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Draft

SUBSTANTIATION STUDY Târgu Neamţ - Iaşi Motorway

March 2019

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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

1.2.1. General aspects

1.2.2.General description of the project

1.3.Opportunity to execute the project

1.4. Proposals in terms of public partners

1.5.Estimated project duration

2.Current status and the need to execute the project

2.1.Presentation of the current context

2.2. Nationwide car park density value

2.3.Analysis of the current status and identification of deficiencies

2.4.Analysis of the demand for goods and services, including long-term prognoses

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

3.1. General aspects

3.2. Traffic study - 2010

3.3.Traffic study - 2018

3.3.1.National and European strategic context

3.3.2. Traffic model construction

3.3.3.Transportation model functionality

3.3.4.Transportation model graph network

3.3.5.Zoning system

3.3.6. Development of the matrices pertaining to the base year

3.3.7. Ascertained demand processing following CESTRIN 2015 OD Surveys

3.3.8. Updating the 2011 matrices to the 2015 values

3.4. Traffic flows (simulated for 2015, without project)

3.4.1.Traffic flows for the option maintaining the current route unchanged

3.4.2.Analysis of traffic flows for the option maintaining the current route unchanged

3.4.3.Traffic flows for the option with included local changes

3.5. Traffic forecast elements

3.5.1. Traffic evolution elements

3.5.2. Estimation of road traffic rates of evolution

3.5.3. Generation of matrices for forecast coefficients

3.6. Traffic flows- simulated for 2020, without project

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3.7. Future traffic flows (for 2020) - assumptionwith project

3.8. Future traffic flows (for 2045) -assumption without project

3.9. Future traffic flows (for 2045) - assumption with project

3.10. Traffic flows for the assumption with project and motorway toll – implementation assumptions

4.Main technical, financial and contractual features of Târgu Neamţ - Iaşi motorway project

4.1. Technical description of the motorway project as per the existing feasibility study

4.2. Motorway project changes.Further clarifications and mandatory requirements

4.3.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 executing the project

5.1 Complex project comprising design services, construction, maintenance and operation works under a toll motorway regime - Târgu Neamţ - Iaşi

5.2. Differences between PPP and a traditional public procurement

5.2.1. Current context

5.2.2. Traditional public procurement method

5.2.3.Public-private partnership

5.3.Project economic efficiency via the presentation of a cost-benefit analysis

5.3.1.Economic analysis general elaboration principles

5.3.2. Cost-benefit analysis

5.4.“Value for money” analysis in both cases

5.4.1. Introduction

5.4.2. Financial model

5.4.3. Financial analysis results of the PPP Scenario

5.4.4. Financial analysis results of the 100% Government Financing Scenario

5.5. Recommended option

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.Project generic possibility of mobilising the financial resources required to cover costs (project sustainability degree)

5.8. Road traffic monitoring system, other systems

5.8.1.Road traffic monitoring system and other systems in Romania

5.8.2.Road traffic monitoring system proposals

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

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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

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1. General information on the investment objective 1.1 DESIGNATION OF THE INVESTMENT OBJECTIVE

Târgu Neamţ– Iaşi Motorway

1.2 GENERAL DESCRIPTION OF THE PROJECT

1.2.1 GENERAL ASPECTS

Târgu Neamţ – Iaşi Motorway

Currently, the link between Moldavia and Transylvaniais deficient, being served by DN15B - DN15 and DN15-DN12C-DN13Bpassageways, which display winding routes and significant declivities across portions that cross the Oriental Carpathians.

A traffic analysis carried out concluded that they are unable to take over increased traffic flowsgenerated bysocioeconomic development. In the long and medium term, Târgu Mureş–TârguNeamţ - Iaşi Motorway will also make it an attractive proposal for the international freight traffic, set to take place between Pan-European Corridors IV and IX.

The creation of a link between Moldavia andTransylvaniais a national and international priority,and the two existing passageways, particularly in the Oriental Carpathians crossing points, are unable to safely and comfortably ensure higher cruising speeds.

The need for a network of modern and safe roads that would meet the ever growing transportation requirements and comply with the EU Directives, as well as facilitate a freight traffic decrease, have determined Romania to initiate a transportation infrastructure development strategy which also includes the quick transportation network development programme.

The Ministry of Transportation, by means of the National Company for Road Infrastructure Administration, makes permanent efforts to ensure the adequate technical state of the entire network of national roads under its administration, without making any discrimination among the various regions of the country while falling within the budgetary limits provided.

Concerning the construction of motorways, the intention is to create a network ofmotorways that would link the main regions of the country and create links to the neighbouring states: Braşov – Borş motorway, the motorway sections along the alignment of Pan-European Transportation Corridor IV (Nădlac – Arad, Arad – Timişoara, Timişoara – Lugoj, Lugoj – Deva, Orăştie – Sibiu, Sibiu – Piteşti, Cernavodă – Constanţa), Bucharest – Braşov motorway and Târgu Mureş – Ditrău – Târgu Neamţ – Iaşi –Ungheni motorway, as part of corridor V.

In terms of supplementing the current motorway network, intended to ensure traffic redistribution, as well as to shorten the origin-destination travel distance, with beneficial effects as regards energy consumption, travel duration, traffic fluidity and safety, each investment objective comprised in the Strategy becomes equally important.

Târgu Mureş – Târgu Neamţ– Iaşi–Ungheni Motorway, which also comprises the section which is the object of the present substantiation study, Târgu Neamţ – Iaşi, shall cross Mureş, Harghita, Neamţ and Iaşi counties and measure approximately320 km in length.

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The motorway construction project was included, in 2007, in theMotorway Construction Programme run by the Ministry of Transportation and Infrastructure – the Romanian National Company of Motorways and National Roads.

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 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.

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.

Studies and normatives making reference to Târgu Neamţ – Iaşi Motorway

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

The early studies that envisaged a network of motorways in Romania were conducted by 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 was drawn up by the National Institute for Transportation Design, an institute which subsequently became, after 1990, IPTANA S.A.

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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 Târgu Neamţ - Iaşi Motorway (The study was drawn up by the National Institute for Transportation Design, an institute which subsequently became, after 1990, IPTANA S.A.).

Law no. 71/1996 on the approval of the Spatial Planning of the National Territory - Section I - Traffic routes–currently repealed

Works stipulated in the Spatial Planning of the National Territory - Section I - Traffic routes. Road network development (by way of prioritisation)

As one may notice, the Spatial Planning of the National TerritoryincludesTârgu Neamţ – Iaşi Motorway, as well.

Law no. 363/2006 on the approval of the Spatial Planning of the National Territory - Section I - Transportation networks

Developments pathwaysstipulated in the Spatial Planning of the National Territory - Section I - Transportation networks (by way of prioritisation).

PATN SPATIAL PLANNING OF THE

NATIONAL TERRITORY

SECTION I – TRAFFIC ROUTES

ROAD NETWORK

DEVELOPMENT

CURRENT | PROVISIONS CAPTION

MOTORWAYS EXPRESS ROADS NATIONAL ROADS

BRIDGES

County capital cities Municipalities Cities County territory limit State border Main border crossing points

SECTION I - TRAFFIC ROUTES

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The added inclusion of Târgu Neamţ– IaşiMotorway is visible on the map.

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.

Târgu Neamţ – Iaşi Motorwayis included in the National Motorway Programme Development Strategy, promoted in 2001 by MLPTL (Ministry of Public Works, Transportation and Housing) and falls under theSpatial Planning of the National Territory – “Traffic routes” Section, approved as per Law 71/1995.

The General Transportation Masterplan, approved as per GD no. 666/2016

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-ante conditionality) was the elaboration of a policy document used to subsequently substantiate the necessity and opportunity of implementing investment objectives.

1.2.2 GENERAL DESCRIPTION OF THE PROJECT

The construction ofTârgu Neamţ – Iaşi 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.

Route presented by way of example:

SPATIAL PLANNING OF THE NATIONAL TERRITORY SECTION I - TRANSPORTATION NETWORKS

A. ROAD NETWORK DEVELOPMENTS PATHWAYS CAPTION

CURRENT | PROVISIONS

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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Târgu Neamţ – Iaşi Motorwayspans across the territory of Iaşicounty and measures 61 kmin

length, supplemented by 7 km representing the connecting belts of nodes DN28andKm 61+000, belts that would also need to be built according to the motorway specifications. The total length of the route to be built according to the motorway specifications shall be 68 km.

The route of Târgu Neamţ – IaşiMotorway, the object of the present substantiation study,starts at thecrossing point with DN2 / E85, including the related road node, coming to an end at the intersection with Iaşi by-pass. The motorway section comprised between Târgu Mureşand Târgu Neamţ, up to the road node at the intersection with DN2/E85, is being implemented by structures within CNAIR SA (National Company for Road Infrastructure Administration).

Iaşi countyis in the North-Eastern part of Romania, near the border withthe Republic of Moldova, and measures 5,500 square km. Its population amounts to 939,395 inhabitants, and the county capital city, according to an estimate issued by theNational Institute of Statistics (NIS), as at January 1, 2015, had 357,192 inhabitants, coming second, nationwide, after Bucharest, as indicated by the number of persons registered in the local government records. The city holds one of the top spots in the Romanian economy and its development is closely related to the favourable geographical location, at the crossroads of the old commercial roads. Iaşi region is one of the most important commercial transit connections across Eastern Romania.

Its road and railway networks are easily accessible from any part of the country, including the Black Sea,the Danube,as well as Europe, along the route towards former U.S.S.R.’s new markets.

Iaşi countyhas the following neighbours:

- The Republic of Moldovato the East– Ungheni district, with its borderline running along Prut river,

- Neamţ county to the West,

- Botoşani county to the North,

- Suceava county to the North-West,

- Vaslui county to the South.

The municipalities within the county borders are Iaşi and Paşcani. They are within the

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motorway corridor sphere of influence.

The landscape belongs, in its entirety, to the Moldavian Plateau, has a primarily sculptural appearance, comprising extended uplands and hills, slightly tilted towards SE, with heights ranging between 200 and 593 m, plains with mounds rising, on average, to 150 m and wide valleys with extended alluvial lowlands.

24% of the NW part of Iaşi countybelongs to theSE extensions of Suceava Plateau, visibly marked by Holm, Lespezi, Tudora,Sangeap, Pietraria, etc. hills (altogether forming a larger hillocky unit, known as “Dealu Mare” (the Great Hill)) and Ruginoasa and Strunga mounds, both on the left side of Siret river, as well as Runcu 454 m, Parcului (445 m), Soci (437 m), Tătăraşor Trestioara (430 m), etc. hills on the right side of Siret. This is where we find the highest altitude in Iaşi county, namely 593 m on Tudora Hill.

The limits between Suceava Plateau and the Moldavian Plain (the Lower Jijia Plain, respectively) are very clear and marked by a declivitous slope 200-300 m high, along the alignment of Deleni – Hârlău – Cotnari – Cucuteni – Târgu Frumos– Strunga localities. In the Southern and South-Eastern parts of the county we find the Northern extensions of Bârlad Plateau,to be more accurate – a subunit thereof known as the Central Moldavian Plateau, which covers 27% of the county area. The Central Moldavian Plateau appears as a main summit along the East-West direction, with heights of 350 – 400 m, from which secondary summits are derived, shorter to the North and longer to the South. The greatest heights in this sector are represented by Tansa (466 m), Cetatea (467 m),Cheia Domniţei (458 m), Crasna (417 m), Movila (417 m), Repedea (416 m), etc. hills. However, the largest part of Iaşi county territory (49%) is taken by the Lower Jijia Plain, spanning across the Central-Eastern part of the county, with an average altitude of 150 m and bordered to the West and East by declivitous slopes with elevation differences of 200 – 300 m.

From a morphological standpoint, the route of the future motorway starts in the area with plateaus and low alluvial lowlands, crossed by Moldova river, extended hills with heights of 200-593m and valleys with extended alluvial lowlands, belonging to the Moldavian Plateau and crossed by Siret Valley, which runs approximately along the North-South direction. The Moldavian Plain open up to the East, with its subunit - the Lower Jijia Plain, represented by a complex of low interfluves(between 50 and 200m) and corridors of valleys and wide alluvial lowlands oriented towards the East.

1.3 OPPORTUNITY TO EXECUTE THE PROJECT

Historical context

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 European 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-

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European networks should facilitate cross-border connections, foster greater economic, social and territorial cohesion, and contribute to a more competitive social market economy and the fight against 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 observing the principle of technological neutrality;

• In its Communication of 20 July 2010 entitled "Towards a European road safety area: policy guidelines 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 European 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 European 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 various systems involved.

Technical context

The motorway is part of Corridor V, representing Moldavia’s link to Transylvaniaand Europa, a part of Romania’s East-West connection, being also connected to the motorway sectors that have already been completed or are in various implementation stages.

Therefore, a connection is created between major economic centres in Moldavia (Iaşi, Paşcani, Botoşani, Bacău, Suceava, Piatra Neamţ)and those of Transylvaniaand beyond, through Borş border crossing, with Europe’s motorway network.

By building a bridge across Prut river and, implicitly, the Iaşi-Ungheni motorway section, a connection can be achieved with the road network in theRepublic of Moldova and the country’s capital city, the distance between Iaşi and Chişinău decreasing by 25 km.

By carrying out this investment, new jobs will be created, both during the performance of the works and subsequent to their completion.

The connection between Iaşi and Târgu Neamţis currently served by a two-lane national road, whose service level is significantly obsolete in the area of Târgu Frumos locality, which is where European road E583 takes over up to Iaşi.

The average cruising speed ranges between 58 and 65 km/h, significantly below the 100 km/hrequired for a road which is an integral part of the TEN – T network.

In this area, numerous spots with a high density of traffic accidents (black spots) have been identified.

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The course crosses 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 road diversions.

A decrease in the number of car accidents subsequent to project implementation, whose direct result would be to decongest a congested route - E583 - and providing road users with a safer alternative route(Târgu Neamţ – Iaşi Motorway)would manage to save numerous human lives every year.

A road trip duration decrease (accompanied trip duration cost cuts) for passenger and freight road traffic crossing the area envisaged in the project, by providing a route alternative that allows higher cruising speeds, results in time savings.

Another significant aspect refers to decreasing the road infrastructure degradation within localities situated along the alternative routes to the project intended route, particularly as a consequence of lorries using the motorway (as they are the elements causing most of the road infrastructure deterioration).

Moreover, the materialisation of the project would help significantly lower vehicle operating costs, given the shorter travel distance and the state of the infrastructure employed, as well as a lower vehicle wear and tear.

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, of NOx emissions, 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.

Moreover, after being commissioned, the areas crossed by the motorway shall develop aided by the construction of petrol stations, charging stations for electric vehicles, motels, restaurants, etc. These, too, will require additional workforce.

Therefore, the construction of themotorway represents the only viable alternative, both from an ethnic and financial standpoint, for Iaşi – Târgu Neamţ corridor.

1.4 PROPOSALS IN TERMS OF PUBLIC PARTNERS

The public partner shall be the Ministry of Transportation, by means of theNational Company for Road Infrastructure Administration.

Investment beneficiary

The project company – during the performance of the contract.

Upon the completion of the contract, the beneficiary – the public partner.

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1.5 ESTIMATED PROJECT DURATION

The design and construction period shall commence on the public-private partnership contract signing date and last 48 months, in which time the private partner is bound to finalise the construction of the entire motorway and the connecting road which links the motorway to Iaşi municipality.

2 CURRENT STATUS AND THE NEED TO EXECUTE THE PROJECT 2.1 PRESENTATION OF THE CURRENT CONTEXT

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 ranking, 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;

• 28th out of 28 - 466 versus the EU average of 126.

According to this data, we can conclude that Romania has the highest fatal car accident rate in Europe.

Moreover, mention should be made that 30% of all road accidents in Romania and more than 50% of fatal accidents take place across Romania’s national road network.

From a nationwide perspective, the following should be mentioned: Out of the approximately 17,600 km of national road network, nearly 6,700 km (38%) are

found within locality limits. This analysis does not include the length of national roads placed under local administration (large urban areas/urban poles/towns and cities). If we take these areas into account, as well, the share of the length of national roads in localities/urban areas increases and reaches a value higher than 45-50%.

Considering the 90 km/h speed limit outside localities and the 50 km/h speed limitacross localities, as well as the volume percentages of 50% (outside localities) and 50% (within localities), we end up with a maximum average speed 70 km/h on our national roads. Within localities there are numerous access roads, level crossroads, pedestrian crossings, etc.Outside localities there are roads with curves designed for a speed below the maximum speed limit, according to the law. Ultimately, the average speed limit drops from a maximum average value of 70 km/h to an average speed closer to reality, namely 40-60 km/h across the network and as low as 20 km/h in certain local areas.

As far as National Road DN 28 is concerned: approx. 36% of the road course is found within locality limits.

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Across National Road DN 28, for2016, statistics indicate:

• 128 traffic accidents; • 217 motor vehicles involved in traffic accidents; • 13 fatalities; • 55 severely injured persons; • 150 mildly injured persons.

During the 2012-2017 interval, approx. 600 traffic accidents took place!!!!

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.

Roads with 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.

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

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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 or on-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 for lorries:The importance of servicing and parking spaces for lorries, in safe conditions, is acknowledged by the EU in Directive 2008/96/EC on road infrastructure safety management, which takes 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, whereby safe 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 capitalised upon.

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 personal 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: • Târgu Neamţ - Iaşi road connection is included in the TEN – T network, • the current road sectors operate at nearly their maximum traffic capacity, • they cross a great number of linear settlements, • there is a significant share of freight traffic, in excess of 15%, • average cruising speed below 65 km/h, • there is a high number of traffic accidents, • long trip durations and traffic jams lead to significantly increased pollution values.

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.

2.2 NATIONWIDE CAR PARK DENSITY VALUE

Whereas road transportation is one of the most important means of transportation in Romania, one must also keep in mind the current car park density and the manner in which it can change in the future, as it directly influences the choice of this means of transportation.

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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 analysed in context, by comparing it with the car park density in the rest of Europe. 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.

Number of passenger cars per 1000 inhabitants, in the EU (2016)

Source: EUROSTAT For the time being, we find in Romania approximately 390 passenger cars per 1000 inhabitants, which places our country last in the European Union in terms of car park density, the EU average being approximately 500 motor vehicles per 1000 inhabitants.Mention should be made that this diagram does not include motor vehicles registered in Bulgaria, while travelling across Romania.

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 Iaşi countyincreased by 5.8%and is estimated to increase, by 2021, at an average rate of 6%. Mention should be made that, nationwide, the estimated average increase rate is around 5.6%.

2.3 ANALYSIS OF THE CURRENT STATUS AND IDENTIFICATION OF

DEFICIENCIES

The main current route, which links Târgu Neamţto Iaşi, comprisesseveral road sectors, from various categories:

• Târgu Neamţ–the point of entry in Cristeşti locality – DN15B: a single lane per direction of traffic;

• Cristeşti - Moţca E85: a single laneper direction of traffic and a hard shoulder while crossing several localities;

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• Moţca -Paşcani - Târgu Frumos- DN 28A:a single lane per direction of traffic;

• Târgu Frumos - Iaşi E58.

The road traffic deficiencies featured by the current connecting option between Târgu Neamţand Iaşi consist in:

- large costs 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 inadequate roads; - greenhouse gas emission pollution and noise pollution; - high number of car accidents; - elevated time requirements and fuel consumption.

2.4 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 (Gross Domestic Product) evolution; - 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, a downward trend is visible.

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Nationwide Population evolution, by residency, as at January 1 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

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 Iaşicounty,falling under the sphere of influence of Târgu Neamţ – Iaşi Motorway,

2015 2016 2017 2018 2019 2020 2021

Iaşi county 910.984 921.056 930.518 939.359 948.753 958.714 969.184

TOTAL Romania

22.312.800 22.260.700 22.230.800 21.193.500 22.149.100 22.104.800 22.060.600

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

GDP evolution • The growth of demand for transportation is due to the GDP increase, concurrently fuelled by

an increased demand for exports and the growth of the internal market in terms of courier services.Romania witnessed a strong development during the 2000-2008 interval, which relied on significant FDI (foreign direct investment) inputs, credit growth – particularly in foreign currencies, as well as an expansionary fiscal policy. This period was followed by a dramatic GDP decrease and the onset of recession. Real cumulated GDP for 2009 and 2010 decreased by 9.6%. Later on, initially helped by exports and subsequently by domestic demand, the upward economic trends became a reality once again, real cumulated GDPincreasing by 15.8% over the 2011-2015 period. The exit from the recession gap began in the former half of 2016, when the Gross Domestic Product grew above its potentialand the strong demand (both external and domestic demand) added once again road transportation to the mix. We may see in the table below our country’s gross domestic product after 2015and the forecast of its evolution as far as 2021.

GDP evolution during the 2015 -2021 period

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: NISfor 2015-2017, CNSP for 2018 – 2021

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• 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 – 2013 report, 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 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;

- increase rates higher than the GDP for road transportation;

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

–linking exports and FDIs in the N-E region to Tg. Neamţ- Iaşi motorway development

Counties GDP (bn Euro)

Exports (mil. Euro)

FDIs (mil. Euro)

Average number of salaried employees (thousand persons)

Iaşi 5.68 921.732 469 158.8 Neamţ 2.51 434.472 197 81.2 Vaslui 1.71 173.422 43 53.5 Botoşani 1.86 321.661 77 53.9 Suceava 3.46 522.942 453 100.6 Total counties 15.22 2374.23 1239,00 448.00 8.1% 3.8% 1.6% 9.1%

out of total GDPRomania

out of total exports Romania

out of total FDIs Romania

out of total salaried employees Romania

Total RO 187.98 62644.08 75851 4945.9 Data source: CNSP, NIS

• GDP evolution for Iaşi county

In Iaşi county,the GDP/inhabitantin 2017 was 7.154 Euro, the unemployment rate was 4.1% and the net average monthly wage was 2,295 lei/salaried employee.

The 2021 estimates are a GDP/ inhabitant of 9.688 Euro (+35%), a 3.6% unemployment rate and a net average monthly wage of 3,131 lei/ salaried employee (+36.4%).

This medium-term evolution will facilitate the materialisation of the objective.

The county population increased from 823,010 inhabitants in 1992 to 939.359 in 2018.

From a touristic standpoint,the area hosts numerous sightseeing items, such as the

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monasteries which attract all year round a significant number of tourists, the medieval fortresses of Târgu Neamţand Suceava and Iaşi city with its rich cultural and artistic heritage.

The need for motorways in the Northern-Eastern region is critical, considering the fact that there is massive potential in attracting foreign direct investments in labour-intensive fields of activity, also taking benefit from the industrial clusters and parks already present in the region.

According to theNational Competitiveness Strategy 2015-2020, approved as per GD no. 775/2015, the Northern-Eastern region hosts majoreconomic clusters in fields such biotechnologies and clothing, electrical apparatus and equipment and wood processing.

As the Strategy indicates, the “by county” specialisation indicates that Iaşi countyspecialises in the manufacture of machinery, electrical apparatus and equipment, recording or duplication devices, Botoşani – textiles, Neamţ–chemical products, Suceava –wooden products, Vaslui – machinery, electrical apparatus and equipment, Bacău –wooden products, textiles, footwear, etc.

Therefore, the connection to the European transportation network may dramatically contribute to attracting FDIs and the development of potentially competitive industries in the region, by creating jobs and bringing a positive input to Romania’s trade balance.

• 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 Iaşicounty is displayed in the table below: 2014 2015 2016 2017

Nationwide total 314.3 332.1 354.8 388.7 Jud. Iaşi 183 191 202 218

Source:CNSP calculations

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.

One may identify two main causes of this growth: the first consists in the GDP increase and the second in 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 by 109% 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 - 2045 time frame, of the car park density.

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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.Mention should be made that this analysis does not include motor vehicles registered in Bulgaria, while travelling across Romania.

• Other aspects concerning the demand for goods and services

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)

3 CURRENT TRAFFIC ANALYSIS AND FUTURE PROGNOSIS (THE LENGTH AND TYPE OF ROADS WITHIN THE AREAS CROSSED BY THE MOTORWAY, THE NUMBER OF VEHICLES PASSING THROUGH THE AREA, ETC.)

3.1 GENERAL ASPECTS

In 2017, the length of public roads across Iaşi countywas 2,488 km (2.9% of the total public roads).

At the end of 2017, there were 7,635,775 registered road-going vehicles, showing an

Car park density forecast

Year

Fig. no. 2.3.3.2. Car park density forecast (motor cars per one thousand inhabitants) in Romania

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increase of around 8.9% as opposed to the previous year.

For the subsequent period (over a medium and long term),estimates show a weighted increase in the share of road-going means of transportation, set to be 4 – 5% a year, on average.

3.2 TRAFFIC STUDY - 2010

Following the traffic study carried out in 2010, the 2015 estimates indicated that 10,321 units would travel on a daily basis along Motca - Târgu Frumosroute, whereas 12,156 units would drive along Târgu Frumos - Podul Iloaiei and 2,817 units would use Podul Iloaei - Vânători– Iaşi route.

As part of the previously elaborated studies, the estimate showed that, by 2045, the number for Motca - Târgu Frumos route would grow to 31,372 units, for Tîrgu Frumos - Podul Iloaiei route to 36,941 units and for Podul Iloaei- Vânători - Iaşi route to 8,504 units.

3.3 TRAFFIC STUDY- 2018

3.3.1 NATIONAL AND EUROPEAN STRATEGIC CONTEXT The TEN – T network at a European and a national level

2012 marked the completion of the European Union’s New Transportation Network (TEN-T), the creation of which intends to eliminatebottleneck, modernise the infrastructure and streamline cross-border transportation operations for passengers and companies throughout the EU.

The new policy sets forth a central transportation network scheduled to be implemented by 2030 as the transportation backbone as part of the single market. The central transportation network shall be supported by a comprehensive networkregional and national routes, called the“affluent (global) network”, set to bring traffic into the central networkand be completed by 2050.

Following the meeting of the European Union’s Transport, Telecommunications and Energy Council (March 22, 2012), the TEN-T network includes two new routes of the European corridors, which cross Romania’s territory. As such, the new central network TEN-T included Timişoara – Sebeş – Turda – Târgu Mureş – Târgu Neamţ – Iaşi – Ungheni road and railway route as well as Calafat – Craiova – Alexandria – Bucharest road and railway route and Danube Channel – Bucharest route. The Commission also accepted the inclusion in the global network of Borş – Turda and Constanţa – Tulcea – Brăila – Galaţi routes.

The TEN-T policy represents the EU’s efforts to coordinate among the member states the development of transcontinental routes. They are intended to help the development of the central network. The new transportation policy for the 2014-2020 programming period defines a main network, built across nine transcontinental corridors: two North-South corridors, three East-West corridors and four diagonal corridors. Each corridor shall include three transportation methods, three member states and two cross-border sections.

Transportation is vital to the European economy: without proper connections, Europe will neither develop, nor prosper. The EU’s new infrastructure policy shall create a solid European transportation network across the 28member states in order to promote economic growth and competitiveness. This network will connect East to West and replace the current transportation mosaic with an authentic European network.

