect, the compensations upon cessation, payable by the public partner to the private partner (and which, to a great extent, are used to reimburse the loan granted by the financers) represent an essential contractual element in terms of project bankability. Thus, in accordance with the

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international practice in the area of PPP projects, upon the contract termination, the public partner shall pay compensations for termination, which can vary depending on why the contract has been terminated, summarised below:

a) Termination by fault of the public partner

If the PPP contract is terminated by fault of the public partner, they shall pay a compensation to the private partner, andthe amount payable as compensation shall allow the latter:

• to reimburse the amounts they owe at the time to financers as per the main financing contracts; • torecover the amounts invested in the project by the private partner’s shareholders (minus any possible amounts already recovered); • to pay any possible costs incurred with the termination of subcontracts by the private partner following the contract cessation (for instance, the termination of the design and construction contract and/or the operation and maintenance contract); • to ensure the rate of return for the amounts invested by the private partner at the time.

b) Cessation following thetermination for convenience by the

public partner

If the PPP contract comes to an end followingthe termination for convenience by the public partner, they shall pay the private partner a compensation equivalent to the amount payable in case of termination by fault of the public partner.

c) Cessation on grounds of force majeure*

If the PPP contract comes to an end following a force majeure event, the public partner shall pay a compensation to the private partner, and the amount payable as compensation shall allow the latter:

• to reimburse the amounts owed at the time by the private partner to financers as per the main financing contracts;

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• to recover the amounts invested in the project by the private partner’s shareholders (minus any possible amounts already recovered); • to pay any possible costs incurred with the termination of subcontracts by the private partner following the contract cessation (for instance, the termination of the design and construction contract and/or the operation and maintenance contract).

In comparison to the compensation payable when the PPP

contract comes to an end by fault of the public authority, the compensation payable if the contract is terminated due to a force majeure event shall not comprise the rate of return of the invested amounts, but only the actual unrecovered investment of the private partner, the grounds for cessation being outside the control of both parties and the cessation risk being thus split between the authority and the private partner.

*One shall take into account its definition as it is stipulated and defined in art. 1351 of the new civil code.

d) Termination by fault of the private partner

According to the international practice in terms of PPP, the

public authority shall pay a compensation to the private partner if the contract is terminated by fault of the latter, as well, so as to avoid the undeserved enrichment of the public partner which receives, upon the contract cessation, a good with a significant value.

The principle of setting forth the compensation when the contract comes to an end by fault of the private partner is that of placing the compensation in relation to the value of the goods reserved for the contracting authority upon cessation / to the value of the project continued by the contracting authority / the amounts advanced by the financers.

The amounts set forth as compensation shall be due to the financers and shall be subject to the (total or partial) reimbursement of the amounts owed to them by the private partner at the time, according to the main financing contracts, the private partner and its shareholders being sanctioned for the failure to recover the investment made up to that point –its amount lying within the goods that are due to the

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contracting authority, whereas the subcontractors will receive no payment following the cessation of the design and construction contract/the operation and maintenance contract. I, the Undersigned CHIRON CORINA-CORNELIA , sworn translator

and interpreter for English and French, Authorization nr. 30798 of January 21, 2011, issued by the Romanian Ministry of Justice, certify the exactness of the English translation, that the text of the Romanian document presented to me was translated in full, with no ommissions, and that the contents and meaning of the text were not distorted in the translation process. The document requested for full translation has 113 pages calculated as 1,800 signs in Word format, it is entitled SUBSTANTIATION STUDY and was presented to me in full, in electronic format. The translation has 113 pages and was processed pursuant to the written request which is registered and kept in our archive.

SWORN TRANSLATOR AND INTERPRETER

Subsemnata CHIRON CORINA-CORNELIA , interpret şi traducător autorizat pentru limba/limbile străine engleză şi francez ă, în temeiul Autoriza Ńiei nr. 30798 din data de 21.01.2011, eliberată de Ministerul JustiŃiei din România, certific exactitatea traducerii efectuate din limba român ă în limba engleză, că textul prezentat a fost tradus complet, fără omisiuni, şi că, prin traducere, înscrisului nu i-au fost denaturate conŃinutul şi sensul. Înscrisul a cărui traducere se solicită în întregime are 113 pagini calculate în format Word la 1800 ccs, poartă denumirea de STUDIU DE FUNDAMENTARE şi mi-a fost prezentat în întregime, în variantă electronică. Traducerea înscrisului prezentat are un număr de 113 pagini şi a fost efectuată potrivit cererii scrise înregistrate şi păstrate în arhiva subsemnatei.

INTERPRET ȘI TRADUCĂTOR AUTORIZAT

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