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That way, Romania will be crossed by two corridors of the central network: the Oriental/Eastern Mediterranean corridor and the Rhine – Danube corridor. This central network, according to the commitments made by Romania, shall have to be completed by 2030, under a motorway or express road regime, in order to lower trip durations across Romania. The ultimate objective, the completion time frame of which is 2050, is that the vast majority of citizens and trading companies in Europe should be able to reach this network within 30 minutes.

Taken in its entirety, the new transportation network shall provide:

a safer and less congested traffic;

more fluid and faster trips;

a lower impact upon the climate.

The picture below presents the new central and global TEN – T network for Romania and Bulgaria.

New central and global TEN – T network for Romania and Bulgaria

The most significant traffic flows are seen along the following routes: Bucharest – Constanţa, Bucharest – Ploieşti – Braşov; Bucharest Beltway; Bucharest – Buzău – Focşani – Bacău - Iaşi, Bucharest – Piteşti – Sibiu, Bucharest – Piteşti – Craiova - Calafat, Bucharest – Giurgiu; Sibiu – Cluj; Sibiu – Sebeş - Turda – Cluj; Nădlac – Arad – Timişoara – Lugoj – Sebeş - Sibiu – Braşov and Cluj – Târgu Mureş – Iaşi.

The central TEN – T network receives the traffic flows which run across the Global TEN – T network.

The deficient state of the road transportation infrastructure leads to poor with the main economic and urban centres and other intermodal transportation nodes, such as ports and airports. Considering the existing deficiencies, we need to continue the motorway construction works so as to finalise the road networks included in the central and global TEN-T network, the rehabilitation,

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overhauling and widening works for our national roads, as well as construction works for locality road diversions, provided they are justified in the General Transportation Masterplan (GTMP).

The strategic objectives identified for the road transportation sector are as follows:

Enhancing the population mobility and the related freight transportation traffic within the basic and the extended TEN-T network, by building a network of motorways and express roads;

Securing, for the population and the business environment, access to thebasic and the extended TEN-T network, by building national connection corridors;

Ensuring a safe and functional road transportation network, able to facilitate a decrease of the number of traffic accidents, as well as of trip durations;

Securing international access via the connections with the neighbouring countries; Securing a transportation network with minimal environmental impact by implementing

road diversion projects.

Consequently, the following development needs have been identified:

increasing accessibilityfor regions and the population via the construction/modernisation of the road network, at European standards, particularly within the TEN-T network;

lowering the incidence of traffic accidents with severe or fatal outcomes, etc.

Nationwide general and particular project promotion context

TEN-T network across Romania’s territory

3.3.2 TRAFFIC MODEL CONSTRUCTION The elaboration of this traffic study made use of the National Transportation Model, drawn

up for the road transportation method, starting from the results and data provided by NTM, calibrated at a national scale based on the latest available data and complying with the accepted

TEN-T NETWORK

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standards, in the context of the necessities resulted from the approval of funding applications as part of LIOP(Large Infrastructure Operational Programme) 2014-2020.

The transportation model description, presented in the subsequent subchapters, complies with: the “Transportation Model Elaboration Report”.

3.3.3 TRANSPORTATION MODEL FUNCTIONALITY The transportation model represents a collection of geo-spatial databases and mathematical

relations intended to produce an abstract depiction of the transportation systems and demand.

The transportation modelhas been developed as an “Assignment Model”, designed to assess a fixed demand for transportation across a predefined network. In assignment models, the results of the “Trip Generation”, “TripDistribution” and “Modal (Traffic) Assignment” stages are calculated externally and represent input data in the assignment modelling process.

The main function of Assignment Models is to calculate the deviate (rerouted) transportation flows following the introduction / improvement of an infrastructure element. In order to reach this objective, one shall start from a schematic representation of the network using curves and nodes, whereas demand is expressed via an Origin – Destination matrix. The assignment of trips is carried out using route-searching algorithms that describe the users’ behaviour in selecting routes based on a generalised trip cost.

The Assignment Model display internal feedback loops – the assignment of demand across a network will change the state of said network (the congestion level and the trip durations). As such, the network state can be adjusted following each assignment, until a stable condition is achieved.

Due to the complex calculation processes, Assignment Models employ specialised modelling software for transportation.

According to “Jaspers Appraisal Guidance (Transport) – The use of transport models in transport planning and Project Appraisal, Aug. 2014”, elaborated by Jaspers (Join Assistance to Support Projects in European Region), Assignment Models can apply to:

• network rehabilitations with expected demand deviations / reroutings, but without any anticipated changesin the selection of modes of transportation or in the demand for transportation;

• transportationpolicies which influence the travel routes within a network.

3.3.4 TRANSPORTATION MODEL GRAPH NETWORK

The transportation network (the graph) has been elaborated by relying on geo-spatial (*.osm) data downloaded from OpenStreetMap.org. *.osm – type database.

The modelled national network contains approximately 14,000 curves and 10,000 nodes, being sufficiently detailed to include the motorways, the national roads and more than 80% of the existing county roads.

• The road network was populated with the following parameters: • landscape type (3 classes – mountain, hill, lowlands); • road technical state (5 classes – very good (5), good (4), medium (3), poor (2), very poor(1)),

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allowed vehicle classes (4 classes – Cars = motor vehicles; LGV = light goods vehicle <3.5 tone; HGV = heavy goods vehicle, comprising lorries with 2 axles, 3-4 axles and articulated lorries; BUS = buses);

• urban or extra-urban sector; • codification subsequent to a census or an OD survey; • proposed connections (motorways, express roads, etc.) and the estimated time frame for

commissioning.

Road network considered for the model base year –2015

3.3.5 ZONING SYSTEM

Elementary areas (TAUs)

Caption Road network Rank

Motorways National roads County roads Township roads Ferry passageway Connecting belt Other category

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The transportation model zoning system relies on the Territorial Administrative Units (TAUs, 3.186). These were considered as the elementary areas, imported in their entirety in the transportation modelin order to be temporarily stored and manipulated until their aggregation within traffic generation and attraction areas.

The traffic assignment model distributes the traffic flows of the origin-destinationmatrices across a network made of curves and nodes. The assignment algorithm shall distribute the traffic values of the origin-destinationmatrices across the network depending on the geometric characteristics of road segments, the potential traffic capacity, the traffic conditions within the network. The calibration procedure intends to render, as close to reality as possible, the structure of network traffic currents from the base year. The fundamental element in obtaining traffic flows distributed across the network segments is the OD matrix, representing the transportation demand.

OD matrices are drawn up for each category of the considered demand and use the data recorded as part of traffic surveys, as well as existing socioeconomic data.

External areas

134 areas

Internal areas

1.169 areas

Proposed zoning system (internal areas and external areas)

3.3.6 DEVELOPMENT OF THE MATRICES PERTAINING TO THE BASE YEAR The OD matrices employed as part of the model were borrowed fromNTM (2011), whereas

OD matrices drawn up based on CESTRIN (Centre for Road Technical Studies and Computer Technology) surveys and censuses were used in the logical verification of traffic relations.

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Transportation demand according toNTM - GTMP

According to chapter 7.2 in the “Transportation Model Elaboration Report” pertaining to the NTM development, the OD matrices contained three components:

• CESTRIN’s observation-based matrices for 2010 (214 posts); • AECOM’s observation-based matrices for 2012 (posts located within penetrations of the 10

largest cities); • synthetic matrices – determined based on the data collected by AECOMin 2012.

The calibrated matrices of transportation demand pertaining to NTM 2011 are structured based on:

• passenger trips,ranked by time of day (AM peak, PM peak, inter-peak and off-peak), by trip purpose both for a trip origin and actual travel;

• freight trips, ranked by type of transported freight and by freight category. The demand for transportation according toNTM 2011 was converted into a vehicle matrix

based on:

- theaverage occupancy values for the passenger cars and buses considered in the GTMP; - the results of CESTRIN 2010 National Traffic Census.

The data collected in 2012 as part of the OD surveys and the counts of bus and coach passengers made by AECOM indicated an average passenger vehicle occupation degree between 1.6and1.9 passengers/vehicle (driver included), depending on the trip purpose,whereas the average number of passengers for buses was 16.8, with significant variations along the 10 screenlines.

Vehicle type

Purpose / Screenline

Occupancy degree

(persons/vehicle)

Motor vehicle

Business 1.597

Commute 1.655

Others (personal) 1.891

Others (holiday) 1.821

Buses/ Coaches

Brăila 12.563

Braşov 16.934

Bucharest 14.890

Cluj 16.496

Constanţa 18.119

Craiova 14.161

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Vehicle type

Purpose / Screenline

Occupancy degree

(persons/vehicle)

Iaşi 14.842

Oradea 19.125

Sibiu 19.452

Timişoara 21.361 Average passenger vehicle occupation degree (2012) Source: AECOM, OD surveys and bus and coach passenger counts

The OD matrices in NTMwere obtained by combining Cestrin 2010 OD surveys, the 2012 OD surveys (scaled to 2011)and the synthetic demand determined as part of NTM.

The picture below summarizes the process used to obtain the matrices for the base year2011, starting from the primary data collected (interviews and classified vehicle counts).

Steps taken to determine the base year (2011) matrices

Source: Model Development Report - GTMP, ch. 7.2. – AECOM

3.3.7 ASCERTAINED DEMAND PROCESSING FOLLOWING CESTRIN 2015 OD SURVEYS

The trip matrices resulted from the 2015 OD Matrices were only used as part of the comparative analyses, the transportation modelborrowing the NTM 2011 transportation demand.

Original Data Source

Expansion to Manual Count

Expansion to 24-Hour Count

Trip Purpose

Remove DoubleCounting

Convert to P-A Format

Combine Matrices

2012 AECOM Interview Data

2010 CESTRINInterview Data Synthetic Data

Using AECOM 2012 Interview Counts

Using 2010 CESTRIN Interview Counts

Using CESTRIN Census Counts

Using CESTRIN Census Counts

Using AECOM Interview Purposes

Using Interview Purposes, splitting EB and HBW using AECOM

Convert using home-end trip proportions from AECOM data

Assign and use # of trips passing through interview sites

Assign and use # of trips passing through interview sites

Calibrate trip generation and distribution relationships

Obtain parameters from AECOM interview data

Combine using indexes from observed AECOM and CESTRIN movements to decide on proportions of each matrix used to produce final total for each movement.

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The fundamental element in obtaining traffic flows distributed across the network segments is the OD matrix, representing the transportation demand. OD matrices are drawn up for each category of the considered demand and use the data recorded as part of traffic surveys.

The initial transportation matrices, pertaining to the base year 2015, were determined using CESTRIN OD surveys (231 posts nationwide) carried out during the performance of the 2015 National Traffic Census.

The figure below presents the methodology employed in order to determine the OD matrices used in the procedure required to calibrate and validate the 2015 base year model.

Methodology used to determine the 2015 base year matrices

The files comprising the results of the OD surveys for each location were imported in a common database in order to be analysed and processed. The OD matrices for each survey post were generated by running an application in Visual Basic programming language.

The 231 analysed survey posts helped generate 924 matrices per post (231 posts detailed for the 4 demand categories,namely passenger vehicles, LGV, HGVand buses). These 924 matrices per post represent the total volume of traffic crossing the survey sections.

The 924 OD matrices were cumulated in order to obtain global matrices, used in the traffic assignment model. The aggregation of matrices took into account the fact that, redundant values may appear in the network, that is, particular traffic currents, of an origin-destination type, recorded by several survey posts, provided that several survey points are placed along a traffic relation.

The procedure applied in order to eliminate redundant values (double instances) is the maximum value algorithm1.

The methodology used to calculate the global matrices is presented below:

• n isthe number associated to the location of the OD survey under consideration; • k= 1...4 is the motor vehicle category, taking into account the previously presented

codification; 1 Another procedure might be using a medium value algorithm, meaning that, if a certain OD relation is found in a second survey point, one shall use the mean value of the first and the second matrix values. This method turned out to produce too low volumes, given that, in general, the main traffic flows are present across very few corridors, whereas the relatively low flows in the same OD relation are distributed over a large number of route variants. The evidence indicated that the maximum value procedure provides more realistic results.

Step 1•Aggregation of initial ample groups in terms of gross zoning, at a TAU level (around 80,000 OD relations

nationwide, within the 3,138 elementary areas)

Step 2•Extrapolation of OD relations at 24h and, subsequently, at AADT levels, using classified traffic counts carried out

simultaneously with OD surveys

Step 3•Elimination of redundant values using the maximum value algorithm

Step 4•Transposition of OD relations within the tailor-made zoning system (1,303 aggregate areas)

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• 3138,...,1, =ji isthe origin-destination area code (the line and column in the OD matrix);

• ( )nij

n xX = , 3138,...,1, =ji , 231=n the OD matrices per post and per vehicle type, as well as

by dimension ( )31383138× . • ( )n

ijknk xX = will calculate the OD matrices per post and per vehicle type, as well as by

dimension ( )31383138× ,and the following is obtained using the relation below:

• ( )nijknijk xx

2311max

≤≤= , 231,...,1, =ji ; k= 1.. 4.

The gross global matrices (obtained via the gross addition of matrices, by post) are adjusted in order to obtain the final matrices via the calibration procedure.

A certain proportion of the total traffic volume is intra-zone traffic, that is, traffic within the area, deemed local traffic. This traffic proportion is an indicator for the medium distance to be travelled by various categories of motor vehicles. A significant share of intra-zone traffic indicates a relatively short distance to be travelled.

Local passenger vehicles and buses account for a high share of intra-zone traffic,meaning that high traffic volumes are recorded for trips over short distances, such as trips taken in the vicinity of cities with elevated traffic values, but over short distances.

In regard to freight-carrying vehicles, the share of intra-zone traffic decreases inversely proportional to the size of these motor vehicles; smaller lorries are used for local distribution of merchandise, whereas heavy-duty lorries operate over long distances or international routes.

Assignment procedure by itinerary

The assignment procedure by itinerary distributes/assigns the transportation demand, represented by the trip matrix, to the transportation offer (represented by the road network). The choice of routes or itineraries uses the “Equilibrium – Lohse” algorithm, underpinned by the impedance function. Impedance, in this case, may be defined as a function of travel / advancement resistance and may take into account a wide range of parameters (the road technical state, levies, cruising speed, etc.).

For the current model, the impedance function was considered to be a Generalised Cost function as per the recommendations of Tag Unit M 3.12. The formula is defined as follows:

Impedance = TCrv + (vehicle operating costs / km * distance / VOT) + (road taxes / VOT)

= TCrv + VOC / VOT + Toll / VOT (units of time)

Where:

• TCrvrepresents the time required to go through a curve (link) [hours]; • Toll represents the fee required to use the infrastructure or the ferry [Euro / vehicle]; • VOT represents the Value of Time [Euro / hour]; • VOC representsVehicle Operating Costs [Euro / km]; in this case, a simplified form of VOC

2 TAG Unit M3.1 Highway Assignment Modelling

33

= f (road technical state) was considered.

The values for the LGV and HGV categories were obtained by means of interpolation or by applying the weighted values of these vehicle categories to primary data. According to the CESTRIN data analysis, heavy-duty lorries (HGV) comprise 24% 2-axle lorries, 11% 3/4-axle lorries and 63% articulated lorries.

3.3.8 UPDATING THE 2011 MATRICES TO THE 2015 VALUES

Updating the demand has the role of bringing particular previously developed OD matrices to current levels by making a comparison with the latest traffic data. As such, calibration represents an iterative process,where demand is adjusted until it meets the replication requirements of the base year with the highest possible accuracy.

Updates to the 2011 matrices

Matrix estimation (ME) is the process by means of which the number of trips in question / assigned to a certain curve (street, road, motorway, etc.) is adjusted so as to correspond to particular values observed (classified traffic counts).

The transportation planning software employed, VISUM, provides various matrix correction methodologies for the matrix estimation procedure. The matrix correction procedures adjust the i-j relations (that is, the trip made by motor vehicles between the origin area “i” and the destination area “j”)so that the traffic values recorded in different locations, on a road section, should indicate minimum differencesas opposed to the traffic values relying on the OD matrices assigned using a road network traffic model. The values of measured traffic flows are compared to those provided by the traffic model.One shall use the GEH parameter, recommended by the “Design Manual for Roads and Bridges” (DMRB, Volume 12, Section 2 - Great Britain), as well as the “Wisconsin state (USA) Guide for macro/microsimulation models”.The advantage of GEH is that it includes both relative and absolute errors.

2/)()( 2

CMCMGEH

+−

=

where M - thevalues in the traffic model, and C - the measured values (hourly traffic values).

In order to calibrate the traffic model, the literature recommends keeping in mind that, for GEH valuesbelow 5in more than 85% of the cases,the model shall be validated.

The GEH statistics represent a comparison method that takes into account not only the differences between the observed and modelled flows, but also the significance of this difference in relation to the scaleof the observed flow.

Following the calibration of matrices, by comparing the two value sets, the reviewed and the modelled ones, for 2015 as the base year, the calibration results reveal that the GEH values for the 4 modelled categories (motor vehicles, freight transportation vehicles and buses) reach, in at least 93% of the cases, values below 5. Therefore, the model calibration meets the GEH criterion.

The verification of the matrix correction process can also be performed by assessing the

34

coefficient of correlation between the two data series: the modelled and the observed ones.

The following shall be presented below:

• the locations of the posts taken into account to adjust the matrices; • setting forth the calibration screenlines, the GEH statistics both for the posts where the TFF

(TFlowFuzzy) procedure was applied, as well as for the remaining posts employed in the census, the coefficient of correlation R2 between the two data sets (modelled flows vs. observed flows);

• verification based on the distribution of distance classes; • calibration validation based on the data acquired from trip duration records or by

calculations of such durations using the Google Maps service.

Total census posts present in the transportation model (943 posts)

Caption Census sectors

35

Location of the census posts used in the matrix correction process(GEH values <5) – 226 posts

Location of the census posts not used in the matrix correction process (GEH values< 5) – 406 posts

GEH values < 5 are obtained in around 2/3 (632) of the cases, out of all the census posts entered in the model (943), which leads to the conclusion that the model generates realistic traffic values.

Caption Census sectors GEH_AADT

Caption Census sectors GEH_AADT

36

Screen line

Modelled(vehicles)

Reviewed (vehicles)

Difference%

1 22,034 22,074 0%

2 35,882 31,692 13%

3 70,89 65,444 8%

4 6,984 56,422 19%

5 80,917 70,558 15%

6 94,31 84,182 12%

7 91 819 87,326 5%

8 22,069 18,712 18%

9 45,194 37,780 20%

10 23,667 20,942 13%

11 45,948 36,667 25%

Verification of the matrix correction process using screenlines countrywide

The previous table indicates an acceptable correlation, according to the FHWA criteria,between the observed and the modelled values, in terms of percentage differences between the flows.

Calibration check based on the distribution of distance classes

The results of distance matrices, obtained from the correction/calibration process, have to be compared to the observed distances matrix in order to make sure that the model has not significantly altered the distribution of distance classes. There is a possibility that, during the process of “matching” the modelled flows to the observed ones following the traffic censuses, the matrix estimation process will add a significant number of trips for the areas placed at the opposite ends of the respective curve, and the effect of this process may generate anomalies (increases) in short-distance (<50 km) trips,whereas the number of long-distance trips may remain unchanged.

In order to check whether the distribution of modelled distance classes corresponds to the distribution of the observed ones, a diagram was generated for each of the four vehicle types considered in the model.

The figures below emphasize the fact that the distribution of distance classes is not significantly altered.

-10%

0%

10%

20%

30%

40%

50%

60%

70%

0 50.000 100.000 150.00motor vehicles

Diferenta maxima % Modelat (vehicule)Maximum difference % Modeled (motor vehicles)

37

Distribution of distance classes before and after the correction of matrices – passenger vehicles (Cars)

Distribution of distance classes before and after the correction of matrices – light lorries (LGV)

Distribution of distance classes before and after the correction of matrices – heavy-duty vehicles (HGV)

Distribution of distance classes before and after the correction of matrices – buses (Bus)

00,10,20,30,40,50,60,70,8

50 100 150 200 250 300 350 400 450 500 550 600

pond

ere

km

Initial Final

00,10,20,30,40,50,60,7

50 100 150 200 250 300 350 400 450 500 550 600

pond

ere

km

Initial Final

0

0,1

0,2

0,3

0,4

0,5

0,6

50 100 150 200 250 300 350 400 450 500 550 600

pond

ere

km

Initial Final

0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

50 100 150 200 250 300 350 400 450 500 550 600

pond

ere

km

Initial Final

share

share

share

share

38

Census posts(screenlines) used as part of the matrix correction process

Road network considered for the model base year – 2015

3.4 TRAFFIC FLOWS (SIMULATED FOR 2015, WITHOUT PROJECT)

The figures below present the traffic flows during the 2015 stage (the model base year), without project, for the roads within the study range, expressed as total physical vehicles.

For an easier understanding of the flows pertaining to each category of users in the

Caption

Connecting belts

Motorways National roads County roads Township roads Ferry passageway Connecting belt Other category

Caption Road network Rank

39

analysed area, figure a displays the flows of passenger vehicles (CAR), figureb corresponds to flows of commercial vehicles (LGV,HGV) and figure c details upon the flows of busses (BUS).

3.4.1 TRAFFIC FLOWS FOR THE OPTION MAINTAINING THE CURRENT ROUTE UNCHANGED

40

Passenger cars – traffic flows AADT(ph.v.) –2020 stage(ph.v. – physical vehicles)

Tg Neamț – Iași Motorway

Tg Neamț

Caption 2020, WITH PROJECT

41

Commercial vehicles – traffic flows AADT (ph.v.) – 2020 stage

Tg Neamț – Iași Motorway

Tg Neamț

Caption 2020, WITH PROJECT

42

Buses – traffic flows AADT (ph.v.) – 2020 stage

Tg Neamț – Iași Motorway

Tg Neamț

Caption

43

Passenger cars – traffic flows AADT (ph.v.) – 2045 stage

Tg Neamț – Iași Motorway

Tg Neamț

Caption 2045, WITH PROJECT

44

Commercial vehicles – traffic flows AADT (ph.v.) – 2045 stage

Tg Neamț – Iași Motorway

Tg Neamț

Caption 2045, WITH PROJECT

45

Buses – traffic flows AADT (ph.v.) – 2045 stage

Tg Neamț – Iași Motorway

Tg Neamț

Caption

46

3.4.2 ANALYSIS OF TRAFFIC FLOWS FOR THE OPTION MAINTAINING THE CURRENT ROUTE UNCHANGED

We can see in the drawing below the motorway route according to the initial proposition.

However, it is visible that, in this case, the motorway does not sufficiently take over traffic from DN 28.

47

TRONSON = SECTION; VALOARE C+M = C&A (construction & assembly) cost; NOD RUTIER = ROAD NODE; TUNEL = TUNNEL; DRUM DE LEGĂTURĂ = CONNECTING ROAD; NOUL POD = NEW BRIDGE; VECHIUL POD = OLD BRIDGE; MODIFICARE 1 DRUM LEG 4 BENZI = 1ST CHANGE, 4-LANE CONNECTING ROAD MODIFICARE 2 DRUM LEG 4 BENZI ÎN LOC DE DOUĂ = 2ND CHANGE, 4-LANE INSTEAD OF 2-LANE CONNECTING ROAD MODIFICARE 3 and bypass NODE

48

In order to make it possible for the motorway to take over traffic at its full potential, the following Project changes are necessary. They shall be considered as such and complied with by the Contractor.

The changes are not significant, either as a part of the project or in terms of execution works.

Change 1.

Road node relocation from the built-up area of Târgu Frumos locality to its immediate proximity, as well as laying down a connecting road featuring a design speed in excess of90 km/h. The connecting road would intersect national road DN28 in the form of a multiple level crossing, via a road node with connecting belts designed for traffic speeds of at least 60 km/h. Increased accessibility to the motorwayis an asset that has to be capitalised on to the fullest.

Change 2.

The road node fromkm 61 would basically be eliminated, leaving the motorway route continue on the direction of the connecting road to DN28,built as a motorway. As such, the connecting road would basically disappear and leave instead a motorway which intersects DN28 via a multiple level crossing.

Change3.

DN28 widening between the road node represented by the intersection of the motorway withDN28 (according to thedetails mentioned at change 2)and the intersection with Iaşi by-pass.

The intersection of DN28with Iaşi by passshall take the shape of a multiple level crossing.

49

Change 1

NOD RUTIER = ROAD NODE; TUNEL = TUNNEL; MODIFICARE 1 DRUM LEG 4 BENZI = 1ST CHANGE, 4-LANE CONNECTING ROAD

50

Changes 2and3

NOD RUTIER = ROAD NODE; TUNEL = TUNNEL; MODIFICARE 2 DRUM LEG 4 BENZI ÎN LOC DE DOUĂ = 2ND CHANGE, 4-LANE INSTEAD OF 2-LANE CONNECTING ROAD MODIFICARE 3 LĂRGIRE 4 BENZI DN 28 and NOD cu bypass = 3RD CHANGE, EXTENSION TO 4 LANES DN (national road) 28 and bypass NODE

51

3.4.3 TRAFFIC FLOWS FOR THE OPTION WITH INCLUDED LOCAL CHANGES

Considering the changes proposed in chapter3.4.2,the new inputs were entered in the road transportation model, with the following traffic flows resulted for the 2015 (base year) time frame. Furthermore, taking into account the evident improvements occurred following the proposed changes, the Substantiation Study has kept these changes(inthe transportation modelwhich underpinned the substantiation study in terms of actual and projected traffic flows).

52

Passenger cars – traffic flows AADT (ph.v.) – 2015 stage

Tg Neamţ – Iaşi Motorway

Tg Neamţ

Iaşi

Caption 2015, WITHOUT PROJECT

53

Commercial vehicles – traffic flows AADT (ph.v.) – 2015 stage

Tg Neamţ – Iaşi Motorway

Tg Neamţ

Iaşi

Caption 2015, WITHOUT PROJECT

54

Buses– traffic flows AADT (ph.v.) – 2015 stage

Tg Neamţ – Iaşi Motorway

Tg Neamţ

Iaşi

Caption 2015, WITHOUT PROJECT

55

2015 TRAFFIC DATA FROM THE NATIONAL ROADS, WITHOUT PROJECT

2015 traffic, without project (physical motor vehicles)

No. ROAD Sector limits Sector length (Km)

BUS CAR LGV HGV

Total physical motor

vehicles

Trip durations BUS

Trip durations CAR

Trip durations LGV

Trip durations HGV

Speed BUS

Speed CAR

Speed LGV

Speed HGV

1

DN28A-DN28 INT(DN 28A-DN 2) – INT(DN 28-DN 24C)

3.995 172 4868 622 677 6339 6min 5min 19s 5min 19s 6min 40 45 45 40 2 2.667 168 4782 597 656 6203 1min 48s 1min 48s 1min 48s 1min 53s 89 89 89 85 3 1.790 168 4782 597 656 6203 2min 13s 2min 13s 2min 13s 2min 13s 49 49 49 49 4 1.698 168 4782 597 656 6203 1min 9s 1min 9s 1min 9s 1min 12s 89 89 89 85 5 1.602 168 4782 597 656 6203 2min 24s 1min 57s 1min 57s 2min 24s 40 49 49 40 6 1.313 234 6446 767 870 8317 1min 59s 1min 58s 1min 58s 1min 59s 40 40 40 40 7 2.307 170 6121 696 573 7560 3min 28s 3min 13s 3min 13s 3min 28s 40 43 43 40 8 2.369 170 6121 696 573 7560 1min 37s 1min 37s 1min 37s 1min 40s 88 88 88 85 9 1.147 170 6121 696 573 7560 1min 27s 1min 27s 1min 27s 1min 27s 48 48 48 48 10 2.840 170 6121 696 573 7560 1min 56s 1min 56s 1min 56s 2min 88 88 88 85 11 3.278 170 6121 696 573 7560 4min 8s 4min 8s 4min 8s 4min 8s 48 48 48 48 12 11.613 179 6354 722 581 7836 7min 54s 7min 54s 7min 54s 8min 12s 88 88 88 85 13 0.927 179 6354 722 581 7836 1min 23s 1min 19s 1min 19s 1min 23s 40 42 42 40 14 1.632 554 12109 1544 1986 16193 2min 28s 2min 27s 2min 27s 2min 28s 40 40 40 40 15 3.661 464 11412 1327 1256 14459 3min 47s 3min 47s 3min 47s 3min 47s 58 58 58 58 16 3.592 464 11412 1327 1256 14459 2min 24s 2min 11s 2min 11s 2min 32s 90 99 99 85 17 0.958 464 11333 1310 1216 14323 1min 14s 1min 14s 1min 14s 1min 14s 47 47 47 47 18 3.079 464 11333 1310 1216 14323 2min 3s 1min 52s 1min 52s 2min 10s 90 99 99 85 19 1.574 464 11333 1310 1216 14323 2min 1s 2min 1s 2min 1s 2min 1s 47 47 47 47 20 1.908 464 11333 1310 1216 14323 1min 16s 1min 10s 1min 10s 1min 21s 90 99 99 85 21 5.838 464 11333 1310 1216 14323 7min 30s 7min 30s 7min 30s 7min 30s 47 47 47 47 22 0.484 489 11559 1320 1081 14449 37s 37s 37s 37s 47 47 47 47 23 6.930 489 11559 1320 1081 14449 4min 37s 4min 12s 4min 12s 4min 54s 90 99 99 85 24 4.353 489 11559 1320 1081 14449 5min 35s 5min 35s 5min 35s 5min 35s 47 47 47 47 25 1.331 547 12574 1401 1023 15545 53s 49s 49s 56s 90 99 99 85 26 2.026 547 12574 1401 1023 15545 1min 21s 1min 14s 1min 14s 1min 26s 90 99 99 85 27 4.194 476 10765 1085 632 12958 3min 38s 3min 38s 3min 38s 3min 38s 69 69 69 69 28 2.828 467 10496 1053 632 12648 4min 15s 3min 42s 3min 42s 4min 15s 40 46 46 40 29 1.152 467 10496 1053 632 12648 1min 57s 1min 57s 1min 57s 1min 57s 36 36 36 36 30 0.812 464 10692 1058 419 12633 1min 22s 1min 22s 1min 22s 1min 22s 36 36 36 36 31 0.342 464 10692 1058 419 12633 34s 34s 34s 34s 36 36 36 36 32 0.440 134 4866 297 419 5716 40s 40s 40s 40s 40 40 40 40

56

3.5 TRAFFIC FORECAST ELEMENTS The elaboration of the traffic forecast model required drawing up forecast matrices for various

time frames,starting from the OD matrices calibrates for the base year (2015).

3.5.1 TRAFFIC EVOLUTION ELEMENTS According to the data provided by CESTRIN, the analysis of the results of the 2015 Traffic

census conducted across the national road network, in comparison with the 2010 census, reveals the following:

the increase of the annual average daily traffic across the national road network in 2015, as opposed to 2010, is around 1%;

the“passenger vehicle” category produced a decrease of around 1%, whereas an increase of around 15% showed the “articulated vehicles” (HGVs) category;

moreover, a significant decrease, of around 21%, was identified for 3- or 4-axle motor vehicles, whereas the value for motor vehicles with trailer increased by around 8%;

the most significant increase, namely 40%, was found in the case of busesand minivans with 8+1 seats;

over a series of road sectors, the AADT traffic exceeds 16,000 veh./24 hours, which is the traffic volume required to place a road into technical class I, as per the Technical rules for setting the technical classes of public roads;

acrossaround 1/3 of the national road network length, the share of heavy-duty motor vehicles exceeds 20% of the total traffic;

an increase by more than 15% of the articulated vehicle traffic determines a significant increase of traffic aggressiveness upon the road structures;

in the case of county roads, we see an annual average daily traffic decrease of around 5%; the national road network sectors which provided traffic values that exceed the country

average are located in the vicinity of large municipalities, as well as Bucharest municipality.

Nevertheless,following the analysis of the results obtained by processing the data collected from the network of totalizing and classifying meters, we see for 2016, in comparison with 2015, a favourable evolution of the average traffic values across the national road network, as follows:

according to the network of totalizing meters (around 300 items of equipment), the annual average daily trafficincreased by around 4.7%;

according to the network of classifying meters (around 120 items of equipment, located primarily along European and main national roads), theannual average daily traffic increased, on average, by around 5%.

Considering the upward trend revealed after processing the data from the network of automatic traffic recorders, data that indicated a 4.7% increase for 2016, as well as the car park density increase forecast, the GDP evolution and the prospect of new investments to be carried out in the economic sector and in infrastructure, we may expect a traffic increase, which leads us to recommend the use of coefficients that are weighted between the average and the optimistic ones, for the 2015-2025period, and the average coefficients for the 2030-2040 period.

AADT

AADT

57

Annual variation – automatic traffic records

3.5.2 ESTIMAREA RATELOR DE EVOLUŢIE A TRAFICULUI RUTIER The traffic evolution factors were estimated based on historical data concerning:

• the demographic evolution based on the NIS data (1990-2017); • the evolution of the national car park based on the NIS / DRPCIV (Directorate for Driving

Licences and Vehicle Registrations) data(1990-2017); • the GDP evolution based on NIS data (1990-2017)and CNSP estimates (2018-2022); • the road traffic evolution based on the CESTRIN data (1990-2017).

For the data series we drew up simple or polynomial linear regression functions, which helped estimate traffic evolution coefficients across the entire road network in Romania.

Demographic evolution

In order to estimate the population evolution, we considered a linear function with a correlation coefficient R2=0.97. The population forecast estimates around 15.5 million inhabitants for the 2045 time frame, a value close to the official predictions.

YEAR

58

Population evolution estimate for the 2018 – 2045 interval

Source: National Institute of Statistics and Economic Studies

National passenger car park evolution

In order to estimate the evolution of the degree of passenger car ownership, we considered a polynomial function with a correlation coefficientR2 = 0.99.For the ownership degree estimate we considered a target of 600 passenger vehicles / 1,000 inhabitants, a value estimated to be reached around the year 2035. Beyond this reached value, a stagnation of the car park was considered.

An Populatie Prognoza1990 23,201,8351991 23,001,1551992 22,794,2841993 22,763,2801994 22,730,2111995 22,684,2701996 22,619,0041997 22,553,9781998 22,507,3441999 22,472,0402000 22,442,9712001 22,131,9702002 21,730,4962003 21,574,3262004 21,451,7482005 21,319,6852006 21,193,7602007 20,882,9822008 20,537,8752009 20,367,4872010 20,246,8712011 20,147,5282012 20,058,0352013 19,983,6932014 19,908,9792015 19,815,4812016 19,699,3122017 19,644,3502018 19,344,5152019 19,199,7802020 19,055,0452021 18,910,3102022 18,765,5752023 18,620,8412024 18,476,1062025 18,331,3712026 18,186,6362027 18,041,9022028 17,897,1672029 17,752,4322030 17,607,6972031 17,462,9622032 17,318,2282033 17,173,4932034 17,028,7582035 16,884,0232036 16,739,2882037 16,594,5542038 16,449,8192039 16,305,0842040 16,160,3492041 16,015,6152042 15,870,8802043 15,726,1452044 15,581,4102045 15,436,675

INSSursa datelor 1990 - 2017:

y = -144,733.78x + 311,419,300.56R² = 0.97

10,000,000

11,000,000

12,000,000

13,000,000

14,000,000

15,000,000

16,000,000

17,000,000

18,000,000

19,000,000

20,000,000

21,000,000

22,000,000

23,000,000

24,000,000

25,000,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

Populatie Prognoza Linear (Populatie)

Year | Population| Forecast

1990 – 2017 data source: NIS

Population Forecast Linear (Population)

59

Passenger car park evolution estimate for the 2018 – 2045 interval

Source:Analysis based onNIS / DRPCIV data

An Autoturisme Prognoza Populatie CO10001990 1,292,2831991 1,431,5661992 1,593,0291993 1,793,0541994 2,020,0171995 2,197,4771996 2,326,1771997 2,447,0871998 2,594,5711999 2,702,0712000 2,777,5942001 2,881,1912002 2,973,3902003 3,087,6282004 3,225,3672005 3,363,7792006 3,220,6822007 3,616,6732008 4,087,1802009 4,302,2682010 4,376,2612011 4,389,0702012 4,548,9382013 4,755,0882014 4,964,6062015 5,209,8662016 5,524,9262017 6,048,3982018 5,910,085 19,344,515 3062019 6,127,483 19,199,780 3192020 6,348,999 19,055,045 3332021 6,574,633 18,910,310 3482022 6,804,386 18,765,575 3632023 7,038,256 18,620,841 3782024 7,276,244 18,476,106 3942025 7,518,351 18,331,371 4102026 7,764,576 18,186,636 4272027 8,014,919 18,041,902 4442028 8,269,380 17,897,167 4622029 8,527,959 17,752,432 4802030 8,790,656 17,607,697 4992031 9,057,472 17,462,962 5192032 9,328,405 17,318,228 5392033 9,603,457 17,173,493 5592034 9,882,626 17,028,758 5802035 10,165,914 16,884,023 602 < indice motorizare tinta2036 10,165,914 16,739,288 6072037 10,165,914 16,594,554 6132038 10,165,914 16,449,819 6182039 10,165,914 16,305,084 6232040 10,165,914 16,160,349 6292041 10,165,914 16,015,615 6352042 10,165,914 15,870,880 6412043 10,165,914 15,726,145 6462044 10,165,914 15,581,410 6522045 10,165,914 15,436,675 659

INS / DRPCIVSursa datelor 1990 - 2017:

y = 2,059.06x2 - 8,095,027.29x + 7,956,515,700.87R² = 0.99

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

Autoturisme Prognoza Poly. (Autoturisme) Linear (Autoturisme)

Year | Vehicles | Forecast Population

Vehicles Forecast Poly (Vehicles) Linear (Vehicles)

target car park density

1990 – 2017 data source: NIS/DRPCIV

60

National freight vehicle park evolution

In order to estimate the evolution of the degree of freight-carrying vehicle ownership, we considered a polynomial function with a correlation coefficient R2 = 0,98. In order to estimate the degree of freight-carrying vehicle ownership, we considered a stagnation of the vehicle park evolution after 2035.

Freight vehicle park evolution estimate for the 2018 – 2045 interval

Source: NIS / DRPCIV

An Autoveh. marfa Prognoza Populatie GO10001990 258,701 23,201,8351991 259,566 23,001,1551992 275,487 22,794,2841993 298,318 22,763,2801994 322,417 22,730,2111995 343,064 22,684,2701996 376,817 22,619,0041997 390,181 22,553,9781998 405,743 22,507,3441999 417,780 22,472,0402000 427,152 22,442,971 192001 437,968 22,131,9702002 447,299 21,730,4962003 463,099 21,574,3262004 482,425 21,451,7482005 493,821 21,319,685 232006 457,012 21,193,7602007 587,380 20,882,9822008 645,340 20,537,8752009 661,859 20,367,4872010 667,219 20,246,871 332011 696,260 20,147,5282012 719,926 20,058,0352013 761,554 19,983,6932014 806,523 19,908,9792015 856,257 19,815,481 432016 912,790 19,699,3122017 841,264 19,644,3502018 952,158 19,344,515 492019 991,022 19,199,780 522020 1,030,917 19,055,045 542021 1,071,842 18,910,310 572022 1,113,798 18,765,575 592023 1,156,785 18,620,841 622024 1,200,802 18,476,106 652025 1,245,850 18,331,371 682026 1,291,929 18,186,636 712027 1,339,038 18,041,902 742028 1,387,178 17,897,167 782029 1,436,349 17,752,432 812030 1,486,550 17,607,697 842031 1,537,782 17,462,962 882032 1,590,044 17,318,228 922033 1,643,337 17,173,493 962034 1,697,661 17,028,758 1002035 1,753,015 16,884,023 1042036 1,753,015 16,739,288 1052037 1,753,015 16,594,554 1062038 1,753,015 16,449,819 1072039 1,753,015 16,305,084 1082040 1,753,015 16,160,349 1082041 1,753,015 16,015,615 1092042 1,753,015 15,870,880 1102043 1,753,015 15,726,145 1112044 1,753,015 15,581,410 1132045 1,753,015 15,436,675 114

INS / DRPCIVSursa datelor 1990 - 2017:

y = 515.32x2 - 2,041,482.70x + 2,022,114,242.88R² = 0.98

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

Autoveh. marfa Prognoza Poly. (Autoveh. marfa) Linear (Autoveh. marfa)

Year | Freight vehicles | Forecast Population

1990 – 2017 data source: NIS/DRPCIV

Road freight vehicles

Forecast Poly. (Road freightvehicles)

Linear (Road freightvehicles)

61

Gross domestic product (GDP) evolution

In order to estimate the Gross Domestic Product evolution, we considered a linear function with a correlation coefficient R2 = 0.91

GDP evolution estimate for the 2018 – 2045 interval (lei)

Source: NIS / CNSP

Gross domestic product evolution (real increase)

Source: NIS / CNSP

An PIB Prognoza Populatie GDP / capita1990 35,822,727,273 23,201,835 1,5441991 27,186,842,105 23,001,155 1,1821992 24,646,666,667 22,794,284 1,0811993 24,446,448,684 22,763,280 1,0741994 27,767,189,124 22,730,211 1,2221995 35,499,754,058 22,684,270 1,5651996 35,154,719,429 22,619,004 1,5541997 33,273,577,009 22,553,978 1,4751998 37,600,833,709 22,507,344 1,6711999 32,238,961,717 22,472,040 1,4352000 33,639,089,778 22,442,971 1,4992001 36,647,534,496 22,131,970 1,6562002 41,608,016,941 21,730,496 1,9152003 53,305,542,169 21,574,326 2,4712004 68,116,217,790 21,451,748 3,1752005 88,124,000,412 21,319,685 4,1332006 109,157,529,370 21,193,760 5,1502007 151,658,614,609 20,882,982 7,2622008 185,446,901,425 20,537,875 9,0302009 150,830,059,358 20,367,487 7,4052010 150,108,121,716 20,246,871 7,4142011 162,642,590,041 20,147,528 8,0732012 150,595,726,890 20,058,035 7,5082013 168,696,054,569 19,983,693 8,4422014 176,521,706,676 19,908,979 8,8662015 156,415,183,364 19,815,481 7,8942016 168,376,724,478 19,699,312 8,5472017 186,694,184,991 19,644,350 9,5042018 196,962,365,165 196,962,365,165 19,344,515 10,1822019 208,189,219,979 208,189,219,979 19,199,780 10,8432020 220,056,005,518 220,056,005,518 19,055,045 11,5482021 231,058,805,794 231,058,805,794 18,910,310 12,2192022 242,611,746,084 242,611,746,084 18,765,575 12,9292023 235,912,778,977 18,620,841 12,6692024 243,281,802,230 18,476,106 13,1672025 250,650,825,483 18,331,371 13,6732026 258,019,848,737 18,186,636 14,1872027 265,388,871,990 18,041,902 14,7102028 272,757,895,243 17,897,167 15,2402029 280,126,918,496 17,752,432 15,7802030 287,495,941,750 17,607,697 16,3282031 294,864,965,003 17,462,962 16,8852032 302,233,988,256 17,318,228 17,4522033 309,603,011,509 17,173,493 18,0282034 316,972,034,763 17,028,758 18,6142035 324,341,058,016 16,884,023 19,2102036 331,710,081,269 16,739,288 19,8162037 339,079,104,522 16,594,554 20,4332038 346,448,127,776 16,449,819 21,0612039 353,817,151,029 16,305,084 21,7002040 361,186,174,282 16,160,349 22,3502041 368,555,197,535 16,015,615 23,0122042 375,924,220,789 15,870,880 23,6862043 383,293,244,042 15,726,145 24,3732044 390,662,267,295 15,581,410 25,0722045 398,031,290,548 15,436,675 25,785

INS / CNPSursa datelor 1990 - '17/22:

y = 7,369,023,253.25x - 14,671,621,262,347.80R² = 0.91

0

50,000,000,000

100,000,000,000

150,000,000,000

200,000,000,000

250,000,000,000

300,000,000,000

350,000,000,000

400,000,000,000

450,000,000,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

PIB Prognoza Linear (PIB)

anul 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022PIB (%) 0.0 -5.5 -12.9 -8.8 1.5 3.9 7.1 3.9 -6.1 -4.8 -1.2 2.1 5.7 5.1 5.2 8.4 4.1 6.7 6.4 7.3 -6.6 -1.6 2.3 0.6 3.4 3.0 3.9 4.8 6.9 5.5 5.7 5.7 5.7 5.0

0,0

-5,5

-12,9-8,8

1,53,9

7,13,9

-6,1-4,8-1,2

2,15,7 5,1 5,2 8,4

4,16,7 6,4 7,3

-6,6

-1,6

2,30,6

3,4 3,0 3,9 4,86,9 5,5 5,7 5,7 5,75,0

-15,0

-10,0

-5,0

0,0

5,0

10,0

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Year | GDP | Forecast Population | GDP/capita

1990 – ‘17/22 data source: NIS/NCP (National Commission of Prognosis)

GDP Forecast Linear (GDP)

GDP year

62

Road traffic evolution across the road network as a whole

In order to estimate the average road traffic evolution, we considered a linear function with a coefficient of correlation R2 = 0.90. The resulted average evolution value was consequently obtained for the entire network.

AADT evolution estimate for the 2018 – 2045 interval

Source:Analysis based onCESTRIN data

An Trafic (MZA) Prognoza1990 2,3051991 1,9581992 2,1511993 2,4171994 2,7441995 3,2091996 3,1521997 3,0151998 3,2841999 3,1242000 3,1282001 3,2012002 3,2282003 3,3552004 3,7862005 4,0782006 4,4372007 4,9282008 5,3852009 5,3022010 4,8962011 5,0342012 4,8942013 4,8812014 4,7722015 5,0542016 5,2902017 5,638 5,6382018 5,7672019 5,8972020 6,0272021 6,1572022 6,2872023 6,4182024 6,5482025 6,6782026 6,8082027 6,9382028 7,0692029 7,1992030 7,3292031 7,4592032 7,5892033 7,7202034 7,8502035 7,9802036 8,1102037 8,2402038 8,3712039 8,5012040 8,6312041 8,7612042 8,8912043 9,0222044 9,1522045 9,282

CESTRINSursa datelor 1990 - 2017

y = 130.2x - 256977R² = 0.9012

0

2,000

4,000

6,000

8,000

10,000

12,000

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045

Trafic (MZA) Prognoza Linear (Prognoza) Linear (Trafic (MZA))

Year | Traffic (AADT) | Forecast

1990 – 2017 data source CESTRIN

Traffic (AADT)

Forecast Linear (Forecast)

Linear (Traffic (AADT))

63

Estimates of traffic evolution coefficients for the 2018-2045 period

An MZA Populatie Autoturisme Autoveh. marfa PIB An Trafic Populatie Autoturisme Autoveh. marfa PIB Autoturisme Autoveh. marfa Ev. Pasageri Ev. Marfuri Ev. Pasageri Ev. Marfuri1990 2,305 23,201,835 1,292,283 258,701 35,822,727,273 1990 1.00 1.00 1.00 1.00 1.001991 1,958 23,001,155 1,431,566 259,566 27,186,842,105 1991 0.85 0.99 1.11 1.00 0.761992 2,151 22,794,284 1,593,029 275,487 24,646,666,667 1992 0.93 0.98 1.23 1.06 0.691993 2,417 22,763,280 1,793,054 298,318 24,446,448,684 1993 1.05 0.98 1.39 1.15 0.681994 2,744 22,730,211 2,020,017 322,417 27,767,189,124 1994 1.19 0.98 1.56 1.25 0.781995 3,209 22,684,270 2,197,477 343,064 35,499,754,058 1995 1.39 0.98 1.70 1.33 0.991996 3,152 22,619,004 2,326,177 376,817 35,154,719,429 1996 1.37 0.97 1.80 1.46 0.981997 3,015 22,553,978 2,447,087 390,181 33,273,577,009 1997 1.31 0.97 1.89 1.51 0.931998 3,284 22,507,344 2,594,571 405,743 37,600,833,709 1998 1.42 0.97 2.01 1.57 1.051999 3,124 22,472,040 2,702,071 417,780 32,238,961,717 1999 1.36 0.97 2.09 1.61 0.902000 3,128 22,442,971 2,777,594 427,152 33,639,089,778 2000 1.36 0.97 2.15 1.65 0.942001 3,201 22,131,970 2,881,191 437,968 36,647,534,496 2001 1.39 0.95 2.23 1.69 1.022002 3,228 21,730,496 2,973,390 447,299 41,608,016,941 2002 1.40 0.94 2.30 1.73 1.162003 3,355 21,574,326 3,087,628 463,099 53,305,542,169 2003 1.46 0.93 2.39 1.79 1.492004 3,786 21,451,748 3,225,367 482,425 68,116,217,790 2004 1.64 0.92 2.50 1.86 1.902005 4,078 21,319,685 3,363,779 493,821 88,124,000,412 2005 1.77 0.92 2.60 1.91 2.462006 4,437 21,193,760 3,220,682 457,012 109,157,529,370 2006 1.92 0.91 2.49 1.77 3.052007 4,928 20,882,982 3,616,673 587,380 151,658,614,609 2007 2.14 0.90 2.80 2.27 4.232008 5,385 20,537,875 4,087,180 645,340 185,446,901,425 2008 2.34 0.89 3.16 2.49 5.182009 5,302 20,367,487 4,302,268 661,859 150,830,059,358 2009 2.30 0.88 3.33 2.56 4.212010 4,896 20,246,871 4,376,261 667,219 150,108,121,716 2010 2.12 0.87 3.39 2.58 4.192011 5,034 20,147,528 4,389,070 696,260 162,642,590,041 2011 2.18 0.87 3.40 2.69 4.542012 4,894 20,058,035 4,548,938 719,926 150,595,726,890 2012 2.12 0.86 3.52 2.78 4.202013 4,881 19,983,693 4,755,088 761,554 168,696,054,569 2013 2.12 0.86 3.68 2.94 4.712014 4,772 19,908,979 4,964,606 806,523 176,521,706,676 2014 2.07 0.86 3.84 3.12 4.932015 5,054 19,815,481 5,209,866 856,257 156,415,183,364 2015 2.19 0.85 4.03 3.31 4.37 2015 1.00 1.002016 5,290 19,699,312 5,524,926 912,790 168,376,724,478 2016 2.30 0.85 4.28 3.53 4.702017 5,638 19,644,350 6,048,398 841,264 186,694,184,991 2017 2.45 0.85 4.68 3.25 5.21 2.45 2.45 2.45 2.452018 5,767 19,344,515 5,910,085 952,158 196,962,365,165 2018 2.50 0.83 4.57 3.68 5.50 3.64 3.34 2.73 2.592019 5,897 19,199,780 6,127,483 991,022 208,189,219,979 2019 2.56 0.83 4.74 3.83 5.81 3.79 3.49 2.81 2.652020 6,027 19,055,045 6,348,999 1,030,917 220,056,005,518 2020 2.61 0.82 4.91 3.98 6.14 3.96 3.65 2.88 2.72 2020 1.32 1.242021 6,157 18,910,310 6,574,633 1,071,842 231,058,805,794 2021 2.67 0.82 5.09 4.14 6.45 4.12 3.80 2.96 2.782022 6,287 18,765,575 6,804,386 1,113,798 242,611,746,084 2022 2.73 0.81 5.27 4.31 6.77 4.28 3.96 3.04 2.852023 6,418 18,620,841 7,038,256 1,156,785 235,912,778,977 2023 2.78 0.80 5.45 4.47 6.59 4.28 3.95 3.08 2.902024 6,548 18,476,106 7,276,244 1,200,802 243,281,802,230 2024 2.84 0.80 5.63 4.64 6.79 4.41 4.08 3.15 2.962025 6,678 18,331,371 7,518,351 1,245,850 250,650,825,483 2025 2.90 0.79 5.82 4.82 7.00 4.53 4.20 3.22 3.03 2025 1.47 1.382026 6,808 18,186,636 7,764,576 1,291,929 258,019,848,737 2026 2.95 0.78 6.01 4.99 7.20 4.66 4.33 3.30 3.092027 6,938 18,041,902 8,014,919 1,339,038 265,388,871,990 2027 3.01 0.78 6.20 5.18 7.41 4.80 4.45 3.37 3.152028 7,069 17,897,167 8,269,380 1,387,178 272,757,895,243 2028 3.07 0.77 6.40 5.36 7.61 4.93 4.58 3.44 3.222029 7,199 17,752,432 8,527,959 1,436,349 280,126,918,496 2029 3.12 0.77 6.60 5.55 7.82 5.06 4.71 3.51 3.282030 7,329 17,607,697 8,790,656 1,486,550 287,495,941,750 2030 3.18 0.76 6.80 5.75 8.03 5.20 4.84 3.58 3.35 2030 1.63 1.532031 7,459 17,462,962 9,057,472 1,537,782 294,864,965,003 2031 3.24 0.75 7.01 5.94 8.23 5.33 4.98 3.66 3.412032 7,589 17,318,228 9,328,405 1,590,044 302,233,988,256 2032 3.29 0.75 7.22 6.15 8.44 5.47 5.11 3.73 3.472033 7,720 17,173,493 9,603,457 1,643,337 309,603,011,509 2033 3.35 0.74 7.43 6.35 8.64 5.60 5.25 3.80 3.542034 7,850 17,028,758 9,882,626 1,697,661 316,972,034,763 2034 3.41 0.73 7.65 6.56 8.85 5.74 5.38 3.87 3.602035 7,980 16,884,023 10,165,914 1,753,015 324,341,058,016 2035 3.46 0.73 7.87 6.78 9.05 5.88 5.52 3.95 3.67 2035 1.80 1.672036 8,110 16,739,288 10,165,914 1,753,015 331,710,081,269 2036 3.52 0.72 7.87 6.78 9.26 5.95 5.59 4.00 3.732037 8,240 16,594,554 10,165,914 1,753,015 339,079,104,522 2037 3.58 0.72 7.87 6.78 9.47 6.02 5.65 4.06 3.782038 8,371 16,449,819 10,165,914 1,753,015 346,448,127,776 2038 3.63 0.71 7.87 6.78 9.67 6.08 5.72 4.12 3.842039 8,501 16,305,084 10,165,914 1,753,015 353,817,151,029 2039 3.69 0.70 7.87 6.78 9.88 6.15 5.79 4.18 3.902040 8,631 16,160,349 10,165,914 1,753,015 361,186,174,282 2040 3.74 0.70 7.87 6.78 10.08 6.22 5.85 4.24 3.96 2040 1.93 1.802041 8,761 16,015,615 10,165,914 1,753,015 368,555,197,535 2041 3.80 0.69 7.87 6.78 10.29 6.28 5.92 4.30 4.012042 8,891 15,870,880 10,165,914 1,753,015 375,924,220,789 2042 3.86 0.68 7.87 6.78 10.49 6.35 5.98 4.36 4.072043 9,022 15,726,145 10,165,914 1,753,015 383,293,244,042 2043 3.91 0.68 7.87 6.78 10.70 6.41 6.05 4.41 4.132044 9,152 15,581,410 10,165,914 1,753,015 390,662,267,295 2044 3.97 0.67 7.87 6.78 10.91 6.48 6.12 4.47 4.192045 9,282 15,436,675 10,165,914 1,753,015 398,031,290,548 2045 4.03 0.67 7.87 6.78 11.11 6.55 6.18 4.53 4.24 2045 2.07 1.93

Cestrin INS DRPCIV / INS DRPCIV / INS INS / CNP avg(pop,auto,PIB) avg(pop,marfa,PIB) (0.8*MZA+0.2*auto)(0.9*MZA+0.1*marfa)

Sursa datelor '90 - 2016/2017:

medii populatie, parc auto, PIBcoeficienti finali ponderati

(baza 1990)baza 2015

Year | AADT | Population | Vehicles | Freight vehicles | GDP Year | Traffic | Population | Vehicles | Freight vehicles | GDP Vehicles | Freight vehicles Passenger ev. | Freight ev. Passenger ev. | Freight ev.

’90 – 2016/2017 data source

CESTRIN NIS DRPCIV / NIS

DRPCIV / NIS

NIS / NCP

avg. (pop., veh., car fleet, GDP (0.8*AADT+0.2*veh.)

(0.9*AADT+0.1*freight veh.)

Population mean values, car fleet, GDP

final weighted coefficients (1990 reference)

2015 reference

64

Estimates of traffic evolution coefficients for the 2018 – 2045 interval

Period Passengers Freight

(%/year) (%/year)

2015-2020 5.63% 4.39%

2020-2025 2.26% 2.18%

2025-2030 2.13% 2.02%

2030-2035 1.95% 1.85%

2035-2040 1.44% 1.52%

2040-2045 1.34% 1.41%

Traffic evolution rates for the 2015-2045 interval

3.5.3 PRODUCTION OF THE PROGNOSIS COEFFICIENTS MATRIX Since traffic evolution coefficients, determined in the previous chapter, represent

average forecast values, it is preferable not to apply these coefficients as unit values for all the traffic relations included in the model. For example, the mobility increase probability is higher between two areas located in urban and peri-urban environments than between areas located exclusively in rural environments.

1,00

1,32

1,47

1,63

1,80

1,93

2,07

1,00

1,24

1,38

1,53

1,67

1,80

1,93

1,00

1,10

1,20

1,30

1,40

1,50

1,60

1,70

1,80

1,90

2,00

2,10

2,20

2015 2020 2025 2030 2035 2040 2045

Ev. Pasageri Ev. MarfuriPassenger ev. Freight ev.

65

Therefore, in order to transform traffic evolution coefficients from unit values totwo-dimensional vectors (matrix), two criteria were considered:

- trip duration; - area type (selected from among 4 classes, based on population and the development levels of recent years; the areas were numbered from 0 (low) to 3 (high).

In order to generate the traffic forecast matrices, the traffic evolution coefficients were adjusted with a y = a*log X + blogarithmic function, where parameters aandb have different values, depending on the zone type and the request type (passengers or freight), whereas X is the trip duration for relations i-j.

$ZONE:NO NAME CLASSIFICATION POPULATION COUNTY POLYGON_NM

30 211132 3 206527 BIHOR ORADEA

79 211324 3 318027 CLUJ CLUJ-NAPOCA

104 211419 3 137976 MARAMUREŞ BAIA MARE

131 211515 3 119141 SATU MARE SATU MARE

192 212206 3 283901 BRAŞOV BRAŞOV

287 212539 3 149577 MUREŞ TÂRGUMUREŞ

301 212612 3 155045 SIBIU SIBIU

344 221130 3 175921 BACĂU BACĂU

417 221332 3 321580 IAŞI IAŞI

485 221530 3 106138 SUCEAVA SUCEAVA

539 222110 3 216929 BRĂILA BRĂILA

553 222210 3 133116 BUZĂU BUZĂU

586 222310 3 310526 CONSTANŢA CONSTANŢA

609 222405 3 298584 GALAŢI GALAŢI

657 222610 3 103219 VRANCEA FOCSANI

693 231128 3 168756 ARGEŞ PITESTI

812 231610 3 232452 PRAHOVA PLOIESTI

66

880 232101 3 228856 BUCHAREST BUCHAREST SECTORUL 1

881 232102 3 360149 BUCHAREST BUCHAREST SECTORUL 2

882 232103 3 392571 BUCHAREST BUCHAREST SECTORUL 3

883 232104 3 298915 BUCHAREST BUCHAREST SECTORUL 4

884 232105 3 282463 BUCHAREST BUCHAREST SECTORUL 5

885 232106 3 358797 BUCHAREST BUCHAREST SECTORUL 6

899 232215 3 29995 ILFOV VOLUNTARI

958 241139 3 302622 DOLJ CRAIOVA

1074 242104 3 172824 ARAD ARAD

1151 242410 3 320323 TIMIŞ TIMIŞOARA

46 211209 2 81467 BISTRIŢA-NĂSĂUD BISTRIŢA

142 211603 2 63305 SĂLAJ ZALĂU

174 212115 2 7635 ALBA ALBA IULIA

247 212420 2 41852 HARGHITA MIERCUREA CIUC

375 221220 2 115344 BOTOŞANI BOTOŞANI

436 221412 2 105499 NEAMŢ PIATRA-NEAMŢ

454 221430 2 69483 NEAMŢ ROMAN

515 221618 2 69183 VASLUI BÂRLAD

517 221620 2 70267 VASLUI VASLUI

639 222509 2 92762 TULCEA TULCEA

709 231205 2 70046 CĂLĂRAŞI CĂLĂRAŞI

747 231321 2 89429 DÂMBOVIŢA TÂRGOVIŞTE

977 241217 2 96562 GORJ TÂRGU JIU

1001 241319 2 104035 MEHEDINŢI DROBETA-

TURNU

67

SEVERIN

1045 241508 2 107656 VÂLCEA RÂMNICU VÂLCEA

1134 242316 2 70189 HUNEDOARA DEVA

61 211303 1 39802 CLUJ DEJ

71 211316 1 55770 CLUJ TURDA

177 212118 1 27680 ALBA SEBEŞ

226 212314 1 61512 COVASNA SFÂNTU GHEORGHE

256 212507 1 32287 MUREŞ SIGHIŞOARA

307 212618 1 55203 SIBIU MEDIAŞ

687 231122 1 35849 ARGEŞ MIOVENI

766 231405 1 69587 GIURGIU GIURGIU

793 231510 1 52677 IALOMIŢA SLOBOZIA

850 231703 1 50591 TELEORMAN ALEXANDRIA

1021 241423 1 79171 OLT SLATINA

1117 242224 1 86882 CARAŞ-SEVERIN REŞIŢA

1118 242225 1 28294 CARAŞ-SEVERIN CARANSEBEŞ

1166 242427 1 47481 TIMIŞ LUGOJ

Classification of zones Note: the table does not comprise the remaining 0 type areas, as well

68

Zone

Function parameters

a b

0.1 0.01

2 0.1 0.05

1 0.1 0.07

0 0 1 0.09

Function type:

y=a*log x + b

Example for 2025, passengers: adjusted coefficient, 1.47

Parameters used to adjust the passenger traffic evolution coefficients

Area

Function parameters

a b

3 .07 0.01

2 0.08 0.03

1 0.09 0.04

0 0.06 0.07

Function type:

y=a*log x + b

Example for 2025, passengers: adjusted coefficient, 1.38

Parameters used to adjust the freight traffic evolution coefficients

1,00

1,05

1,10

1,15

1,20

1,25

1,30

1,35

1,40

1,45

1,50

1,55

1,60

0 2 4 6 8 10

Zona 3 Zona 2 Zona 1 Zona 0

1,00

1,05

1,10

1,15

1,20

1,25

1,30

1,35

1,40

1,45

0 2 4 6 8 10

Zona 3 Zona 2 Zona 1 Zona 0

Area Area Area Area

Area Area Area Area

69

Results of the forecast scenario applied (daily number of trips)

Source: Analysis based on the Transportation Model results

The previous tables present the evolution of total demand after the application of the increase scenario. For the 2015-2045 interval, there is an anticipated transportation demand increase of 2.4% per year for passengers and 2.3% per year for freight transports.

3.6 TRAFFIC FLOWS - SIMULATED FOR 2020, WITHOUT PROJECT The figures below present the traffic flows during the 2020 stage, without project, for

the roads within the study range, expressed as total physical vehicles.

For an easier understanding of the flows pertaining to each category of users in the analysed area, figure d displays the flows of passenger vehicles (CAR), figure e corresponds to flows of commercial vehicles (LGV, HGV) and figure f details upon the flows of busses (BUS).

2015 2020 2025 2030 2035 2040 2045Cars 1,653,625 2,127,151 2,390,361 2,670,020 2,949,680 3,179,988 3,393,846LGV 150,407 185,667 209,554 234,933 260,313 281,214 300,622HGV 170,745 209,502 236,581 265,352 294,123 317,816 339,818BUS 61,212 76,540 86,297 96,665 107,032 115,570 123,498

2015 2020 2025 2030 2035 2040 2045Cars 1.00 1.29 1.45 1.61 1.78 1.92 2.05LGV 1.00 1.23 1.39 1.56 1.73 1.87 2.00HGV 1.00 1.23 1.39 1.55 1.72 1.86 1.99BUS 1.00 1.25 1.41 1.58 1.75 1.89 2.02

1.001.101.201.301.401.501.601.701.801.902.002.102.20

2015 2020 2025 2030 2035 2040 2045

Cars LGV HGV BUS

70

Passenger vehicles – traffic flows AADT (ph.v.) – 2020 stage

Tg Neamț – Iași Motorway

Tg Neamț

Iași

Caption 2020, WITHOUT PROJECT

71

Commercial vehicles – traffic flows AADT (ph.v.) – 2020 stage

Tg Neamț – Iași Motorway

Tg Neamț

Iași

Caption 2020, WITHOUT PROJECT

72

Buses– traffic flows AADT (ph.v.) – 2020 stage

Tg Neamț – Iași Motorway

Tg Neamț

Iași

Caption 2020, WITHOUT PROJECT

73

2020 TRAFFIC DATA FROM THE NATIONAL ROADS, WITHOUT PROJECT

2020 traffic, without project (physical motor vehicles)

No. ROAD Sector limits Sector length (Km)

BUS CAR LGV HGV

Total physical motor

vehicles

Trip durations BUS

Trip durations CAR

Trip durations LGV

Trip durations HGV

Speed BUS

Speed CAR

Speed LGV

Speed HGV

1

DN28A-DN28 INT(DN 28A-DN 2) – INT(DN 28-DN 24C)

3.995 191 5492 689 748 7120 6min 5min 32s 5min 32s 6min 40 43 43 40 2 2.667 186 5397 662 726 6971 1min 48s 1min 48s 1min 48s 1min 53s 89 89 89 85 3 1.790 186 5397 662 726 6971 2min 15s 2min 15s 2min 15s 2min 15s 48 48 48 48 4 1.698 186 5397 662 726 6971 1min 9s 1min 9s 1min 9s 1min 12s 89 89 89 85 5 1.602 186 5397 662 726 6971 2min 24s 1min 57s 1min 57s 2min 24s 40 49 49 40 6 1.313 261 7240 847 960 9308 2min 7s 2min 7s 2min 7s 2min 7s 37 37 37 37 7 2.307 189 6854 752 633 8428 3min 28s 3min 24s 3min 24s 3min 28s 40 41 41 40 8 2.369 189 6854 752 633 8428 1min 37s 1min 37s 1min 37s 1min 40s 88 88 88 85 9 1.147 189 6854 752 633 8428 1min 29s 1min 29s 1min 29s 1min 29s 46 46 46 46 10 2.840 189 6854 752 633 8428 1min 57s 1min 57s 1min 57s 2min 88 88 88 85 11 3.278 189 6854 752 633 8428 4min 15s 4min 15s 4min 15s 4min 15s 46 46 46 46 12 11.613 199 7098 778 641 8716 7min 59s 7min 59s 7min 59s 8min 12s 87 87 87 85 13 0.927 199 7098 778 641 8716 1min 24s 1min 23s 1min 23s 1min 24s 40 40 40 40 14 1.632 617 13557 1691 2188 18053 2min 38s 2min 38s 2min 38s 2min 38s 37 37 37 37 15 3.661 514 12758 1451 1387 16110 3min 51s 3min 51s 3min 51s 3min 51s 57 57 57 57 16 3.592 514 12758 1451 1387 16110 2min 24s 2min 12s 2min 12s 2min 32s 90 98 98 85 17 0.958 514 12664 1432 1343 15953 1min 16s 1min 16s 1min 16s 1min 16s 45 45 45 45 18 3.079 514 12664 1432 1343 15953 2min 3s 1min 53s 1min 53s 2min 10s 90 98 98 85 19 1.574 514 12664 1432 1343 15953 2min 5s 2min 5s 2min 5s 2min 5s 45 45 45 45 20 1.908 514 12664 1432 1343 15953 1min 16s 1min 10s 1min 10s 1min 21s 90 98 98 85 21 5.838 514 12664 1432 1343 15953 7min 45s 7min 45s 7min 45s 7min 45s 45 45 45 45 22 0.484 545 12966 1448 1195 16154 39s 39s 39s 39s 45 45 45 45 23 6.930 545 12966 1448 1195 16154 4min 37s 4min 14s 4min 14s 4min 54s 90 98 98 85 24 4.353 545 12966 1448 1195 16154 5min 47s 5min 47s 5min 47s 5min 47s 45 45 45 45 25 1.331 618 14214 1546 1133 17511 53s 49s 49s 56s 90 98 98 85 26 2.026 618 14214 1546 1133 17511 1min 21s 1min 15s 1min 15s 1min 26s 90 98 98 85 27 4.194 540 12199 1214 700 14653 3min 40s 3min 40s 3min 40s 3min 40s 69 69 69 69 28 2.828 515 11771 1179 700 14165 4min 15s 3min 49s 3min 49s 4min 15s 40 44 44 40 29 1.152 515 11771 1179 700 14165 2min 2s 2min 2s 2min 2s 2min 2s 34 34 34 34 30 0.812 511 11981 1183 465 14140 1min 25s 1min 25s 1min 25s 1min 25s 34 34 34 34 31 0.342 511 11981 1183 465 14140 36s 36s 36s 36s 34 34 34 34 32 0.440 151 5431 325 465 6372 40s 40s 40s 40s 39 39 39 39

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3.7 FUTURE TRAFFIC FLOWS (FOR 2020) - ASSUMPTION WITH PROJECT For the 2020 forecast stage, the OD matrices corresponding to each vehicle category

were assigned on the network graphpertaining to given time frame.

The figures below present, by way of example, the traffic flows for the 2020 stage, in the case of the “with project”assumption, expressed as total physical vehicles.

For an easier understanding of the flows pertaining to each category of users in the analysed area, the figures below correspond to the flows of passenger vehicles, the flows of commercial vehicles (LGV, HGV) and the flows of busses (BUS).

CAR – traffic flows AADT (ph.v.) – 2020 stage

Commercial vehicles – traffic flows AADT (ph.v.) – 2020 stage

Caption 2020, WITH PROJECT

75

Buses – traffic flows AADT (ph.v.) – 2020 stage

Caption 2020, WITH PROJECT

Caption

76

According to the traffic studyrelated to the documentation of the Feasibility study elaborated in 2010, the traffic values under motorway conditions are:

Traffic assignment – the “with project” variant – 2020 forecast year

Sectors

Tourism, commerc

ial vehicles

Buses 2-axle lorries

3- and 4-axle lorries

Articulated vehicles

TOTAL physical vehicles

Passenger car units

115 kN axles – Supple and

semi-rigid road systems

115 kN axles –

Reinforcements of supple

and semi-

rigid road systems

115 kN axles – Rigid road

systems

Motca – Tg.

Frumos 10,748 396 822 275 680 12,859 16,859 1,275 1,316 3,856

Tg. Frumos –

Podu Iloaie

12,453 538 996 291 927 15,205 20,260 1,637 1,689 4,899

Podu Iloaie –

Iaşi 2,986 127 186 130 99 3,528 4,441 308 325 1,027

We, therefore, see a slight traffic decrease as opposed to the previous traffic study. This is caused primarily by the still absent Tg Mureş - Tg Neamţ motorway, as well as under the influence of nowadays’ more refinedtransportation model,as well as the new programming which provides the implementation of motorways, express roads, etc., as per the Master Plan issued in 2016.

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3.8 FUTURE TRAFFIC FLOWS (FOR 2045) - ASSUMPTION WITHOUT PROJECT For the 2045, forecast stage, the OD matrices corresponding to each vehicle category were assigned on the network graph pertaining to

given time frame.

2045 TRAFFIC DATA FROM THE NATIONAL ROADS,WITHOUT PROJECT 2045 traffic, without project (physical motor vehicles)

No. ROAD Sector limits Sector length (Km)

BUS CAR LGV HGV

Total physical motor

vehicles

Trip durations BUS

Trip durations CAR

Trip durations LGV

Trip durations HGV

Speed BUS

Speed CAR

Speed LGV

Speed HGV

1

DN28A-DN28 INT(DN 28A-DN 2) – INT(DN 28-DN 24C)

3.995 282 6624 953 1070 8929 6min 21s 6min 21s 6min 21s 6min 21s 38 38 38 38 2 2.667 294 6885 976 1158 9313 1min 53s 1min 53s 1min 53s 1min 53s 85 85 85 85 3 1.790 294 6885 976 1158 9313 2min 29s 2min 29s 2min 29s 2min 29s 43 43 43 43 4 1.698 294 6885 976 1158 9313 1min 12s 1min 12s 1min 12s 1min 12s 85 85 85 85 5 1.602 294 6885 976 1158 9313 2min 24s 2min 1s 2min 1s 2min 24s 40 48 48 40 6 1.313 360 9156 1204 1449 12169 2min 52s 2min 52s 2min 52s 2min 52s 28 28 28 28 7 2.307 308 9666 1153 1066 12193 4min 46s 4min 46s 4min 46s 4min 46s 29 29 29 29 8 2.369 308 9666 1153 1066 12193 1min 47s 1min 47s 1min 47s 1min 47s 80 80 80 80 9 1.147 308 9666 1153 1066 12193 1min 54s 1min 54s 1min 54s 1min 54s 36 36 36 36 10 2.840 308 9666 1153 1066 12193 2m i n 9s 2m i n 9s 2m i n 9s 2m in 9s 80 80 80 80 11 3.278 308 9666 1153 1066 12193 5min 25s 5min 25s 5min 25s 5min 25s 36 36 36 36 12 11.613 319 9760 1174 1069 12322 8min 49s 8min 49s 8min 49s 8min 49s 79 79 79 79 13 0.927 319 9760 1174 1069 12322 1min 56s 1min 56s 1min 56s 1min 56s 29 29 29 29 14 1.632 842 19849 2555 3086 26332 3min 59s 3min 59s 3min 59s 3min 59s 25 25 25 25 15 3.661 747 18157 2181 2053 23138 4min 27s 4min 27s 4min 27s 4min 27s 49 49 49 49 16 3.592 747 18157 2181 2053 23138 2min 24s 2min 20s 2min 20s 2min 32s 90 92 92 85 17 0.958 743 17899 2140 1987 22769 1min 40s 1min 40s 1min 40s 1min 40s 35 35 35 35 18 3.079 743 17899 2140 1987 22769 2min 3s 1min 59s 1min 59s 2min 10s 90 93 93 85 19 1.574 743 17899 2140 1987 22769 2min 44s 2min 44s 2min 44s 2min 44s 35 35 35 35 20 1.908 743 17899 2140 1987 22769 1min 16s 1min 14s 1min 14s 1min 21s 90 93 93 85 21 5.838 743 17899 2140 1987 22769 10min 9s 10min 9s 10min 9s 10min 9s 35 35 35 35 22 0.484 773 18010 2132 1763 22678 50s 50s 50s 50s 35 35 35 35 23 6.930 773 18010 2132 1763 22678 4min 37s 4min 28s 4min 28s 4min 54s 90 93 93 85 24 4.353 773 18010 2132 1763 22678 7min 26s 7min 26s 7min 26s 7min 26s 35 35 35 35 25 1.331 874 19791 2270 1660 24595 53s 53s 53s 56s 90 91 91 85 26 2.026 874 19791 2270 1660 24595 1min 21s 1min 20s 1min 20s 1min 26s 90 91 91 85 27 4.194 763 16811 1799 1105 20478 3min 53s 3min 53s 3min 53s 3min 53s 65 65 65 65 28 2.828 280 16181 1708 1105 19274 4min 26s 4min 26s 4min 26s 4min 26s 38 38 38 38 29 1.152 280 16181 1708 1105 19274 2min 27s 2min 27s 2min 27s 2min 27s 28 28 28 28 30 0.812 621 16359 1703 743 19426 1min 44s 1min 44s 1min 44s 1min 44s 28 28 28 28 31 0.342 621 16359 1703 743 19426 44s 44s 44s 44s 28 28 28 28 32 0.440 207 8063 520 743 9533 42s 42s 42s 42s 38 38 38 38

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3.9 FUTURE TRAFFIC FLOWS (FOR 2045) - ASSUMPTION WITH PROJECT For the 2045, forecast stage, the OD matrices corresponding to each vehicle category

were assigned on the network graph pertaining to given time frame.

The figures below present, by way of example, the traffic flows for the 2045 stage, in the case of the “with project” assumption, expressed as total physical vehicles.

We see, in this case, a massive traffic decrease as opposed to the previous traffic study. This is caused primarily by the still absent Tg Mureş - Tg Neamţ motorwayand equally by the fact that significantly lowered traffic coefficients were imposed by external consultants and in accordance with the Master Plan issued in2016.

Passenger vehicles – traffic flows AADT (ph.v.) – 2045 stage

Commercial vehicles – traffic flows AADT (ph.v.) – 2045 stage

Caption 2045, WITH PROJECT

Caption 2045, WITH PROJECT

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Buses – traffic flows AADT (ph.v.) – 2045 stage

Caption 2045, WITH PROJECT

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3.10 TRAFFIC FLOWS FOR THE ASSUMPTION WITH PROJECT AND MOTORWAY TOLL – IMPLEMENTATION ASSUMPTIONS

Following the tests, the transportation modelproduced the following traffic values under motorway conditions – the toll motorway assumption:

- approximately 75% of motor vehicles remain on the motorway, in the “toll” variant,

- approximately 85%of LGVs remain on the motorway, in the “toll” variant,

- approximately 90% of HGVsremain on the motorway, in the “toll” variant,

- approximately 90% of BUSESremain on the motorway, in the “toll” variant.

The traffic study was conducted in a modular manner, by section, in order to allow, as part of economic and financial analyses, the development of several implementation assumptions.Following the analysis, it was decided to implement Sections 1and2 pertaining to Tg Neamţ – Iaşi Motorway, namelyTg Neamţ (DN2) – Tg Frumos – Iaşi Section.

The traffic flows are presented for each individual section, namelySection 1: Tg Neamţ – Tg FrumosandSection 2: Tg Frumos – Iaşi, with the added mention that section 1 comprises 2 subsections: Subsection Tg Neamţ – Pascani 1Aand SubsectionPascani – Târgu Frumos 1B.

DN2 - PAŞCANI

1A

PASCANI - TG FRUMOS 1B

YEAR Car LGV HGV Bus

YEAR Car LGV HGV Bus 2020 2,856 462 422 174

2020 5,108 718 580 221

2021 2,907 481 427 181

2021 5,159 727 592 224 2022 2,959 499 432 188

2022 5,210 735 605 228

2023 3,010 518 437 195

2023 5,261 744 618 231 2024 3,062 536 442 201

2024 5,312 753 631 234

2025 3,113 555 447 208

2025 5,363 761 644 237 2026 3,164 481 427 181

2026 5,414 727 592 224

2027 3,216 592 458 222

2027 5,465 779 670 243 2028 3,267 610 463 229

2028 5,516 787 683 246

2029 3,319 629 468 236

2029 5,567 796 696 249 2030 3,370 647 473 243

2030 5,618 804 708 252

2031 3,421 666 478 250

2031 5,669 813 721 255 2032 3,473 684 483 257

2032 5,720 822 734 259

2033 3,524 703 488 264

2033 5,771 830 747 262 2034 3,576 721 493 271

2034 5,823 839 760 265

2035 3,627 740 498 278

2035 5,874 848 773 268 2036 3,679 758 503 285

2036 5,925 856 786 271

2037 3,730 777 508 292

2037 5,976 865 798 274 2038 3,781 795 513 299

2038 6,027 873 811 277

2039 3,833 814 518 306

2039 6,078 882 824 280 2040 3,884 832 523 313

2040 6,129 891 837 283

2041 3,938 853 529 321

2041 6,170 897 845 286 2042 3,992 874 534 328

2042 6,211 904 852 289

2043 4,046 894 539 336

2043 6,252 911 860 292 2044 4,100 915 544 344

2044 6,293 917 868 295

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2045 4,154 936 549 352

2045 6,334 924 876 298 2046 4,229 952 554 358

2046 6,397 935 894 301

2047 4,304 968 559 364

2047 6,460 945 912 304 2048 4,379 985 564 370

2048 6,524 956 930 308

2049 4,453 1,001 569 376

2049 6,587 966 948 311 2050 4,528 1,017 574 382

2050 6,650 977 966 314

Section 2 Tg Frumos - Iaşi YEAR Car LGV HGV Bus 2020 8,802 1,129 1,042 450 2021 8,960 1,154 1,065 458 2022 9,119 1,180 1,089 466 2023 9,277 1,205 1,112 474 2024 9,436 1,230 1,135 482 2025 9,594 1,256 1,158 490 2026 9,753 1,154 1,065 458 2027 9,911 1,306 1,204 506 2028 10,069 1,332 1,227 515 2029 10,228 1,357 1,251 523 2030 10,386 1,382 1,274 531 2031 10,545 1,408 1,297 539 2032 10,703 1,433 1,320 547 2033 10,862 1,458 1,343 555 2034 11,020 1,484 1,366 563 2035 11,179 1,509 1,390 571 2036 11,337 1,534 1,413 579 2037 11,495 1,560 1,436 587 2038 11,654 1,585 1,459 595 2039 11,812 1,611 1,482 603 2040 11,971 1,636 1,505 611 2041 12,129 1,661 1,528 619 2042 12,286 1,687 1,552 627 2043 12,444 1,712 1,575 635 2044 12,602 1,737 1,598 644 2045 12,760 1,763 1,621 652 2046 12,989 1,788 1,644 660 2047 13,219 1,813 1,667 668 2048 13,449 1,839 1,691 676 2049 13,678 1,864 1,714 684 2050 13,908 1,889 1,737 692

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4 MAIN TECHNICAL, FINANCIAL AND CONTRACTUAL FEATURES OF TÂRGU NEAMŢ – IAŞI MOTORWAY PROJECT

4.1 TECHNICAL DESCRIPTION OF THE MOTORWAY PROJECT AS PER THE EXISTING FEASIBILITY STUDY

As part of the previously elaborated initial project, three corridor alternatives were analysed:

• Alternative 1, hereafter called generically ATNU1 – a route analysed as part of the Pre-feasibility Study. We shall mention that km 0+000 designed in the FS coincides with km 209+530 designed as part of the Pre-feasibility Study (PFS).

• Alternative 2, hereafter called generically ATNU2 – a route derived from thealternative studied as part of the Pre-feasibility Study, containing local route corrections and the end point relocation in the Southern part of Ungheni locality,intended to facilitate the link to a potential future motorway across the Republic of Moldova and the bridge over Prut.

• Alternative 3, hereafter called generically ATNU3 – a route derived from Alternative 2, containing a course correction in the Northern-Western part of Iaşi, between Leţcani and Iaşi, following the local government’s request (Iaşi County Council, Iaşi Mayor’s Office, Iaşi RDRB (Regional Directorate of Roads and Bridges)) during the public consultations.

Description of ATNU2 route alternative (approved by RNCMNR - Romanian National Company of Motorways and National Roads)

From this alternative,the present substantiation studyonly covers the TârguNeamţ (DN2) – Iaşisection, 61 km long. The Iaşi-Ungheni section, including the bridge over, is not covered by the present study and shall be analysed depending on the future context and requirements.

Târgu Neamţ – Iaşi Motorwaystretches along a corridor from West to East.

Aftercrossing Moldova river floodplain, the motorway crosses an industrial (apparently decommissioned) railroad and national road DN2 (km 0+412), continuing its course between the South-Eastern part of Soci locality and the Northern part of Bureni locality. Further on, around km 7+246,the route by-passes Sodomeni locality, South of it, and then runs between Paşcani municipality (South of it) and Stolniceni – Prăjescu locality (North of it). At km 14+873 it crosses Siret river and continues to stretch, from West to East, between Ruginoasa locality (South of it) and Hărmăneasa, Helesteni, Movileni (North of them). Up to the area of km 23+020, the motorway stretches parallel to the left side of DN28A, the distance to the latter remaining, with variations, around 3 km. Around motorway km 27+271, km 4 – km 5 on DN28A, the motorway switches to the right side of DN28A in order to by-pass, to the North, Târgu Frumos town. Still North of Târgu Frumos town, the route intersects DN28B (E58). From this area, the motorway stretches parallel to DN28, up to the area beyond Podu Iloaiei town, and continues its route leaving to its right, at km 53+292, Războieni, Bălţaţi, Sârca, Budai, Podu Iloaiei localities, whereas Valea Oilor, Sprânceana andŞesul Târgului remain to its left.Around km 58+753, the motorway switches from the left

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to the right of national road DN28 (E58), then returns left of it in order to by-pass Leţcani locality North-West of it.

For an easier description of the motorway route, it was divided into two sections, without any implications upon the motorway construction:

1. Km 0+000 – Km 32+000 (Tg. Frumos, including the node with DN28B);

2. Km 32+000 (Tg Frumos, beyond the node with DN28B) – Km 61+000 (including Letcani node and the connecting road to DN28).

The proposed cross-section profile shall be that of motorway with 2 lanes per direction of traffic, a lane divider, footways and an emergency lane (in accordance with normative PD 162/2002 and the TEM norms on motorways).

Design speed: 120 km/h

For longitudinal declivities in excess of 4%, the design speed is: 100 km/h.

The standardised cross-section profile shall have the following characteristics*:

- platform width: 26.00 m,of which:

o running carriageway: 4 x 3.75 m, o lane divider: 3.00 m, o shoulder/emergency lane: 2 x 2.50 m, o footways: 2 x 0.50 m, o merge lanes: 4 x 0.50 m,

- bulwark space (outside the platform): 2 x 0.75 m. Intersections with other public roads shall be designed as interchanges. Railroad crossings shall be designed as underpasses or overpasses. The lane divider shall be fitted with interruptions that would serve distributing traffic to a single lane should the road coursebe closed due to maintenance works or otherwise.

*These are minimal imposed technical characteristics,and the private partner, during the PTE (implementation technical design) elaboration, and with the public partner’s consent, shall subsequently propose better technical characteristics/changes in order to increase projectyield.

Maintenance and snow clearance bases shall be fitted (every 50 km at the most), operating as traffic coordination and monitoring centres. Parking and service areas shall be fitted in line with the “Normative on the design of extra-urban motorways”,indicative PD 162-2002 (with a protection width of at least 10.00 m from the motorway platform limit) and shall include:

o public restroom; o water tank + water pressure tankand pumps; o septic tank; o wastewater pumping station; o parking spots for vehicles of physically disabled persons; o parking area for lorries;

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o parking area for buses; o fencing; o petrol station area; o restaurant area; o car service area; o motel and business premises area; o area for fuel tanks; o area for petrol station pumps+ awning; o platform for household waste containers; o coalescence-based petroleum-based product maker; o separating tank for alluvial deposits; o pole-mounted transformer station 250 KVA.

Access to and from the parking area is secured by breaking and acceleration lanes, so that vehicles may safely re-enter the traffic flow.

Road nodes The motorway shall be linked to the existing network by means of the following road

nodes, located at intersections with main roads and in the proximity of major localities:

No. Site Obstacle km

1 motorway DN2 0+412

2 DJ (county road) 208 motorway 9+760

3 DN(national road) 28B motorway 31+206

4 motorway DN28 61+292

Road node 1, with DN2, is at motorway km 0+412, near Moţca and Miroslăveşti

localities, with a double trumpet layout, where DN2 crosses the motorway at multiple levels by means of a passageway. The linking road between the 2 trumpet-shaped structures was fitted with a toll booth,should a toll system be installed.

Road node 2, with DJ208, is at motorway km 9+760, in the area of Paşcani municipality and Stolniceni Prăjescu locality, with a simple trumpet layout and a roundabout crossroads with the county road. DJ 208 crosses the motorway via a passageway-type interchange. The linking road between the county road and the road nodewas fitted with a toll booth, should a toll system be installed.

Road node 3, with DN28B, is at motorway km 31+206, in the area of Ion Neculce, locality,with a simple trumpet layout and a roundabout crossroads with the national road. DN28B crosses the motorway via a passageway-type interchange. The linking road between the county road and the road node was fitted with a toll booth, should a toll system be installed.

Road node 4, with DN28, is at motorway km 61+292, in the area of Leţcani locality, with a double trumpet layout, one of them linking it to the motorway and the second to DN28.

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Between the 2 belts a 7 km long connecting road was built, as a two-way belt with a 7 m running carriageway and a 10 m platform. At km 2+440 of the connecting road, in Bogonos locality, the intersection with DJ248B was laid out as a roundabout.

The linking road between the 2 trumpets was fitted with a toll booth, should a toll system be installed.

Intersections with existing classified roads The classified (national, county, township) roads intersected by Târgu Neamţ – Iaşi

motorway course, as well as the layout methods, are presented below: 1) DN2 – national road 2 shall keep its current location, however, being included in

road node 1, it shall be fitted with a motorway overpass. The existing 7/10 cross-section profile shall be retained.

2) DC127 – township road 12, as it crosses the motorway by means of an underpass, shall not be affected.

3) DJ208L – county road 208L shall be deviated and shall cross the motorway via a passageway.

4) DJ208 – county road 208 shall retain its current location, but will be fitted with a motorway overpass, as it is also included in road node 2.

5) DJ280D – county road 280D shall be deviated and shall cross the motorway via an underpass at km 21+250.

6) DN28A – national road 28A shall not be affected and its course shall continue above the tunnel.

7) DC120 – township road 120, which cross the motorway via an underpass, shall not be affected.

8) DJ280B – county road 280B shall be deviated and shall cross the motorway via an underpass at km 29+925, having a 7/9 cross-section profile.

9) DN28B – national road 28B shall retain its current location, however, by being a part of road node 3,it shall cross the motorway via an overpass. The current 7/9 cross-section profile is retained.

10) DC117 – township road 117 shall retain its current location and benefit from a motorway overpass.

11) DC116 – township road 116 shall be deviated in order to cross the motorway via an underpass at km 39+144.

12) DC115 – township road 115 shall be deviated in order to cross the motorway via an overpass at km 44+848.

13) DC114 – township road 114 shall be deviated in order to cross the motorway via an overpass at km 50+640.

14) DJ281 – county road 281 shall retain its current location and cross the motorway via un underpass.

15) DJ282D – county road 282D shall retain its current location and cross the motorway via un underpass.

16) DN28 – national road 28, at motorway km 54+050, in the area of Podul Iloaiei locality, given the limitations of the intersection and the presence of CF (railroad) 607 Podul Iloaiei – Hârlau, shall be deviated and cross the motorway via a passageway.

17) DN28 – national road 28, at motorway km 57+450, shall be deviated but retain its

86

current characteristics. It shall cross the motorway via a passageway. Motorway facilities For Târgu Neamţ – Iaşimotorway the following facilities were proposed: - CIC Paşcani maintenance and coordination centre(km 9+760) (inside the road node), - short-term parking area (between km 11+760 and km 12+220), - short-term parking area(between km 22+400 and km 22+840), - S1 service area(between km 34+440 and km 34+820), - Târgu Frumos support and maintenance station (km 35+300), - short-term parking area(between km 49+800 and km 50+260), - short-term parking area(between km 59+210 and km59+670), - CIC IAŞI maintenance and coordination centre(km 60+500) (on the connecting belt

between DN28 and the motorway), Short-term parking area The short-term parking area is a space physically separated from the motorway,

allowing users to stop whenever they need to rest and relax. It is recommended to set up these areas in a manner that takes away the motorway monotony, by means of leisure outlets.

The actual parking area shall have a protection area at least 10 m wide, from the motorway road surface. Each parking platform shall be set up both for heavy-duty vehicles, as well as passenger vehicles.

Access to and from the parking platform is strictly secured by special entry and exit connecting belts, so that vehicles may safely re-enter the traffic flow.

These short-term parking areas shall be built along Târgu Neamţ – Iaşi Motorway, essentially on the right and the left side, symmetrically from the road axis, according to themotorway site plans. In order to adapt the platform to the land and perform a minimum amount of embankment works, the following exceptions may be made:

- the parking area on the left may be offset in relation to that on the right by no more than 2 km

- the platforms of parking areas may have different elevations than that of the motorway, and the access connecting belts shall be adequately adjusted.

The platforms of parking areas may be built more than 10 m away from the motorway depending on the local conditions.

Each left or right site comprises: - a public restroom; - a water management plant;

- a mechanical-biological wastewater treatment station;

- separator for petroleum-based products;

- wastewater pumping station and wastewater discharge pipeline;

- parking areas for passenger cars,busesand heavy-duty motor vehicles;

- safety areas and landscaping facilities;

- resting areas;

- waste disposal platform;

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- fencing;

- transformer station and power grid connection;

- lighting fixtures fitted along perimeter and access belts.

S1 service area

These S1 service areas shall be located along the motorway, on both the right side and the left side, symmetrically from the road axis, according to the motorway site plans. The platform on the left may be offset in relation to that on the right by no more than 2 km.

The S1 service area is designed to host stationary and parked vehicles over longer periods of time and, in comparison with short-term parking areas, is fitted with a petrol station and a business premises containing a bar.

The area shall be leased in order to have the above-mentioned facilities installed.

S3 service area

S3 service areas shall be located along Târgu Neamţ – Iaşi Motorway, both on the right side and the left side, symmetrically from the road axis, according to the motorway site plans. The platform on the left may be offset in relation to that on the right by no more than 2 km.

The S3 service area is designed to host stationary and parked vehicles over longer periods of time and, in comparison with short-term parking areas, is fitted with a petrol station, a business premises, a restaurant, a healthcare facility, an autoservice unit and accommodation premises (motel or hotel).

Support and maintenance station

The support and maintenance stationis a unit designed to service a motorway sector and maintain it in suitable operating conditions, as well as to provide road traffic safety within the assigned sector, being subordinated to the maintenance and coordination centre.

These support stations shall be located along Târgu Neamţ – Iaşi Motorway, according to the motorway site plans.

The support and maintenance station is a technical complex that handles a series of tasks grouped as follows:

- monitoring of road traffic and the influence of weather factors upon road traffic; - the provision of first aid when car accidents occur; - maintenance of the motorway within the assigned sector, the service areas, the

signalling panels, the lighting and telecommunication facilities; - reconstruction and repair works following traffic accidents or natural disasters; - refuelling for maintenance machinery and equipment; - storage for intervention materials; - parking area for intervention machinery. For the performance of the above-described tasks, thesupport and maintenance

stationshall be fitted with the following items: - service building with a heating plant;

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- storage room for anti-skid materials; - shed; - open and covered warehousesfor intervention materials; - a water management plant and a drilled well, or a water supply network connection; - refuelling station for intervention machinery; - separator for petroleum-based products; - fuel tank for the heating plant; - mechanical-biological wastewater treatment station; - wastewater pump station and discharge pipeline located at the receiving water body; - parking areas for intervention machinery; - transformer station; - fencing and gates; - perimeter lighting fixtures. The service building fulfils functions related to motorway security and control and is

fitted with accommodation facilities for its permanent staff. Maintenance and coordination centre (CIC) Thismaintenance and coordination centreshall be located along Târgu Neamţ – Iaşi

Motorway, according to the motorway site plans. In the present study, it has been proposed to locate the maintenance facilities within or in the vicinity of road nodes, along access roads to the motorway, given the access and supply advantages. The maintenance and coordination centre (CIC)is a unit designed to service a particular motorway sector, maintain the motorway in suitable operating conditions and provide road traffic safety within the assigned sector, while also facilitating repair works for the existing machinery. It can also coordinate the activity of support stations and permanently monitor motorway compliance with the performance criteria, as per the “Normative on motorway maintenance in line with performance criteria”.

The maintenance and coordination centre (CIC)is another technical complex that handles a series of tasks grouped as follows:

- monitoring of road traffic and the influence of weather factors upon road traffic; - the provision of first aid when car accidents occur; - maintenance of the motorway within the assigned sector, the service areas, the road

markings, the lighting and telecommunication facilities - reconstruction and repair works following traffic accidents or natural disasters; - collection of tolls and fines; - refuelling for maintenance machinery and equipment; - maintenance and repair works of included machinery, etc. For the performance of the above-described tasks, constructions with various functions

have been designed. These constructions are: - control building; - maintenance workshop; - storage room for anti-skid materials; - refuelling station + tanks; - 200 m3 water tank + pumping station;

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- a drilled well or a water supply network connection; - washing platform; - sludge collection platform; - sludge and oil separating tank - separator + pumping-washing station; - transformer stationand power grid connection; - mechanical-biological wastewater treatment station; - separator for petroleum-based products; - wastewater pump station and discharge pipeline located at the receiving water body; - machinery parking area platforms; - fuel storage and supply unit for the heating plant; - fencing and gates; - perimeter and access road lighting fixtures. Toll booths As per the proposal in the previously drawn up feasibility study, the motorwayshould

be fitted with toll booths containing5 modules. Regardless of the toll chargingsystem selected by the designer/project company, it

shall comply with the European normatives in force in the field and ensure easy access for motorway use.

Collection of rainfall from the road platform The platform is considered to be fully waterproofed, also along the lane divider. Rainfall shall be collected into collector ditches located at the foot of the batter, within

the embankment, or at the edge of the footway, within the cut. Rainfall shall drain from the platform across the batters of embankment, up tothe

collector ditch at its foot. When embankments are higher than three meters, at the edges of footways one shall build footway culverts intended to collect rainfall from theplatform and, through the draining canalson the batters, rainfall is directed into the ground-level ditches. At the foot of the draining canal one shall fit hydraulic jump prevention diffusers.

In the case of small and medium-size batters, batter protection against erosion is deemed sufficient. For large batters, next to erosion protection measures, one shall also take precautions by fitting footway culverts, designed to discharge water into draining canals.

Additionally, within cuts, as a measure against possible erosions, one shall protect the cut slopes and build slopes with the lowest possible gradients.

If the motorway is laid out onto a medium-sizeembankment and the general gradient decreases towards the exterior, rainfall may be left to drain onto the surrounding ground. This may be resorted to on distances that are not too long. From a ground and vegetation protection standpoint, rainfall from the motorway platform should be collected and directed towards fat and oil decanting areas.

Collection of rainfall from natural batters The rainfall draining across natural surfaces with slopes descending towards the foot

of the motorway embankments shall be collected in the ditches located at the foot of the batter so as to prevent any infiltrations at the base of batters or the earthwork becoming destabilised.

This rainfall is directed through the collector ditches towards water treatment areas and then dischargedinto receiving water bodies. The facility designed to collect, direct and treat surface water has multiple functions. The water across the surrounding land areas do not

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require treatment, however, inside the collecting facility, it mixes with the water draining from the motorway platform, supposedly contaminated by exhaust products, vehicle tire wear or following accidental contaminations via leaks of products from faulty or crashed vehicles.

In the case of cuts, the rainfall draining from the surface of cuts shall be collected by means of the ditches built at the edges offootways. Additionally, earth walls doubled by discharge channels shall be fitted at the upper edges of cuts in order to prevent excess water draining across them and eroding them.

Surface water discharge The surface water collected by means of ditches are treated throughseparating tanks,

desanders and fat separators and then discharged into receiving water bodies. Surface water is discharged into receiving water bodiesby means of collector ditches

with various longitudinal gradients, depending on the morphological configuration of the area, as well as special setups at the ends, designed to discharge without eroding the soil.

If noreceiving water body exists, the water can be discharged into troughs of natural valleys via water lamellar dispersionreservoirs, which will prevent possible soil erosion due to concentrated flow bursts.

Within troughs, where rainfall can be collected and directed downstream or torrents can form, surface water is transited from one side of the motorway to the other via pipe culverts fitted in these areas. The installed pipe culverts have an upstream water collecting system,depending on the morphological nature of the land. These upstream setups may take the shape of concrete flumes connected to the surrounding landor spillways, systems used primarily in profile, cut or mixed areas. Downstream, the link to the surrounding land takes the shape of concrete flumes connected to the land or water dispersion diffusers.

In areas with flat lands, general trough-like morphology, in the vicinity of flowing waters that can also flood extended land areas under high water flow rates, one shall fit discharge pipe culverts, designed to prevent the formation of any dam in front of overflowing waters, consisting in the motorway embankment, which might create hydrostatic pressures across the batters and infiltrations into the road structure.

Underground water draining Underground water, in areas where the land primarily has medium and steep slopes

and water levels are at a relatively low depth from the natural surface, shall be intercepted by means of longitudinal drains located in the upstream areas of slopes, below the surface water collecting ditch. In general, longitudinal drain pipes will discharge waterinto trough-like areas and areas fitted with pipe culverts. If there is no possibility of discharge in the vicinity of a pipe culvert and a trough-like area, longitudinal drain pipes may discharge their load downstream across the motorway width, via PVC pipes running under and across the embankment. The discharge ends of longitudinal drain pipes shall be protected. In order to maintain longitudinal drains, every fifty meters one shall fit slope disruption manholes. If the transversal drain pipe is discharged by undercrossing the embankment, the system shall be mandatorily fitted with a manhole.

The purpose of setting up longitudinal drain pipes is to intercept underground waterpresent at low depths from the natural surface, which can infiltrate into the road structure or bed and degrade it.

In relatively flat areas, with low slopes of the natural land, which ensures,

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nevertheless, a slow drain of underground waters, one shall fit longitudinal drain pipes on both sides of the road, beneath the ditches designed to collect surface water, in order to intercept underground water and decrease their level curve.

Across flat areas, with no drain possibilities, where the underground water levels are close to the natural surface, the draining methods to be fitted shall be wick drains and additional road bed consolidation measures.

Drainage works These shall be carried out as follows:

• - the drainage works shall be entirely executed in the final positions of the items in question (collector ditches, discharge channel, drains, sewers);

- inside theembankmentone shall execute a collector ditch, at the edge of the batter, resulted from the motorway construction; if the motorway profile displays its transversal slope towards the lane divider, water can be collected through the drainage and sewer system, wherever possible, whereas an alternative solution is fitting a footway culvert designed to take over water from the road surface, to be subsequently discharged into the ditch at the base of the batter by means of draining canals;

- within the cut, ay the base, one shall execute a collector ditch, the water being collected via the drainage and sewer system;the alternative solution is building a footway culvert designed to take over water from the road surface, to be subsequently discharged into the ditch at the base of the batter by means of draining canals;

- in regard to guard ditches, they shall be located 5 m away from the cut batter Pipe culverts

Their length is determined by the motorway reservation width for Stage I. To be fitted on the right side of the motorway. Their headroom shall be at least 2 metres in order to allow easy maintenance Corrugated sheet pipe culverts shall be discarded and only concrete pipe culverts are allowed.

Cut batters The cut batters were determined based on the stability calculations corresponding to

the geotechnical characteristics of the land strata encountered during the cut excavation. Due to the poor geotechnical characteristics of the natural land and the presence of underground water, the resulted batter slopes were 2:3…1:4, with 6.0m steps and 5.0 m benches.

Over the entire length of benches one shall build a pour-in-place concretedischarge channeldesigned to collect water from the cut slope and discharge it, in a controlled manner, into the collector ditch at the foot of the batter, with the help of a batter discharger.

Embankment batters For heights of up to 6.0m, one shall retain a single batter with a 1:1.5 slope. For

embankment heights in excess of 6.0m, a 1:1.5 slope shall be used. Across the first 6.0m above mentioned one shall built a 5.0 m wide bench with a 4% general gradient, followed by a batter with a 1:2 slope, up to the lower part. Over the entire bench length, one shall fit a pour-in-place concrete discharge channel designed to collect water from the batter anddischarge it, in a controlled manner, into the collector ditch at the foot of the embankment batter, using a batter discharger.

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Prior to commencing the embankment filling works, one shall remove the existing vegetal layer around 40cm thick. Additionally, where necessary for a better match between the existing ground and the embankment batter, one shall build twin levels between 1.0 and 2.0m high.

After completing the execution ofembankment batters, these shall be covered with vegetal earth layer 20cm thick.

Earthwork reinforcing and consolidation The consolidation works are intended to ensure the stability of batters and slopes, as

well as the load-bearing capacity of the foundation land. Additionally, the reinforcing works will help diminish the road reservation where necessary.

The consolidation works shall be selected and sized based upon several elements: - landlayout; - natureof the land from a geotechnical standpoint; - presenceof surface and underground water; - anypossible instability phenomena; - seismic characteristics within the work site.

Most of the aforesaid elements are produced by the land studies previously carried out (geotechnical study, topographic surveys, etc.).

In order to check the stability of slopes and batters, as well as the deformability of foundation grounds,a series of specific calculations was carried out, pointing out whether stipulating various measures and works is required or not.

All the batter consolidation and reinforcing works were designed based on the Romanian standards, normatives and rules in force, also aligned to the European regulations.

Moreover, a very significant role will belong to the architectural treatment (physical appearance) of these works for landscape inclusion purposes.

Longitudinal and transversal drain pipes In order to increase the stability of slopes and cut batters, some of the stipulated works

shall helpcollect water from slopes by means of guard ditches and cut batters, drain water from slopes and cut batters using cut surface drains, located at the edges of platforms, below the drainage element.

In order to collect and drain underground water in the vicinity of the road platform, longitudinal drains at the base of cut slopes and along the benches were provided, intended to decrease the natural land humidity and improve its physical and mechanical characteristics.

Longitudinal drains are 3.0 m deep and 1.20m wide at the base. The drains shall carry the water along their length and discharge it into the concrete ditches at the edge of the platform or through transversal drains.

The drain fill is made ofgravel and ballast, protected with anti-contamination geotextile, whereas, in the upper part, the drain pipe coveris provided by impervious surface water drainage system (collector ditch); transversal drains are made of clay.

The drainage of water at the base of the drains shall be aided by corrugated PVC tubes 110mm in diameter, with slits, laid out onto pour-in-place concrete ditch.

In order to service and maintain of longitudinal drains, one shall fit manholes approx. 40 m from one another, along the entire drain length.

Batter protection works

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Guard ditches Guard ditches are built on top of cut batters in order to intercept surface water draining

from the slope onto the road. They are intended to protect cut batters and prevent the overfilling of road longitudinal ditches with the water draining from the slopes.

The earth resulted from digging the collector ditch shall be stored nearby, into a guard ditch (in the shape of an earth deposit) having a level surface and a 5% gradient towards the guard ditch, to be located up to 1.0m away from the cut batter edge. Guard ditches shall also be erected behind cut walls and reinforcing structures within drilled columns and be made ofpour-in-place concrete.

The ditches built across steep will be able to discharge water aided by staggered dischargers or draining canals fitted so as to decrease the water draining speed and erosions at their opening end.

Batter protection with geomeshes The protection of batters with geomeshes shall be used along road sectors where cut

batters in excess of 12.0 m are made of granular earths (sands, gravels, ballast) or powdery-sandy clay, degradable through erosion, which cannot sustain any vegetation.

The solution consists in laying down spatial geomeshes, fixed into place with metallic stakes, onto which one shall lay down a layer of sown vegetal earth 5-10cm thick.

Embankment consolidation works Concrete reinforcing walls with indirect foundation Along road sectors where, on stability and road territory limitation grounds,

reinforcing works were required, reinforcing walls with indirect foundations were provided at the base of the embankment batter.

The elevations of concrete reinforcing walls range from 8.00 to 12.00m. The foundation of walls shall sit on large-diameter piles, three of them fitted in each

section. For the collection and drainage of water produced by infiltrations,behind the wall one

shall build a coarse rock drywall drain, from which water shall discharge through weepers fitted at the base of the drain.

The protection of the concrete that comes into contact with the natural land shall be ensured by a hydroinsulation.

The work is executed in sections 25-30m long and between sections one shall fit separation joints made of two layers ofbuilt-up felt asphalt.

In terms of architectural treatment of the visible face of walls and inclusion within the general landscape, we suggest imprinting them with the help of special formworks fitted on the inside with elastic patterned moulds.

Supporting structures made of geomesh-reinforced earth This supporting system is designed to limit the road territory, as well as to secure the general stability of batters.

The solution was applied at the foot of embankment batters, where the natural land gradient exceeds 1:5, the slope works take a significant land area and fillings are difficult to carry out. As such, the base of earthworks is reinforced and the risk of slides is eliminated.

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The elevations of reinforced earth structures range between 4.00 and 6.00m and aremade of filling that contains geo-mesh reinforced draining compacted granular material (crushed stone or ballast) with strengths of 60,80,100 KN/m. The geomeshes shall be placed at 40-50cm away from one another, allowing the filling to spread.

Onto the visible face of the wall one shall lay down a layer of sown vegetal earth.

Geosynthetic-reinforced ballast cushion

Wherever necessary, geosynthetic-reinforced ballast cushions were fitted in order to increase the load-bearing capacity of foundation lands, existing land areas with poor physical and mechanical characteristics, which cannot be replaced and on top of which the road body is to be built(river and rivulet valleys and beds, swampy areas, near pipe culverts).

The cushion is made of ballast 1.0 – 1.5m thick and is reinforced with two layers of geomeshes, having an anticontaminating geotextile layer at the base.

Ballast piles

Across areas where the foundation land has poor characteristics, particularly across excessively humid areas, one shall enhance the foundation course at depth.

To that end, one shall fit ballast-filled drilled piles with a diameter of 600mm. The piles shall be around 10-15m deep and arranged as part of a mesh with 1.50m eyelets.

In the upper part of these piles one shall lay down a geosynthetic-reinforced ballast cushion 1.0 – 1.5m thick.

Hydrotechnical works The motorway crosses a series of valleys, watercourses, torrents or stretches along

rivers or rivulets. This setting requires a series of protection or adjustment hydrotechnical works. Hydrotechnical works are understood as any type of works intended to protect the

infrastructure of traffic routes and works of art againsterosion or scouring caused by water currents, waves, ice, etc., consolidations and protections for the banks of watercourses in the proximity of the motorway, corrections and recalibrations for the beds of watercourse in the immediate vicinity of the motorway.

The hydrotechnical works shall be sized according to the flow rates provided by INHGA (National Hydrology and Water Management Institute).

The provisions of Government Decision no. 846/2010 on approving the National medium- and long-term flood risk management strategy.

Watercourse bed correction Watercourse bed correction is required if the road territory totally or partially overlaps

the bed of an existing watercourse and a different course cannot be selected. The adjustment consists in building a reinforced canal outside the road territory, able

totransit the average flow rate of the respective valley, until the respective stream re-enters its normal course.

The canal battersshall have a 1:1.5 slope and be reinforced. The riprap shall be made of concrete slabs 15 cm thick, placed onto a support layer made of a granular material

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(crushed stone or ballast) and geotextile. The support layer thickness shall be at least 10cm. The watercourse bed deserted portions shall be filled with the material locally

excavated for the new stream bed, whereas the ends shall be closed with material (gravel) from the stream bed. In the area where corrections are made one shall also fill lower portions where other stream beds might form as a result of high waters.

The following corrections of watercourse beds were provided: o Boura rivulet-Boura rivulet course was locally adjusted with a reinforced

concrete canal; the canal section was sized so as to bear the flow rate plus likely overflows; therefore, the water level shall not exceed the upper part of the canal, the bridge benefitting from abutments on both its sides.

o Vătaşniţa rivulet-it crosses the motorway twice, underneath the same bridge; the rivulet course was locally adjusted, its bed being managed by a reinforced concrete canal.

o Valley at km 40+660 - thevalley course was locally adjusted in order to become perpendicular to the motorway.

o Bahlui river - theriver was corrected downstream from the motorway bridge, by eliminating a river bed elbow, so that the batter of the embankment of the right side of the motorway should not be affected by the river course.

Corrections of irrigation ditches Târgu Neamţ – Iaşimotorway sector crosses a series of canals operating as draining

and/or irrigation ditches. These canals belong to ANIF RA, Moldova de Nord Territorial Branch, Iaşi

Administration Unit. The canals intersected by the motorway course were locally adjusted in order to exit

the work road territory or intersect the road at a perpendicular angle. The local corrections of canals were carried out while retaining the initial

functionalities unchanged. The corrections were made by projecting a trapezoidal section whose drain portion

would be similar to that of the initial one. The slopes of batters shall be 1:2. Guard rails and guiding poles For the road users’ safety, both the road surface edges and lane divider were fitted

with medium heavy, heavy and very heavy guard rails. The guard rails were installed in compliance with the criteria of technical design along

the lane divider and platform edges, taking into account the embankment height. The guard rail type, as well as their installation method shall be reanalysed during the

technical project stage, keeping in mind the provisions of the final version of the Normative of extra-urban motorway design PD162-2002 and AND 593.

Passages across the lane divider were provided in order to facilitate traffic management in emergency situations(traffic accidents, etc.) and motorway intervention (repair) cases. They are 161 m long, in accordance with the specifications of the technical norms in force on signalling and marking during the performance of maintenance works.

The passages across the lane divider were set up, as a general rule, approx. every 5 km and in the areas close to works of art of extended length.

The guiding poles were fitted on the outer sides of the routes, within sectors lacking

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any guard rails. They were built into the footway 25 cm away from the exterior edge of shoulders/emergency lanes.

The distance between installed guiding poles shall be 100 m along straight sections and curves with a radius in excess of 1100 m, whereas in curves with a radius under 1100 m they shall be placed every 75 m.

Anti-glare devices In order to increase traffic safety levels, comfort during night time, as well as to

reduce the glare effect, the land divider has been fitted, over its entire length with anti-glare devices.

Restoring road connections The motorway route intersects a series of roads from various categories (agricultural,

service, township, county),disrupting their continuity. Depending on their significance, provisions were made to build interchanges with no

access to the motorway or deviate such roads along the motorway and group them in order to create a common motorway overpass.

Additionally, there are several agricultural roads or local access roads whose continuity was retained byresorting to motorway underpass or overpass solutions, through the openings of bridges or passageways.

Intersections with railroads Târgu Neamţ – Iaşimotorway route intersects the following railroads:

- 10+650 CF (railroad) 500 Paşcani - Roman; - 25+855 CF 606 Paşcani - Podul Iloaiei; - 53+292 CF 607 Podul Iloaiei - Hârlău; - 60+203 CF 608 Leţcani - Dangeni

These shall be crossed at multiple levels in the form of overpasses. Bridges and passageways The widths of bridges, viaducts and passageways shall comply with TEM/2001 Rules,

the Normative on the design of extra-urban motorways, code PD 162-2002, Technical Rules 46/27.01.1998, the annex to Ordinance 43/1997, approved as perLaw 82/15.04.1998,namely:

- therunning carriageway width for all motorway works of art, between the interior guard rails of a direction of traffic – 12.00m;

- therunning carriageway width for motorway overpasses of national, county and township roads – 7.80m+2x1.75m;

- therunning carriageway width for motorway overpasses of service roads – 7.00m + 2x0.75m;

- passagewaysin the form of two-lane connecting roads – 9.00m+ 2x0.75m; -the road and railroad height clearances of multiple level passageways are the

following: • motorway overpasses of intersecting national, county and township roads –

5.50m, • motorway overpasses of service roads – 5.00m, • passageways on top of CF (railroads) – 7.80 m, so as to ensure the height

clearanceofelectrified overhead wires. The crossings of railroads shall take into account any possible doubling of such

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railroads. The horizontal overall sizes shall comply with STAS 4392-84 and UIC 777 Leaflets.

The headroom under the bridges, up to the maximum levels of calculation flow rates, plus a 2% margin, across intersected rivulets and rivers - min 1.00 m, as per Normative PD-95/2002.

Designing the structures of bridges/passageways/viaducts shall comply with the legislation in force, namely rules/normatives/Eurocodes.

Two categories of designed works of art can be differentiated, which are motorway bridges and passageways, on the one hand, and motorway overpasses, on the other hand.

Tunnels General considerations on tunnels Adopting a tunnel solution is an alternative to open construction and supported by the

following arguments: • improvingthe course characteristics, viewed from the top and from a

longitudinal profile standpoint, by decreasing the size of declivities; • avoidingthe performance of bridge works of extensive lengths, as well as

costly consolidation and reinforcing works for cut batters; • given the local geomorphological conditions (sandy clays, sands, gravels), the

tunnel solution may be adopted with no cost increases; • protection of the environment by avoiding natural habitat fragmentation and

preservation of forests; • elimination of expropriations and partitions of properties; • lowering operating expenses – fuel consumptions and operating costs.

The “no tunnel” solution may be adopted, as well, so long as it meets the minimum design and engineering requirements imposed and the related risks are taken into account.

The tunnel solution may be resorted to where a “no tunnel” solution has been waived, provided that the requirements stipulated by the technical regulations (both Romanian and European) in force are complied with.

In general,the tunnel construction solutions will depend on: - the geological layers of the massif to be pierced is critically significant; the

tunnel can be either perpendicular or parallel to thedirection of the layers; - the local hydrology and the state of underground waters are decisive factors in

selecting the execution technology of building solutions; the detection of any possible water-filled karstic gaps under high pressure or liquefiable rocks that may allow exceptionally high water flows to enter the excavation.

The tunnel solutions that may be suggested are: - the “twin domes” solution; - the “parallel tubes” solution.

Electrical and mechanical equipment. Electricity supply is required by the following items of equipment: - the ventilation system–the ventilation system, including the electricity supply of the

propeller fans, and the smoke exhaust ventilation equipment inside the general tunnel section; - the lighting facilities, including normal lighting inside the general tunnel section,

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safety lighting at tunnel entry points, emergency lighting, lighting for pedestrian or motor vehicle traffic and guiding lights fitted on the tunnel side walls;

- fire suppression system, including the electricity supply of pumps, necessary in order to maintain inside the main pipeline the pressure required to suppress the fire;

- lit traffic indicators, including indicators for lane assignment, variable message indicators, traffic halt mobile indicators and “danger”, “no entry” or «Police» indicators, as well as traffic signs indicating safety areas and emergency exists;

- telecommunications systems, including roadside emergency phone booths and operating landlines inside technical facilities (the command centre building, the main power plants andtechnical booths for pedestrian and motor vehicle crossroads), required for operating and safety equipment safekeeping;

- radio communication system, including radio and loudspeaker transmission and communication system,employed in order to broadcast emergency messages to users. Speakers/loudspeakers shall be fitted inside evacuation galleries,where tunnel users would wait before being evacuated outside;

- tunnel remote monitoring and control systems, items of equipment such as:closed-circuit television (CCTV), automatic road traffic incident detection, tunnel pollution control and measurement systems, Programmable Logic Controllers (PLCs) and theSupervisory Control and Data Acquisition System (SCADA) used to control the technical facilities inside the tunnel and at tunnel entry points. Cabling shall consist in several electricity supply networks, depending on the various voltage requirements.

The electrical system of tunnels shall be entirely provided depending on the electricity supply redundancy levels (equipment duplication so that one item of equipment should be replaced with the other in case ofmalfunction) in order to ensure the uninterrupted operation of the technical facilities and guarantee the tunnel users’ safety.

Lighting system Standard lighting inside the tunnel The galleries of each tunnel shall be fitted, over their entire length, with lighting

fixtures able to provide vehicle traffic safety inside the tunnel. Depending on the tunnel characteristics, standard lighting under normal conditions should be able to provide a luminance level of 4.2/light fixture/m², over the entire tunnel length. Lower luminance levels shall be allowed under specific traffic conditions (low traffic, nighttime traffic, etc.).

Emergency lighting: For each tube, safety (or emergency) lighting shall be secured by retaining, for each

lighting fixture inside the general tunnel section, one of two lamps (1/2), the active lamp being set up at 50% of its rated power (the lamp shall be connected to electronic ballast with double the power). These circuits shall comprise cables and fireproof distribution board, anchored directly to the tunnel dome. The emergency lighting circuits shall operate non-stop. They shall be powered from the tunnel primary and secondary power plants. The maximum length of an emergency lighting circuit shall be approximately 920 meters. Emergency lighting shall be poweredthrough the Uninterruptible Power Supply (UPS).

Backup lighting: The tunnel backup lighting is necessary:

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- in order to provide high brightness levels at tunnel entry points, - to indicate the tunnel portal direction and the fact that the tunnel can be used

when snow is present at the edge of the tunnel portals. The backup lighting at entry points (threshold areas) shall be asymmetrical or „counter

beam”, with luminaries anchored to the dome long the two axial lines. Safety lighting for equipment: Special, highly visible lights, shall be fitted on top of emergency exist located between

the tunnel and intersections. All the safety lighting equipment shall be connected to theUninterruptible Power Supply (UPS).

Roadside emergency phone booths: The use of roadside emergency phones has to be as easy as possible. Users will have

to press a button in order to be put through to the tunnel control centre building. The operating procedures shall be presented as easily comprehensible and construed pictographs. A dedicated workstation (intended to centralize and manage emergency phone calls) shall be placed and set up in the tunnel control centre building. It shall allow the operator in charge with traffic control to monitor the entire network. The system shall transmit to the operator the exact location of the received phone call.

Radio network: A radio transmission system shall be installed inside the tunnel, dedicated to

emergency services (fire fighting unit, motorway patrol, emergency services, etc.) and operating and maintenance teams. This system shall cover the following areas:

- the tunnel areas intended for traffic; - intersections; - the primary power plants; - the vicinity of tunnel access platforms; - the control centre building operating areas (fire fighting unit, etc.).

Operational telecommunications: A phone network dedicated to the tunnel operation was set up to cover the entire

tunnel. It includes the phones in the following buildings: - the administrative building; - the control centre building; - the operation and maintenance facilities; - the primary power plants.

The network of operational phones shall be connected to the tunnel phone networks. A Private Automatic Branch Exchange (PABX) shall monitor the entire network and handle connections with the private phone lines inside the tunnel, the control centre building and the public network outside the tunnel. All the phone systems shall be connected to uninterruptible power supplies.

Road traffic management

The road traffic management systems, such lane assignment indicators, variable message indicators, stop signals (red disc) and traffic stop signs,shall be installed at the tunnel entry. The traffic management equipment (monitoring, transmission of information)

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shall have to be powered through the uninterruptible power supply (UPS). Tunnel closure equipment:

The tunnel closure equipment shall represent the main traffic management tools. These items of equipment may be connected to the CCTV (closed-circuit television) system, the automatic incident detection system and the roadside emergency phone booths. All the tunnel closure equipment shall be powered through the Uninterruptible Power Supply (UPS)and operated from thetunnel control centre building.

Barriers at tunnel entries Remotely controlled barriers are provided at the entry of each tunnel and are located

approximately 50 meters ahead of the tunnel entry and in central stop points. They are used in order to block traffic in emergency cases (e.g., fire inside the tunnel, etc.). The operators inside the tunnel control centre shall monitor the activation of these automatic barriers, which will be fitted with large intermittent indicators (red disc), an alarm signal and a variable message indicator intended to inform users on the tunnel closure cause

Safety signalling system: Safety indicators and lighting facilities were provided for:

- the safety areas and the fire extinguishers; - the safety exists; - the indicators signalling the nearest emergency exit.

The locations of safety spaces and fire extinguishers shall be clearly indicatedto tunnel users. In that respect, one shall use standard safety indicators (depicting one phone and one fire extinguisher). These traffic signs shall be located above the safety areas and anchored to the tunnel dome. The safety indicators shall be powered through the Uninterruptible Power Supply.

Geology and geotechnical aspects Geology in the region The Iaşi county territory is included in the Moldavian Platform. This platform is the

SW extension of the Russian Platform and comprises, at the surface,quasi-horizontal Sarmatian deposits, whereas at depth we find Neozoic, Mesozoic and Paleozoic deposits. Towards WSW, the platform immerses itself significantly underneath molasseand the Carpathian flysch.

Based on the laboratory test results and the geotechnical surveys, the soil stratification encountered along Târgu Neamţ – Iaşimotorway may be divided into horizons with similar physical and mechanical properties. The stratification appears as follows:

A. Cohesive horizon – with high-very high plasticityand medium-high consistency(plastic, consistency – hard): clay, powdery clay, sandy clay, powdery-sandy clay, powdery clay, clay-like powder

B. Cohesive horizon – with low-medium plasticityand low consistency (plastic, flowing – soft): sandy - clay-like powder, powder, sandy powder, clay-like sand, powdery sand

C. Cohesive horizon – high consistency (plastic, hard): marly clay D. Cohesive horizon – high consistency (plastic, hard): clay-like marl E. Non-cohesive: sand, sand with shingle, shingle with sand, sand with rare shingle F. Hard bedrock horizon: freestone, oolitic limy freestone

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The motorway route comprises a single tunnel, located between km 26+325 and km 27+728, with a total length of 1403 m, of which 1355 m shall be excavated below ground and the remaining 48 m shall be a false tunnel (cut & cover).

The maximum height is 62.52 m at km 27+400. Starting from the tunnel entry portal, namely at km 27+160, one shall excavate unit F (semi-hard rock, freestones). Along the second section, up to the tunnel exit portal, the excavated materials shall belong to horizons C and A. At the contact point between the bedrock and the clay-like soils there are small units belonging to horizons B and E.

Emergency galleries The dimensions of the galleries for tunnels shorter than 1500 m shall be minimal so

as to allow pedestrian access. Seismic effects Area seismicity: According to the technical regulation “Seismic design code – Part 1 – Design

provisions for buildings”,code P 100-1/2013, the ground acceleration zoning for design purposes, within the analysed area, for seismic events with an average standard (recurrence) intervalARI= 225years, has a value ag = 0.25 g.

As far as the tunnel in this project is concerned,seismic acceleration is 0.2g, a value equal to the threshold from where earthquakes start causing damage inside tunnels. On the other hand, concerning resistance to seismic events, we must keep in mind the fact the tunnel section benefits from a simple concrete covering, closed on the inside in a reverse cove and not considered a permanent ground resistance element against pressure, therefore, a safety margin for accidental stress shall be taken into account.

In conclusion, damage from seismic events might occur within the portal areas, caused by slope/land slides, as well as across the underground tunnel covering portion. Seismic events should be taken into account when designing both slopes, that is, the slopes of portals and the screen walls.

Motorway communications system The main systems to be integrated are:

• dedicated fiber-optic telecommunications system; • traffic control system (the display of variable messages and real-time traffic

monitoring - thecruising speed limit/warning only,video surveillance cameras,weather stations,static and dynamic weight measurement - WIM, etc.),

• traffic guiding system (traffic guidance within a road network pertaining to a certain area by means of fixed and variable message signs).

The specific systems to be integrated are: • communications and signalling systems; • distributed security systems (CCTV, emergency phones, including electricity

supplied from alternative energy sources); • distributed traffic control and monitoring systems (SCADA) for tunnels –

separately assessed;

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• dynamic message display, • protection / security – alert systems (weather, congestions, dynamic

measurements, licence plate recognition); • internal automation systems - enterprise - office (LAN, voice); • traffic control and information centres; • access to the telecommunications system for companies handling the

management of car fleets – possible extension arrangement; • automatic toll charging system – possible future extension arrangement(steps

may be taken to allow future integration). Motorway lighting system Lighting systems for parking areas, maintenance centres and toll booths Each parking area requires electricity supply for its exterior perimeter lighting. Power supply To secure the necessary power requirements, a 20/0.4kV closed transformer station

was provided, placed inside a metallic or concrete envelope. Distribution shall be handled by the transformer station low voltage distribution

board. Perimeter lighting fixtures The lighting poles shall be located so as to ensure the necessary and recommended

even lighting levels. The electricity supply required by the lighting fixtures shall come from an

underground power grid, made from cables placed between 2 layers of sand, along the green area and inside protection tubing as it crosses and runs underneath the road surface.

Lighting systems for intersections and road nodes Lighting intended for traffic routes shall emphasize the characteristics of the traffic

route in question and of actual traffic in order to ensure the safety of road users, road traffic fluidity and visual comfort.

The lighting systems shall be fitted bilaterally, facing each other. At roundabout intersections, the lighting systems shall be placed along the

intersection outer edge. The poles shall be located outside the road protection area. The poles may be

installed inside the protection area only with the consent of the unit managing the road and after any mutually agreed upon measures have been taken.

Electricity sources located in the vicinity of the site: The power supply solutions (power grid connections from the existing medium

voltage grid) shall be set forth by the electricity provider. 4.2 MOTORWAY PROJECT CHANGES. FURTHER CLARIFICATIONS AND

MANDATORY REQUIREMENTS The three previously presented changes shall be taken into account:

• Change 1.

The Road node relocation from the built-up area of Târgu Frumos locality to its immediate proximity, as well as laying down a connecting road featuring a design speed in excess of 90 km/h. The connecting road would intersect national road DN28 in the form of a

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multiple level crossing, via a road node with connecting belts designed for traffic speeds of at least 60 km/h. Increased accessibility to the motorway is an asset that has to be capitalised on to the fullest.

• Change 2.

The Road node from km 61 would basically be eliminated, leaving the motorway route continue on the direction of the connecting road to DN28, built as a motorway. As such, the connecting road would basically disappear and leave instead a motorway which intersects DN28 via a multiple level crossing.

• Change 3.

DN28 widening between the road node represented by the intersection of the motorway with DN28 (according to the details mentioned at CHANGE 2) and the intersection with Iaşi by-pass.

The intersection of DN28 with Iaşi by-pass shall take the shape of a multiple level crossing.

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Change 1

NOD RUTIER = ROAD NODE; TUNEL = TUNNEL; MODIFICARE 1 DRUM LEG 4 BENZI = 1ST CHANGE, 4-LANE CONNECTING ROAD

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Changes 2and3

NOD RUTIER = ROAD NODE; TUNEL = TUNNEL; MODIFICARE 2 DRUM LEG 4 BENZI ÎN LOC DE DOUĂ = 2ND CHANGE, 4-LANE INSTEAD OF 2-LANE CONNECTING ROAD MODIFICARE 3 LĂRGIRE 4 BENZI DN 28 and NOD cu bypass = 3RD CHANGE, EXTENSION TO 4 LANES DN (national road) 28 and bypass NODE

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Other aspects:

The connecting road shall be built according to the motorway specifications and designed in compliance with the motorway-related technical regulations and legislation in force.

One shall only take into consideration the national and European technical regulations/legislation in force as at the public procurement procedure commencement date.

The technical solutions stipulated in the feasibility study may be enhanced by means of the future Technical Project, in accordance with the legislation and the (Romanian and European) technical regulations in force.

4.3 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.)

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: Government Decision no. 947/1990 on the “Modernisation of the existing road

network and construction of motorways in Romania”, published in the Official Gazette no. 102 from 1990. Târgu Neamţ – Iaşi 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 Spatial Planning of the National Territory - Section I - Traffic routes.

Law no. 363/2006 on the approval of the Spatial Planning of the National Territory - Section I - Transportation networks. In the current context

Târgu Neamţ – Iaşi Motorwayis comprised in the policy document entitled GTMP – General Transportation Masterplan, a document approved as per GD no. 666/2016,as well as inLaw no. 363/2006 on the approval of the Spatial Planning of the National Territory - Section I - Transportation networks.

Law no. 291/2018 on the implementation of the motorway in question: Târgu Neamţ – Iaşi - UngheniMotorway. Basically, implementing the Project does not require fundamental changes from an

institutional standpoint. The public-private partnership is the contract concluded between the public partner

and the private partner based on which a new company is incorporated, a company set to act as the project company and regulate the rights and obligations of thepublic partner, the private partner and the project company during the performance of the investment project.

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The project company constituted by the public partner and the private partner as part of the public-private partnership acquires the status of party to the public-private partnership contract. The project company’ rights and obligations are set forth in a manner that guarantees the observance of the public-private partnership contract and the requirements to be met in rendering the public service in question.

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.

5 STUDIES AND ANALYSES REGARDING THE MANNER OF EXECUTING THE PROJECT

5.1 COMPLEX PROJECT COMPRISING DESIGN SERVICES, CONSTRUCTION, MAINTENANCE AND OPERATION WORKS UNDER A TOLL MOTORWAY REGIME - TÂRGU NEAMŢ - IAŞI The duration of the services and works pertaining to the project entails a longer period

of time required to recover the investment costs, as part of an approach that is logical and correlated with the extended repayment durationof such investments known to entail significant expenses.

The estimated value is approx. 1201million EuroVAT-inclusive, or 1001 million EuroVAT-exclusive.

The duration of the services and works to be carried out as part of the project requires the existence of 2 stages, namely:

STAGE 1

Design and construction services for Tg. Neamţ - Iaşi Motorwayunder a public-private partnership regime - contract duration -nomore than 48 months from the contract signing date.

STAGE 2

Maintenance and operation of Tg. Neamţ - Iaşi Motorway under a toll motorway regime over a26-year period from the completion of Stage no. 1.

The scope of the public-private partnership also comprises the following aspects:

- the public partner may contribute, as per the provisions of GEO no. 39/2018 on public-private partnerships,withno more than 25%of the total investment value;

- the maximum tolls for motorway use(VAT-exclusive), which may subsequently be subject to indexations in line with the national average wage evolution, are:

Toll/100

ALLOWED MAXIMUM

108

km

Car LGV HGV Bus

Toll (euro)

6.3 8.8 12.6 12.6

- anannual, availability-based, payment during the operation period, not exceeding 61mil. Euro (VAT-exclusive). In terms of implementation, the motorway in question requires an availability-based payment in order to be feasible under a PPP;

- the construction of 61motorway km+ 7 motorway kmbetween the connecting belts of DN28and km 61+000 road nodes;

- a successful completion bonus/penaltyfor the early/delayed completion of works, amountingto80 million Euro/year (proportionate to the period elapsed from that year),

- maintenance and operation for 68 km of motorway.

5.2 DIFFERENCES BETWEEN PPP AND A TRADITIONAL PUBLIC PROCUREMENT

5.2.1 CUURENT CONTEXT 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 as part of a PPP mechanism with the project development costs in traditional public procurements. Concerning the possible project funding to be received from LIOP 2014-2020 or from other programmes benefitting from community funding, the current context indicates the project, carried out through avenues different from a PPP, shall not generate financial incomes. The financial analysis results indicate that a non-PPP option provides no financial profitability of the total capital. Given the financial indicators below, formulated in time, the project would be eligible as part of the financing axis PERTAINING TO Motorways located long the central TEN-T network (TEN-T core), however, the amount of contracts reserved for this objective has already been exceeded. 2010. indicators: FIRR = -2.27%, FNPV = -2,207,283,660, B/C <1; 2018. indicators: FIRRTg Neamţ - Iaşi Motorway = -3.6%, FNPV = -750,000,000, B/C <1. According to the priorities set forth inGTMP:

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No. Transportation pathway Project designation

Implementation

authority

TEN-T network

EIRR rating

(%) Rating FS start

year

Works starting year / Completion

year

Length

(km)

Estimated value (2014

price) mil. EURO

Estimated value (2014

price) mil. EURO, VAT-

inclusive

Feasibility study / Execution years of

staged projects Works execution years Aggrega

te impact by 2020 or 2030

Remaining

budget (thousand Euro) 2015 2016 2015 2016 2017 2018 2019 2020

Financing Sources – Cohesion Fund (amount: 2,773 thousand Euro) – programming period 2014 - 2020 Chapter I – staged projects 1 Motorway Lugoj - Deva (land

plots 2, 3 and 4) RNCMNR Core achieved 2015/2016 - 145.87 180.88 90.44 90.44 180.88 2442.12

2 Motorway Sebeş - Turda RNCMNR Core achieved 2015/2016 - 178.39 221.20 110.60 110.60 221.20 2220.92 3 Motorway Cp. Turzii -Tg. Mureş RNCMNR Core achieved 2015/2017 - 364.23 451.65 150.55 150.55 150.55 451.65 1769.27 4 National road CB modernisation

(A1-DN7. A2-DN2) RNCMNR Core achieved 2015/2017 - 46.36 57.49 19.16 19.16 19.16 57.49 1711.79

5 Motorway Timişoara - Lugoj (land plot 2)

RNCMNR Core achieved 2015/2016 - 36.39 45.12 22.56 22.56 45.12 1666.66

TOTAL GENERAL PROIECTE FAZATE 771.24 956.34 393.31 393.31 169.71 956.34 Chapter II – new (Core ) projects identified in GTMP - MOTORWAYS 1 Motorway Sibiu-Pitesti RNCMNR Core 15.30 120.22 2015/2016 2017/2020 116.60 1673.57 2075.23 31.13 31.13 560.31 207.52 311.28 933.85 2075.23 -408.56 2 Motorway Bacău - Paşcani RNCMNR Core 13.20 85.85 2015 2017/2018 81.20 485.52 602.04 18.06 144.49 240.82 198.67 602.04 -1010.61 3 Motorway Tg. Neamţ - laşi -

Ungheni RNCMNR Core 10.80 75.15 2015 2017/2019 135.00 1129.70 1400.83 42.02 336.20 560.33 462.27 1400.83 -2411.44

TOTAL GENERAL AUTOSTRĂZI CORE 332.80 3288.79 4078.10 31.13 91.21 896.51 912.34 1014.38 1132.53 4078.10

Chapter III – new (Core ) projects identified in GTMP – EXPRESS ROAD

1 Express Road Modernisation of Southern Beltway

Bucharest - 4 lanes

RNCMNR Core 14.50 82.05 achieved 2016/2017 35 176.00 218.24 87.30 130.94 218.24 -2629.68

2 Express Road Ploieşti - Buzău RNCMNR Core 14.30 81.33 2015/2016 2018/2020 65 254.80 315.95 4.74 4.74 78.99 126.38 101.10 315.95 -2945.63 3 Express Road Focşani -Bacău RNCMNR Core 13.20 74.38 2015/2016 2018/2020 109.3 428.30 531.09 7.97 7.97 132.77 21244 169.95 531.09 -3476.72 4 Express Road Buzău - Focşani RNCMNR Core 11.00 69.49 2015/2016 2018/2020 72 282.36 350.13 5.25 5.25 87.53 140.05 11204 350.13 -3826.85 TOTAL GENERAL EXPRESS ROAD CORE 281.30 1141.46 1415.41 17.96 17.96 87.30 130.94 299.29 478.87 383.09 1415.41

As such, the value in relation to GTMPis much lower than that provided by the General ITEMISED ESTIMATE (certain cost standards were used instead of the cost estimate pertaining to the Feasibility Study); similarly, the traffic values and, consequently, potential economic benefits, display downward trends. Therefore, we see higher costs in parallel with lower traffic values, which will result in lower economic benefits. This may ultimately lead to the failure to meet the minimal admissible requirements for having the project funded fromNon-reimbursable European Funds. Therefore, given the above constraints, only two possible methods to secure the funds required to implement the project have been identified, namely: a) the public procedure for the procurement of design services and execution works,

followed, upon completion, by the conclusion of maintenance contracts with funding from the state budget / maintenance and operation works, as direct labour operations funded from the same state budget;

b) the procedure for securing design services and execution works public under a public-private partnership regime, a partnership based on which the private partner, once the motorway construction is complete, would maintain and operate the motorway in exchange of charging certain tolls.

- Analysing the traditional public procurement procedure for design services and execution works,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.We will also mention that constituting the Sovereign Fund for Investmentclearly indicates an already adopted strategy, seen as an urgent implementation of significantly delayed priority investments via a PPP-type financing system, concurrently with financing from non-reimbursable

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European funds limited by the allotted budget (already subject to overcontracting)and the already programmed State Budget (which does not include Tg Neamţ – Iaşi Motorway), all of which would allow gaining the lost ground. This is a commitment made by the political establishment. Mention should also be made that these implementation delays also determined the implementation of investments / motorways strictly in certain historical regions / provinces, which caused imbalanced development/accessibility issues at a regional level and significant negative social aspects. In the same context we will include the opportunity cost, which cannot be very accurately determined, while it undoubtedly exists. For the priority objectives, implementation should be expedited as soon as possible as it can have positive effects.

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) from financial resources provided by the private partner, together with the public partner.” option a), namely funding entirely provided by the private partnership. Moreover, we considered the fact that the budget deficit is affected by availability-based payments, as per Emergency Ordinance no. 39/2018 on public-private partnerships. 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 good(s) or the public service representing 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 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 30-year contract term was stipulated, 26 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) avoid the artificial limitation of competition; b) secure a 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 affordable prices for the services comprised in the project scope of

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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. We should also add aspects pertaining to opportunity, legality and commitments made to the European Commission. The difference between the classical procurement procedure andPPPand the choice of the best technically and economically argued for option can be made much more realistically when these two avenues can actually be alternatives for each other. For the time being, we need to consider the following:

• implementation delays; • imbalanced development and accessibility (most motorway-related investments in

Transylvania); • the emergence of social dissensions as a result of the aspects above; • delays in implementing investments lead to an a series of additional investments to be

made under an initial programming the budget of which does not include such delays; • the positive effect produced by implementation is demonstrated both in GTMP, which

also includes a prioritisation,as well as in Feasibility Studies, which practically eliminates the risk of a chaotic approachby resorting to the said prioritisation;

• thelikelihood that both these alternatives, namely the selection of either of them, actually exist is extremely low. We are rather looking at an Accomplished Fact.

5.2.2 TRADITIONAL PUBLIC PROCUREMENT METHOD 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:

a) A single public procurement procedure – the launch of a public procurement procedure for design services focused on a Technical Execution Project and execution works.

b) 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 for execution works as per the Technical Execution Project. The second option offers, however, the most remote perspective in 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 the General Transportation Masterplan strategic document, approved as per Decision no. 666/2016, as well as Law no. 363/2006.

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

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specific to the investment objectives financed from public funds reserved for design and construction, we will add that 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 (MT)in procurement procedures for design and construction of transportation infrastructure, mainly used in the case of large infrastructure works with a severely delayed implementation.

a) The design and construction stage • several design and construction contracts would be awarded, following bidding

procedures, for various investment components, depending on the budget allotted for the project;

• considering the historical database, the period from launch to contract awarding 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;

• unlike the 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;

• the contractor would rather be responsible for servicing and maintenance during the warranty period instead of the entire lifespan of the construction;

• the amounts of CLAIMS–contractors can practically gain very large amounts of money, which may actually exceed the value estimated and approved as per a GD;

• in the case of actual contracts for construction works, the situation described above is actually aggravated, being followed by terminations, caused by poorly drawn up projects;

• technical normatives and regulations with loopholes allowing the contractorto bypass the quality requirements imposed by the beneficiary and comply only with the minimal admissible ones.

b) The maintenance and operation stage • the maintenance and operation works would be purchased separately from the works

in the construction stage / direct labour operations, 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 works, the public procurement procedure takes place and may lead to

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gaps and delays in the performance of such works; no long-term strategy 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 MT budget in regard to direct labour operations;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 works 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 will these requirements depend directly on the private partner’s performance, reflected in the level of services provided to the users.

• as we have previously shown, the 2018 financial indicators for Tg Neamţ–Iaşi motorway are: FIRR = -3.6%, FNPV =approx.750,000,000 Euro, B/C <1.

Analysis year

Year of use

Receipts 25% INV. + AVAILABILITY-

BASED PAYMENTS (mil.

Euro)

RECEIPTS, OPERATING

COSTS (mil. Euro)

INCOMES (mil. Euro)

Residual value (mil. Euro)

EXPENSES (mil. Euro)

TOTAL INVESTMENT

(mil. Euro)

MAINTENANCE and OPERATING

COSTS (mil. Euro)

NET CASH FLOW

(mil. Euro)

1

2 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

3 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

4 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

5 1 0.00 0.00 15.99 0.00 8.05 0.00 8.05 7.94

6 2 0.00 0.00 16.26 0.00 8.05 0.00 8.05 8.21

7 3 0.00 0.00 16.53 0.00 8.05 0.00 8.05 8.48

8 4 0.00 0.00 16.25 0.00 8.05 0.00 8.05 8.20

9 5 0.00 0.00 17.07 0.00 8.05 0.00 8.05 9.01

10 6 0.00 0.00 17.34 0.00 58.56 0.00 58.56 -41.22

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11 7 0.00 0.00 17.61 0.00 8.05 0.00 8.05 9.55

12 8 0.00 0.00 17.87 0.00 8.05 0.00 8.05 9.82

13 9 0.00 0.00 18.14 0.00 8.05 0.00 8.05 10.09

14 10 0.00 0.00 18.41 0.00 8.05 0.00 8.05 10.36

15 11 0.00 0.00 18.68 0.00 58.56 0.00 58.56 -39.88

16 12 0.00 0.00 18.95 0.00 8.05 0.00 8.05 10.90

17 13 0.00 0.00 19.22 0.00 8.05 0.00 8.05 11.17

18 14 0.00 0.00 19.49 0.00 8.05 0.00 8.05 11.44

19 15 0.00 0.00 19.76 0.00 8.05 0.00 8.05 11.71

20 16 0.00 0.00 20.03 0.00 58.56 0.00 58.56 -38.53

21 17 0.00 0.00 20.30 0.00 8.05 0.00 8.05 12.25

22 18 0.00 0.00 20.57 0.00 8.05 0.00 8.05 12.52

23 19 0.00 0.00 20.83 0.00 8.05 0.00 8.05 12.78

24 20 0.00 0.00 21.09 0.00 8.05 0.00 8.05 13.04

25 21 0.00 0.00 21.35 0.00 161.04 0.00 161.04 -139.69

26 22 0.00 0.00 21.61 0.00 8.05 0.00 8.05 13.56

27 23 0.00 0.00 21.87 0.00 8.05 0.00 8.05 13.82

28 24 0.00 0.00 22.21 0.00 8.05 0.00 8.05 14.16

29 25 0.00 0.00 22.55 0.00 8.05 0.00 8.05 14.50

30 26 0.00 0.00 22.89 720.72 58.56 0.00 58.56 363.21

300.30 0.00 502.88 720.72 1765.57 1201.20 564.37 -563.52

FNPV -727.57

FIRR -3.601%

B/C >1

5.2.3 PUBLIC-PRIVATE PARTNERSHIP According to Emergency Ordinance no. 39/2018 on public-private partnerships, “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 an already commenced project and a 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 keep the motorway operational within certain quality parameters, based on defined performance criteria defined in the contract.

b) “the relatively long duration of carrying out contractual relations, in excess of 5

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years, that would allow the private partner to recover the investment and secure a reasonable profit;”

Proposed contract term of 30 years, of which 4would be intended for design and execution and 26 would be reserved for maintenance and operation.

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

Project financing would primarily come from private funds, since there are currently no funding capabilities from the national budget,whereas there is already a state of overcontracting in terms of non-reimbursable European funds.

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

The Ministry of Transportation, by means of the public partner, must execute this motorway, as an absolute requirement, and can only do this at present, in a relevant context, with the help of a private partner. The private partner, by means of the long contract term and the availability-based payments,shall fulfil their objective as far as securing a reasonable 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 have to an availability-based payment, intended to secure a reasonable profit for the private partner. 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 of par. (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 within one year from the date when the present emergency ordinance has come into force. 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 public partner will, therefore, be annual expenses that occur during the operation period of the PPP contract. 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.

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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. 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, also by means of more advanced materials and technologies;

• 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, which issue performance bonds 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;

• 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 services specific 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 contract within the contractual deadlines and costs set forth

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(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;

• considering the focus laid upon the private partner’s performance in providing services during the entire operational stage of the project, as per the nature of PPP contracts, it is essential to pay attention to the investment end user.

• financial indicators for implementation via a PPP: 2018 -indicators: FIRRTg Neamţ - Iaşi Motorway = 6.92%, FNPV = 182,000,000, B/C >1;

Analysis year

Year of use

Receipts 25% INV. + AVAILABILITY-

BASED PAYMENTS(mil.

Euro)

RECEIPTS, OPERATING COSTS(mil.

Euro)

INCOMES (mil. Euro)

Residual value (mil. Euro)

EXPENSES (mil. Euro)

TOTAL INVESTMENT

(mil. Euro)

MAINTENANCE and

OPERATING COSTS

(mil. Euro)

NET CASH FLOW

(mil. Euro)

1 2 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

3 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

4 100.10 0.00 0.00 0.00 400,40 400,40 0.00 -300.30

5 1 79.60 2.01 13.16 0.00 8.05 0.00 8.05 86.72

6 2 79.60 2.01 13.38 0.00 8.05 0.00 8.05 86.94

7 3 79.60 2.01 13.60 0.00 8.05 0.00 8.05 87.15

8 4 79.60 2.01 13.37 0.00 8.05 0.00 8.05 86.93

9 5 79.60 2.01 14.03 0.00 8.05 0.00 8.05 87.59

10 6 79.60 14.64 14.25 0.00 58.56 0.00 58.56 49.93

11 7 79.60 2.01 14.47 0.00 8.05 0.00 8.05 88.03

12 8 79.60 2.01 14.69 0.00 8.05 0.00 8.05 88.24

13 9 79.60 2.01 14.91 0.00 8.05 0.00 8.05 88.46

14 10 79.60 2.01 15.12 0.00 8.05 0.00 8.05 88.68

15 11 79.60 14.64 15.34 0.00 58.56 0.00 58.56 51.02

16 12 79.60 2.01 15.56 0.00 8.05 0.00 8.05 89.12

17 13 79.60 2.01 15.78 0.00 8.05 0.00 8.05 89,34

18 14 79.60 2.01 16.00 0.00 8.05 0.00 8.05 89.55

19 15 79.60 2.01 16.21 0.00 8.05 0.00 8.05 89.77

20 16 79.60 14.64 16.43 0.00 58.56 0.00 58.56 52.11

21 17 79.60 2.01 16.65 0.00 8.05 0.00 8.05 90.21

22 18 79.60 2.01 16.87 0.00 8.05 0.00 8.05 90.43

23 19 79.60 2.01 17.08 0.00 8.05 0.00 8.05 90.63

24 20 79.60 2.01 17.29 0.00 8.05 0.00 8.05 90.84

25 21 79.60 40.26 17.49 0.00 161.04 0.00 161.04 -23.69

26 22 79.60 2.01 17.70 0.00 8.05 0.00 8.05 91.26

27 23 79.60 2.01 17.91 0.00 8.05 0.00 8.05 91.47

28 24 79.60 2.01 18.19 0.00 8.05 0.00 8.05 91.75

29 25 79.60 2.01 18.47 0.00 8.05 0.00 8.05 92.02

30 26 79.60 14.64 18.74 720.72 58.56 0.00 58.56 54.42

2369.80 141.09 412.70 720.72 1765.57 1201.20 564.37 1158.01

FNPV 182.04

FIRR 6.920%

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B/C >1

5.3 PROJECT ECONOMIC EFFICIENCY VIA THE PRESENTATION OF A COST-BENEFIT ANALYSIS

5.3.1 ECONOMIC ANALYSIS GENERAL ELABORATION PRINCIPLES

The economic analysis intends to estimate the impact and contribution of the project to economic increase at a regional and national level.

The analysis is carried out from the perspective of the entire society (municipality, region or country) and is not strictly limited to the infrastructure owner’s perspective.

The financial analysis is considered a starting point for conducting the socioeconomic analysis. In order to determine the socioeconomic indicators, certain adjustments need to be made in the case of the variables employed by the financial analysis.

The principles and methodologies underpinning the present cost-benefit analysis are in accordance with:

• “Guidance on the Methodology for carrying out Cost-Benefit Analysis”, elaborated by theEuropean Commission for the 2014-2020 programming period;

• HEATCO – “Harmonized European Approaches for Transport Costing and Project Assessment” – a project financed by the European Commissionin order to harmonize the cost-benefit analysis for transportation-related projects. HEATCO research project was started with the goal of unifying the cost-benefit analysisfor transportation-related projects carried out across the European Union. The main objective was to align the methodologies employed in TEN-T transnational projects, however, the recommendations presented may be used in analyses of national projects, as well;904

• “General Guidelines for Cost Benefit Analysis of Projects to be supported by the Structural Instruments” – ACIS, 2009;

• “Guidelines for Cost Benefit Analysis of Transport Projects” – elaborated by Jaspers; • Romania’s General Transportation Masterplan, The National Assessment Guide for

Transportation Sector Projects and the Methodology used to Prioritise Master Plan Projects, “Volume 2, Part C: Guide on Drawing Up the Cost - Economic and Financial Benefits Analysis and the Risk Analysis”, elaborated by AECOM forthe Ministry of Transportation in 2014.

o The main recommendations concerning the harmonised analysis of transportation projects refer to the following elements:

• general elements: assessment techniques, the transfer of benefits, the management of unquantifiable impact, capital update and transfer, decisional criteria, the project analysis period, future risk and sensitivity assessment, the marginal cost of public funds, the carriers’ value surplus, the management of indirect socioeconomic effects;

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• the value of time and the traffic congestion (including passenger traffic for occupational purposes, passenger traffic for non-occupational purposes, freight transportation traffic decreases, traffic congestion management, unjustified delays);

• the value of changes in traffic accident risks;

• environmental costs; • the capital investment costs and indirect impact (including the capital costs required to

implement the project, maintenance, operation and management costs, residual value).

The discount rate used to update costs and benefits per time unit is 5%, in accordance with the European rules, as they are described in the ‘Guide to cost-benefit analysis of investment projects’, issued by the “Evaluation Unit - DG Regional Policy”, the European Commission.

The 5% discount rate is valid for the “cohesion countries”, Romania being included in this category.

5.3.2. COST-BENEFIT ANALYSIS

Basic assumptions

The main goal of the economic analysis is to assess whether the benefits of the project exceed its costs and whether or not promoting it is a worthy effort. The analysis was elaborated from the perspective of the entire society, not only from the project beneficiaries’ standpoint and, in order to register the entire range of economic effects, the analysis includes elements with direct monetary value, such as the construction and maintenance costs and the savings from the costs required to operate the motor vehicles, as well as elements without a direct market value, such as time savings, a decrease in the number of traffic accidents and the environmental impact.

All the effects should be financially quantified (that is, they receive a monetary value) so as to allow making a consistent comparison between costs and benefits within the project, and then added up in order to determine its net benefits. Thus, one may determine if the project is desirable and implementing it is worth the effort. Nevertheless, it is important to accept the fact that not all the effects of the project can be financially quantified, in other words, not all socioeconomic effects can be attributed a monetary value.

The year 2018 is taken as a reference point, being the point when the cost-benefit analysis was drawn up. Therefore, all the costs and benefits are updated in relation to the real prices of 2018.

The assumption is that the proposed construction works would be carried out during the 2020-2023 interval. As such, an improvement of the road infrastructure would be visible as of 2024. The calculation period used is 30 years. These assumptions were also adopted in compliance with the European rules, as defined in the ‘Guide to cost-benefit analysis of investment projects’ – “Evaluation Unit - DG Regional Policy”, the European Commission.

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The performance indicators used for the motorway sector construction works were the Net Present Value (discounted benefits minus discounted costs) and the Yield Level (the benefit/cost rate). The latter expresses the updated benefits in relation to the invested capital monetary unit. In the end, results are also expressed as the Internal Rate of Return: the discount rate for which the Net Present Value would be zero.

Economic Internal Rate of Return

The calculation of the Project Internal Rate of Return (EIRR) relies on the assumptions below:

o All the benefits and incremental costs are expressed in real 2018 prices, in Euro; o EIRR is calculated for a 30-year duration of the Project. It includes the investment period

(the first four seven years, conventionally marked by years 0-3), as well as the operation period, until year 30 (effectively, year 2047);

o The economic viability of the Project is assessed by comparing EIRR with the actual Economic Opportunity Cost of Capital (EOCC). The EOCC value used in the analysis is 5%. Therefore, the Project is considered economically feasible if EIRR is higher than or equal to 5%, a requirement which corresponds to obtaining an improper benefit/cost ratio.

Investment scheduling

o In terms of scheduling, the investment was assumed to take place over a four-year period, corresponding to analysis years 0-3, according to the Project Master Schedule.

Economic benefits

The socioeconomic analysis took into consideration only some of the monetary components with a direct influence. In order to determine these benefits, the same incremental analysis concept was applied, namely the benefits are estimated as part of the difference between the “with project” and the “without project” cases”.

The socioeconomic impact pursued by means of implementing Tg Neamt - IasiMotorway pertains to enhancing access to the community resources and activities, but also to the direct positive effects upon road users and the community.

The indicators used to estimate the capacity of the project to fulfil these objectives are:

• the benefitting population, who would enjoy better transportation and mobility conditions

• the direct impact upon users, in the form of a decreased general cost (comprising the value-of-time cost and the vehicle operation cost), as well as in the form of benefits from a lower number of traffic accidents;

• the (positive) impact upon local and regional development; • the (negative) impact upon anthropic areas;

• the (negative) impact in the form of relocating or separating urban areas; • an increase of employment opportunities within the project area of influence;

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• the degree of acceptability by the population;

• the rate of return indicators; • other positive factors difficult to identify or quantify.

Further on, we present a brief listof the direct and indirect socioeconomic benefits for this type of project, allowing for the most complete definition possible of the project’s socioeconomic impact:

Access infrastructure improvement:

• decreasingthe wear and tear of motor vehicles and trip durations for passengers - direct,

• decreasing the costs entailed by traffic accidents- indirect,

• decreasing environment-related costs - direct, • decreasingthe time spent by motor vehicles in traffic - direct.

Increasing the standard of living of the population residing in the localities close to the project site:

• creation of temporary jobs during the project implementation period - direct, • increase ofthe local budget revenues with income tax amounts – indirect.

• increasein the volume of attracted investments - indirect.

Other non-monetary socioeconomic benefits:

• the project, as it facilitates tourism development, will contribute to a decrease of local unemployment and enrich the qualifications of the personnel employed across the system,

• increaseof land and real estate value triggered by the localities in the vicinity of the project becoming more attractive.

• attractingother investments in projects aimed at preserving touristic sights in the area.

In order to emphasize all the beneficial effects produced by the investment project, we shall list below the effects upon individuals:

o collective participation in economic well-being; o life expectancy increase due to better healthcare facilities and pollution decrease; o creation of new jobs for the unemployed, people with low income and socially

disadvantaged groups: the Roma, young people leaving foster homes, women re-entering the labour market, unemployed persons older than 45, single-parent families, young people having left school early without obtaining basic qualifications;

o higher chances of success as a direct outcome of the higher vocational training standards made possible by participation in the project.

The multiplying effect generated by the project implementation may be associated to the following variables:

o sustainable economic growth the implementation of the Project brings along;

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o exogenous benefits emerged following the improvement of social conditions within the Project sphere of influence;

o other factors that are difficult to quantify and identify.

The non-quantifiable economic benefits are presented in the table below.

Non-quantifiable economic benefits

Quality-related indirect benefits Derived benefits

Creation of new jobs o Employment levels increase o Labour migration decrease o Increase of professional qualification levels

Higher incomes for the population (from salaries and/or related activities)

o Increaseof solvable demand for consumer goods o Increase of accumulations to be aimed at direct

investments (the launch of small businesses) o Greater contribution of the region to the national GDP

increase Fiscal contribution increase o Budget balancing at a (primarily) local and central level

Increase of traffic for touristic purposes

o Development of existing touristic areas o Adjustments for the trade balance and the balance of

payments o Increase of regional economic competitiveness

Increase of foreign direct investments

o Modern business management and supervision methods o Implementation of non-polluting activities

Increase of real estate values following the addition of infrastructure in the area

o Increase of demand for utilities (water, telecommunications, energy, gas)

o Infrastructure modernisation o Value increase of the lands and buildings in the area and

the vicinity

The table below presents the basic assumptions of the economic analysis, the quantified costs and benefits, as well as the project result and economic efficiency score indicators.

Economic analysis basic assumptions, quantified measures and result indicators

Category

Description

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Category

Description

Basic assumptions

Economic discount rate EOCC 5%

Cost discounting year 2018

Base year of costs 2018

Analysis period, of which 30 years

Construction 4years 2019-2022

Operation 26years 2023-2047

Exchange rate Lei/Euro 4.66

Economic costs CapEx Investment cost

OpEx Maintenance and operation costs

Quantified economic benefits

VOC Decrease in vehicle operation cost

VOT Value of time decrease

Decrease in the number of traffic accidents

Lowering the negative environmental impact

Result indicators

EIRR Economic Internal Rate of Return

ENPV Economic Net Present Value

C/B R Cost/Benefit Ratio

In brief, the stages of conducting the economic analysis are:

implementationof fiscal adjustments;

monetisation of impacts (calculation of benefits);

transformationof market prices into accounting prices (shadow prices);

calculation of economic performance key indicators.

After applying the conversion factors, we obtain the economic incremental flowof investment, maintenance and operation costs.

Quantification of economic benefits

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According to the above information, the following categories of economic benefits shall be quantified:

o Benefits from decreasingvehicle operation costs; o Benefits from decreasing passengers’ trip durations; o Benefits from decreasingthe number of traffic accidents; o Benefits from decreasingthe negative effects upon the environment; o The residual value, calculated as the total net (non-present) flowpertaining to the

remaining lifespan.

These economic benefits are usually calculated by resorting tounit rates (costs) expressed with the “vehicle-km” or “vehicle-hour” measuring unit. The indicators for “total vehicle-km” and“total vehicle-hours”are derived from the traffic model, for various time frames (forecast years), but also as part of the “Without Project” and “With Project” scenarios.

To estimate the economic benefits generated by each tested scenario, we used the results of the Transportation Model associated to the project (see the previous study sections).

Benefits fromdecreasing vehicle operation costs (VOC)

Users’ vehicle operation costs areonly generatedin cases when one person owns or rents a motor vehicle, to be used strictly in order to take a particular trip.

Road-going vehicle operation costs are divided into two categories: fuel costs and costs not related to fuel. On average, fuel costs account for approx. 42% of a vehicle’s total operation costs, whereas vehicle depreciation holds a 34% share, the other components (lubricants, tires, spare parts, labour and depreciation) having a total chare of around 24%.

Vehicle operation cost depends on the distance to be covered, the cruising speed, road geometry and the road surface condition, an indicator expressed by means of the mean flatness/roughness index, marked as IRI (International Roughness Index).

To determine the VOC unit costs, we used the RED HDM-4 model ver. 3.2, developed by World Bank. The following assumptions were taken into account:

o threetypes of landscape (lowland, hill, mountain) were defined, specific to the public road network in Romania;

o we took into account the road type, depending on the profile type in various road sections (roads with the road surfaces separated by a rigid lane divider, i.e. motorways, express roads, as well as roads whose directions of traffic are separated by markings);

o vehicle operation costs were determined taking into account various cruising speed values, as well as various values of the IRI technical state parameter.

The car fleet parameters representative for Romania, used by RED HDM-4, are presented in the table below (prices are expressed for base year 2018, as economic values).

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Calculation parameters of VOC unit costs

Source: RED HMD-4 VOC model, World Bank

Benefits from decreasingpassengers’ trip durations (VOT)

The main economic considerations, taken into account in estimating time savingsas part of the economic analysis of the new capital investment into an infrastructure:

o real time savings generated by the new infrastructure; o the values assigned to these time savings,both for employed and unemployed passengers,

as well as the values assigned to time savings related to the transported freight.

The traffic study provides, for each vehicle category, the hourly vehicle flow rate in both scenarios, as well as the cruising speed at various future moments in time. These values are turned in monetary values based on the following parameters:

o the average number of passengers by vehicle category; o the purpose of the trip; o the trip duration depending on the purpose of the trip.

As previously mentioned, in order to obtain unit values expressed as EURO/vehicle/hour, one needs to take into account the following additional parameters:

o distribution by purpose of trip; o average vehicle occupancy degree.

These values were taken from Romania’sGeneral Transportation Masterplan, The National Assessment Guide for Transportation Sector Projects and the Methodology used to Prioritise Master Plan Projects, “Volume 2, Part C: Guide on Drawing Up the Economic and Financial Cost-Benefit Analysis and the Risk Analysis”, elaborated by AECOM for the Ministry of Transportation in 2014. The values are presented in the tables below.

Value of time (2010 prices)

Vehicle Fleet Characteristics

Car MediumGoods

Vehicle Bus Light Bus Medium Bus Heavy Truck LightTruck

Medium Truck HeavyTruck

ArticulatedEconomic Unit CostsNew Vehicle Cost (€/vehicle) 7500 17000 20000 35000 70000 26000 42000 60000 89000Fuel Cost (€/liter for MT, €/MJ for NMT) 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75 0.75Lubricant Cost (€/liter) 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20 2.20New Tire Cost (€/tire) 50.00 75.00 220.00 220.00 220.00 170.00 255.00 255.00 320.00Maintenance Labor Cost (€/hour) 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00 5.00Crew Cost (€/hour) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Interest Rate (%) 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00 7.00Utilization and LoadingKilometers Driven per Year (km) 12000 35000 80000 80000 80000 50000 50000 70000 80000Hours Driven per Year (hr) 550 1100 2000 2000 2000 1300 1800 2000 2000Service Life (years) 10 9 9 9 9 9 10 10 10Percent of Time for Private Use (%) 100.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00Gross Vehicle Weight (tons) 1.20 2.00 3.00 6.00 11.00 6.00 12.00 20.00 30.00

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Mode of transportation Trip purpose Trip distance Travellers

Value in Euro/hour

(passengers) in Euro/ton

(freight)

Pass

enge

rs

Passenger vehicle/LGV

Business All Driver 10.16 Passengers 10.16

Commute Short distance Driver 3.62

Passengers 3.62 Long distance Driver 4.65

Passengers 4.65

Other, non-occupational

Short distance Driver 3.03 Passengers 3.03

Long distance Driver 3.90 Passengers 3.90

Long distance

6.93 Other, non-occupational

Short distance Passengers 4.65 Long distance 5.81

Frei

ght Road

Business All - 1.27

Rail 0.52 Air 1.27 Sea 0.52

Source: GTMP

Average vehicle occupancy degree

Vehicle type Purpose Occupancy degree

Passenger vehicle

Business 1.5969 Commute 1.6548 Other, (personal) 1.8911 Other (holiday) 1.8207

LGV All 1 HGV All 1

Source: GTMP

Distribution by purpose of trip

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Means of transportation

Trip purpose

Business Commute Other (personal)

Other (holiday)

Passenger car 13% 33% 44% 11% Bus 6% 21% 71% 2%

Source: GTMP The final values of time used in the calculation of benefits are presented in the table below.

Calculation of value-of-time costs

Travel purpose Cars LGV HGV Buses

VOT (EURO per passenger*hour)

Distribution by travel purpose

VOT (EURO per passenger*hour)

Distribution by travel purpose

VOT (EURO per passenger*hour)

Distribution by travel purpose

VOT (EURO per passenger*hour)

Distribution by travel purpose

Business 10.16 13% 10.16 100% 10.16 100% 8.15 6%

Commute 3.62 33% 2.60 21%

Personal 3.90 44% 2.80 71%

Holiday 3.90 10% 2.80 2% Mean value of time (Euro per passenger*hour)

4.62 10.16 10.16 3.08

Mean occupancy degree (average number of passengers, driver included)

1.77 1.00 1.00 18.00

Determination of the mean value of time (EURO per vehicle*hour) – 2010 prices

8,18 10,16 10,16 55,42

Determination of the mean value of time (EURO per vehicle*hour) – 2018 prices

10,37 13,48 13,48 70,03

Source: GTMP

The value of time shall be incremented by a 0.7 projected GDP/capita ratio, in the case of passenger trips for purposes of work (business), and by a 0.5 ratio for the other trip purposes.

Following the emergence of the new road infrastructure, set to make it possible for vehicles to cruise at higher speeds, road users who currently travel across the existing road network shall enjoy travel time savings.

Benefits from decreasingthe number of traffic accidents

The construction of this motorway sector shall help reduce the number of traffic accidents in comparison with the scenario in which the traffic still uses the existing road network.

The traffic accident rate of occurrence is calculated based on the road category (national road, county road or motorway) and the number of vehicle-km travelling across the respective road.

At the same time, for each accident, depending on the road category, estimates are made for the number of victims, namely a number of casualties, of severely and mildly injured persons.

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Concerning the rates of occurrence and the costs related to accidents, one shall use the information included in the “Guide on Drawing Up the Economic and Financial Cost-Benefit Analysis and the Risk Analysis”, a component of theNational Guide for Assessing Transportation Projects in Romania, GTMP.

The accident rates of occurrence, by national road category (urban and interurban), as well as by severity class, are presented in the table below.

Traffic accident rates of occurrence (number of accidents per one million veh-km)

Casualties Severe injuries

Mild injuries

A road 0.00607 0.01442 0.04060

Rural DN 0.02287 0.06414 0.14967

Urban DN 0.03556 0.10815 0.24030

Rural DJ 0.04092 0.12250 0.30041

Urban DJ 0.04781 0.20408 0.49942

Local 0.05621 0.30906 0.75919

Source: GTMP, Guide on Drawing Up the Economic and Financial Cost-Benefit Analysis and the Risk Analysis and the Consultant’s estimates for Urban DN and Urban DJ categories

The data concerning the value of an avoided accident, by category, in Romania, was taken from the same guide. After expressing unit costs as 2018 costs, they become:

o casualties: 843.501Euro; o severe injuries: 116.667Euro; o mild injuries: 9.435Euro.

Benefits from decreasingthe negative effects upon the environment

In order to assess the impact upon the environment, in terms of pollutant emissions and climate changes, we applied the methodology included in Update of the Handbook on External Costs of Transport, 2014. The manualprovides the costs of the environmental impact produced by exhaust emissions, differentiating them by type of area crossed (urban, suburban, interurban and motorway), as well as based on vehicle features.

Consideringthe car park characteristics nationwide (2017 date), we determined:

Average unit pollution (emissions) costs – Euro/veh-km, 2018 prices

Passenger cars LGV HGV Buses

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Urban 3.992 1.573 60.012 41.827 Suburban 2.757 1.123 48.930 34.311 Interurban 2.039 0.738 37.976 25.557 Motorway 2.358 0.739 32.682 21.990

Benefits from decreasing noise pollution

As far as noise is concerned, the method proposed relies on a series of standard costs by vehicle type, environment type and time of day. The recommended values were borrowed from the manual “Update of the Handbook on external costs of transport”, DG Move 2013, and are presented in the table below.

Noise pollution impact costs (Euro / 1.000 veh-km, 2010 prices)

The unit costs were converted into 2018 prices; average costs shall be used, as per the table below, taking into account a 20% share of nighttime passenger vehicle traffic and a 30% share of freight-carrying vehicle traffic, respectively.

Noise pollution impact costs (Euro / 1.000 veh-km, 2018 prices)

Environment Cars LGV HGV Buses

Rural 0.058 0.286 0.514 0.260

Urban 6.127 32.831 60.410 29.575

Considering the total veh-km in the “Without Project” and “With Project” scenarios, the distribution of these values between the urban and interurban environments, as

Mode Time of day Traffic type Urban Suburban RuralDense 4.1 0.2 0.0Thin 10.0 0.6 0.1Dense 7.5 0.4 0.0Thin 18.2 1.2 0.2Dense 8.3 0.5 0.0Thin 20.0 1.3 0.2Dense 15.0 0.9 0.1Thin 36.4 2.4 0.3Dense 20.6 1.1 0.2Thin 50.0 3.2 0.4Dense 37.5 2.1 0.3Thin 91.0 5.9 0.7Dense 20.6 1.1 0.2Thin 50.0 3.2 0.4Dense 37.5 2.1 0.3Thin 91.0 5.9 0.7Dense 37.8 2.1 0.3Thin 91.8 5.9 0.7Dense 69.0 3.9 0.6Thin 167.4 10.8 1.2

CarDay

Night

MotorcycleDay

Night

HGVDay

Night

BusDay

Night

LDVDay

Night

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well as the unit costs per measurement unit, we obtain the flow of benefits from decreasing the negative environmental impact.

The amounts of GHG (greenhouse gas) emissions were calculates based on the determined emission factors, starting from the marginal costs (Eurocent/veh-km) of GHG and the value of a CO2 equiv. ton, presented in “Update of the Handbook on External Costs of Transport”, European Commission – DG MOVE, Final Report (January 2014).

Climate change average unit costs – Euro/ 1.000 veh-km, 2018 prices

Passenger vehicles LGV HGV Buses

Motorway 2.238 3.413 9.558 6.776

Rural 2.029 2.394 10.863 7.439

Urban 3.031 3.741 13.851 10.100

Calculation of the project economic performance indicators

In terms of rating the investment rate of return, for a 5% capital economic discount rate (the discount rate), the following economic cost-effectiveness indicators shall be calculated:

o Economic Internal Rate of Return (EIRR); o Economic Net Present Value (ENPV); o Benefit/Cost ratio (C/B R). The table below presents the economic analysis results for the assessed project.

Rate of return indicators

Analysis year

Year of use

Investment cost

Maintenance and

Operation costs

Total costs Benefits

from VOC decrease

Benefits from VOT decrease

Benefits from a

decrease in the number

of car accidents

Benefits from a decrease in the magnitude

of environmental

effects

Residual value Total Benefits Net present benefits

Net non-present benefits

2018 0 0 0 0 0 2019 0 0 0 0 0 2020 212.500.000 212.500.000 0 -212.500.000 -192.743.764 2021 212.500.000 212.500.000 0 -212.500.000 -183.565.490 2022 212.500.000 212.500.000 0 -212.500.000 -174.824.276 2023 212.500.000 212.500.000 0 -212.500.000 -166.499.310 2024 1 0 293.018 293.018 5.516.463 28.523.706 9.373.936 3.124.645 46.538.751 46.245.732 34.509.278 2025 2 0 -563.759 -563.759 5.607.825 29.537.510 9.742.949 3.247.650 48.135.935 48.699.693 34.609.963 2026 3 0 -563.759 -563.759 5.482.097 29.368.002 9.904.228 3.301.409 48.055.735 48.619.494 32.907.587 2027 4 0 -452.312 -452.312 5.790.550 31.650.068 10.517.474 3.505.825 51.463.916 51.916.228 33.465.663 2028 5 0 2.633.907 2.633.907 5.881.912 32.750.255 10.923.715 3.641.238 53.197.120 50.563.213 31.041.427 2029 6 0 2.633.907 2.633.907 5.973.275 33.880.698 11.343.112 3.781.037 54.978.123 52.344.215 30.604.579 2030 7 0 10.169.317 10.169.317 6.064.637 35.042.160 11.776.057 3.925.352 56.808.206 46.638.889 25.970.279 2031 8 0 -563.759 -563.759 6.155.999 35.975.836 12.114.233 4.038.078 58.284.146 58.847.904 31.208.300 2032 9 0 -2.793.201 -2.793.201 6.247.361 36.926.257 12.459.570 4.153.190 59.786.378 62.579.579 31.606.940 2033 10 0 2.633.907 2.633.907 6.338.724 37.893.687 12.812.202 4.270.734 61.315.347 58.681.440 28.226.776 2034 11 0 2.633.907 2.633.907 6.430.086 38.878.396 13.172.266 4.390.755 62.871.503 60.237.596 27.595.537 2035 12 0 10.169.317 10.169.317 6.521.448 39.880.655 13.539.900 4.513.300 64.455.303 54.285.987 23.684.796 2036 13 0 -563.759 -563.759 6.612.784 40.900.668 13.915.225 4.638.408 66.067.085 66.630.843 27.686.492 2037 14 0 -2.793.201 -2.793.201 6.704.119 41.938.788 14.298.405 4.766.135 67.707.446 70.500.647 27.899.500

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2038 15 0 2.633.907 2.633.907 6.795.454 42.995.298 14.689.586 4.896.529 69.376.867 66.742.960 25.154.720 2039 16 0 2.633.907 2.633.907 6.886.790 44.070.489 15.088.918 5.029.639 71.075.836 68.441.928 24.566.708 2040 17 0 19.750.653 19.750.653 6.978.125 45.164.653 15.496.552 5.165.517 72.804.848 53.054.195 18.136.570 2041 18 0 -563.759 -563.759 7.065.412 46.266.015 15.906.509 5.302.170 74.540.105 75.103.864 24.451.663 2042 19 0 -2.793.201 -2.793.201 7.152.699 47.386.638 16.324.907 5.441.636 76.305.879 79.099.080 24.526.086 2043 20 0 2.633.907 2.633.907 7.239.986 48.526.823 16.751.902 5.583.967 78.102.678 75.468.770 22.286.137 2044 21 0 2.633.907 2.633.907 7.327.272 49.686.874 17.187.653 5.729.218 79.931.018 77.297.111 21.739.096 2045 22 0 10.169.317 10.169.317 7.414.559 50.867.102 17.632.322 5.877.441 81.791.425 71.622.108 19.183.861 2046 23 0 -563.759 -563.759 7.528.165 52.215.501 18.152.480 6.050.827 83.946.973 84.510.731 21.558.150 2047 24 0 -2.793.201 -2.793.201 7.641.770 53.587.945 18.683.746 6.227.915 1.171.210.702 1.257.352.079 1.260.145.280 306.147.660

Economic Internal Rate of Return (EIRR) 6,68% Economic Net Present Value (ENPV) 211.134.925

Cost/Benefit Ratio (C/B R) 1,29

The economic analysis of the project indicates the investment opportunity, with a positive ENPV, but also its beneficial effect upon the local economy, more significant than the economic and social costs it entails, whereas the benefits/cost ratio is higher than 1.

In regard to the project Economic Internal Rate of Return, it is 6.68%, a value that is higher than the 5% social discount rate. This aspect reflects the investment yield from an economic standpoint. Nevertheless, the EIRR value is visibly low, leading to the expectation that unfavourable variations of the investment cost will render a low economic efficiency value (EIRR < 5%).

Main indicators of the economic analysis

Main parameters and indicators Values

Social discount rate (%) 5%

Economic Internal Rate of Return (EIRR) 6.68%

Economic Net Present Value (ENPV) 211,134,925

Cost/benefit ratio (C/B R) 1.29

The requirements imposed to the three economic indicators for a project to become economically viable are:

o positive ENPV; o EIRR higher than or equal to the s social discount rate (5%); o C/B R higher than 1.

Analysing the values of economic indicators, we find out that the project is economically viable. The economic indicators have adequate values, given the economic benefits generated by the implementation of the project.

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Source:Authors’ calculations

Source:Authors’ calculations

Evolution of Net non-present benefits vs. Net present benefits

Evolution of benefits

Million

EURO

Benefits from VOC decrease Benefits from a lower number of car crashes

Benefits from VOT decrease Benefits from a decrease in the magnitude of environmental effects

Benefits from a lower number of

car crashes

Benefits from a decrease in the magnitude of

environmental effects

Benefits from VOC decrease

Benefits from VOT decrease

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Source:Authors’ calculations

Comparingthe benefits cumulated over the entire period with the costs estimated to be borne (design, construction and operation), theEconomic Internal Rate of Return (EIRR) was calculated as 6.68%, whereas the Economic Net Present Value (ENPV) is estimated at approximately 211.1 million Euro.

However, fora capital economic discount rate of 5.5% (discount rate), as it was considered at the end of 2010, the economic efficiency indicators appear as follows:

Project economic rate of return indicators

Main parameters and indicators Values

Social discount rate (%) 5.5%

Economic Internal Rate of Return (EIRR) 9.39%

Economic Net Present Value (ENPV) 1209.74 mil. Euro

Cost/benefit ratio (C/B R) 1.53

Therefore, the economic analysis of the project indicated, at that early stage, as well,

the investment opportunity, with a positive ENPV, but also its beneficial effect upon the local economy, greater than the economic and social costs it entails, with a cost/benefit ratio higher than 1.

Regarding the projectEconomic Internal Rate of Return, it was 9.39%, higher than the 5.5% social discount rate, still valid today.This indicates the investment rate of return from an economic standpoint.

The positive effects upon the users and the society are obvious, leading to the conclusion that the project deserves to be promoted.

Million

EURO

Net present benefits Net non-present benefits

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5.3.3. Sensitivity analysis

There are three main methods for carrying out a risk / uncertainty analysis, namely the sensitivity analysis (the “what happens if” scenario analysis), conversion values and the risk probability analysis.

A sensitivity analysis is considered the simplest form ofrisk / uncertainty analysis and, probably, the most commonly applied in the performance of a risk / uncertainty analysis. It involves setting forth “what happens if” scenarios in order to reflectany changes in the variables and “critical” parameters of the model.

The EC Guide defines the variables / “critical” parameters as “those the variations (positive or negative) of which have the strongest effect upon the financial and/or economic performance of the project.

The criterion used to emphasize these key variables varies depending on the specificity of the analysed project and needs to be determined with great accuracy.

Considering that the project does not generate income and, therefore, the financial rate of return indicators cannot improve in any given situation, the risk and the sensitivity analyses were carried out strictly in order to estimate the economic performance of the investment.

Identification of the critical variables

To emphasize the critical variables, the EC Guide recommends a general criterion, as follows: “As a general criterion, we recommend taking into account those parameters for which a 1% variation (positive or negative) generates a variation in excess of 1% a NPV.”

Further on, we present the NPV variation degree under the influence variables.

For each category of income and expenditure one shall consider a 1% variation and calculate, as absolute figures, the corresponding variations induced to the efficiency indicators.

The table below contains the degree of influence upon the investment efficiency for each of the influence factors.

Identification of critical variables # Influence variables Initial value Variation Changed

value Initial EIRR

Changed EIRR

EIRR variation

Initial ENPV

Changed ENPV

ENPV variation

1 Investment costs €850,000,000 1.0% €858,500,000 6.68% 6.61% -1.01% €211,134,925 €203,958,597 -3.40%

2 Maintenance and operating costs €56,615,214 1.0% €57,181,366 6.68% 6.67% -0.03% €211,134,925 €210,906,067 -0.11%

3 Benefits from decreasingoperating costs €123,105,389 1.0% €124,336,443 6.68% 6.68% 0.08% €211,134,925 €211,820,771 0.32%

4 Benefits from decreasing trip durations €999,338,712 1.0% €1,009,332,099 6.68% 6.71% 0.48% €211,134,925 €215,257,214 1.95%

5 Benefits from decreasingthe number of accidents €270,002,434 1.0% €272,702,458 6.68% 6.69% 0.16% €211,134,925 €212,532,167 0.66%

6 Benefits from decreasingthe environmental impact €90,000,811 1.0% €90,900,819 6.68% 6.68% 0.05% €211,134,925 €211,600,673 0.22%

For a 1% variation in each of the 6 tested variables, grouped under two categories of costs and four categories of benefits, we obtained the corresponding variations of EIRR (Internal Rate of Return) and ENPV (Net Present Value).

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The previous table indicates that, for a positive variation of benefits, the investment efficiency indicators shall evolve in the same direction, whereas, between the categories of costs, on the one hand, and RIR and NPV, on the other hand, there is an inversely proportionate relation. Taking all these into account, we can conclude that the “investment cost” and “benefits from decreasing VOT” variables are critical.

Calculation of the conversion values

Further on, we will calculate the threshold values (the variations for which the investment rate of return becomes null), for all 5 influence variables, taking into account negative variations (decreases for benefits and increases for costs) of 20%, as opposed to 1% (the variation applied in order to select the critical variables). Therefore, the conversion (threshold) values are the variations of the influence variables due to which we may obtain a null ENPV or an EIRR equal to the 5% discount rate.

The most significant influence variable in determining the socioeconomic yield of the investment is the one with the highest threshold value.

Conversion values shall be determined for all the influence variables instead of strictly for the critical ones.

Calculation of the conversion values

Influence variables Variation EIRR Sensitivity index

Conversion value

Basic Case - 6.68% - - Investment costs 20% 5.48% -17.95% 29% Maintenance and operating costs 20% 6.64% -0.52% n/a Benefits from decreasing operating costs -20% 6.57% -1.60% n/a Benefits from decreasing trip durations -20% 6.03% -9.64% -51% Benefits from decreasing the number of accidents -20% 6.46% -3.24% n/a Benefits from decreasing the environmental impact -20% 6.60% -1.08% n/a

According to these results, the construction cost is the variable influencing to the greatest extentthe investment economic rate of return. If it grows by more than 29%, the internal rate of return shall decrease belowthediscount rate, whereas the net present value becomes negative: in other words, the investment will no longer be profitable in economic terms. The image below illustrates the evolution of EIRR and ENPV for the variations of the main influence variables within the (-50%, 50%) interval.

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EIRR and ENPV sensitivity graphs EIRR sensitivity

Variation

ENPV sensitivity

Variation

Investment costs Benefits from lowered trip durations Maintenance and operation costs

Benefits from lowered operating costs Benefits from a lower number of car accidents Benefits from a lower environmental impact

Investment costs Benefits from lowered trip durations Maintenance and operation costs

Benefits from lowered operating costs Benefits from a lower number of car accidents Benefits from a lower environmental impact

Moreover, the sensitivity analysis allows identifying the critical variables of the projectand stands as a tool for measuring the extent to which their variation (seen as decrease or increase) has an impact upon the financial and economic performance of the project carried out under a public-private partnership.

For example, we can quantify the extent to which a 10% decrease of incomes influences the rate of return.

Scenarios testes as part of the sensitivity analysis (the assumption where the shares are 25% for the Public Partner and 75% for the Private Partner)

Variables Modification of

explanatory variables Influence upon the rate

of return Projected Impact

Incomes form the toll 10p.p. decrease as opposed

to the base scenario Minus 0.5 p.p. Low

Availability-based payment 10p.p. decrease as opposed

to the base scenario Minus 1 p.p. Moderate

The Public Partner’s Contribution to the Base Investment

10p.p. decrease as opposed to the base scenario

Minus 1.3 p.p.

Significant (FIRRis 0.7%

away from the 5% critical threshold)

Increase of the Base Investment Value

10p.p. increase as opposed to the base scenario

Minus 1 p.p. Moderate (RRIF

5.9%) Maintenance And Operating Costs

10p.p. increase as opposed to the base scenario

Minus 0.5 p.p. Low

Source:Authors’ calculations Note: The public partner’s contribution is the critical variable.

In the assumption where the public partner’s contribution to the investment cost is 0% whereas the private partner provides 100% of the investment cost, FIRRdecreases below 5%.

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5.4 “VALUE FOR MONEY” ANALYSIS IN BOTH CASES

5.4.1 INTRODUCTION Determining the advantages in favour of either option makes use an economic and

financial analysis, widely known in the literature as the “Value for Money”. Choosing either option resorts to an analysis revealing whether the implementation of the project under a concession/PPP is more efficient from an economic standpoint than having it implemented as a classical public procurement.

In order to determine the relative merits of the project development alternative methods, the method approached as part of the substantiation study relied on comparing the project development costs under a PPP with the project development costs under traditional public procurements.

In the case of traditional procurements, private companies employed for large-scale infrastructure projects are remunerated during the construction period, which usually lasts a limited number of years. Therefore, public authorities need to secure sufficient budgetary resources to finance the entire construction over a relatively brief period of time.

In cases when the available funding is insufficient, projects can be divided into several different sections which are assigned during different years, depending on the availability of funds, the construction of the entire infrastructure being consequently assigned over a greater number of years.

On the other hand, in public-private partnerships, the private partner is, usually, the party that should finance the entire construction, its expenditure being subsequently reimbursed by the public partner or the users during the operational period of the contract, which lasts, as a rule, up to 20-25 years or, quite often, up to 30 years. This will allow the public partner to immediately order the commencement of construction works for the entire infrastructure and thus expedite the completion and materialisation of all the benefits resulting from the infrastructure as a whole.

According to the applicable legal provisions and the international practices in the field, in order to determine whether the procurement under a concession procedure of the motorway design, funding, construction, operation and maintenance activities is able to secure the “Value for Money” for the contracting authority, two different scenarios were compared: the first is the traditional public procurement, the second being the PPP option.

Consequently, a comparison was made between the estimated payments (including the anticipated risk values) 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 for the planning, construction, maintenance and operation costs in the case of a procurement in line with the procedures provided by the national legislation on the procurement of a contract for works and as per the contractual conditions “FIDIC Yellow Book” (engineering and

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construction agreement), followed by the Ministry of Transportation carrying out operation and maintenance activities, directly and/or by means of specialised contractors selected as per the same procurement procedures.

As part of the concession/PPP scenario, assessments were made for the payments made by the statutory undertaker (to be used by the statutory undertaker to cover the planning, construction, maintenance, operation and financing costs), as well as for the availability-based payments to be made by the public authority (a fixed annual amount). The direct cash flows to be borne by the public sector are the annual availability-based payments which are made during the performance of the concession contract, once the infrastructure has been fully finalised andmade available for use. On the other hand, the project company, which operates as a statutory undertaker, shall generate profits to be later on distributed to the shareholders and, with them, a cash flow back to the public sector in the form of corporate taxes.

The activities taken into account for the “Value for Money” analysis included, in particular, the planning/design activity (in terms of execution details) related to the motorway project, the motorway maintenance and operation works until the contract term expiration.

Depending on the project bidding method, the profile of cash distributions is projected differently in time for each of the two possible options. The flows of payments in the case of a project awarded as per the traditional procurement procedures are elevated during the construction period and significantly lowered during the maintenance and operation period, depending on the costs pertaining to these activities (numerous times, they are sized depending on the available budget, without necessarily reflecting the real needs). The flows of payments in the case of a project awarded under a concession/PPP rely on the availability level of the infrastructure set forth in the contract and consist in amounts periodically paid (and partially indexed) for each road operation and maintenance year, minus any deductions applicable in cases of unavailability or availability not in line with the service level stipulated in the contract.

When analysing the option of implementing an investment project under a PPP/concession versus a traditional procurement, a fundamental instrument in determining the best option takes the form of the financial model based on which the net benefit (“Value for Money”) is to be determined. For each of the two project procurement options, one shall secure all the cash flows, including all the costs and revenues generated by the project. Given that the profile of the payments made as part of the two options is different, as well as the fact that the analysis also includes an extended period of time (of up to 30 years), the methodology used to compare the two project implementation options relies on the so-called net present value (NPV), which is practically the current value of all the cash flows planned for the subsequent 27 years of the project. The assessment based on the net present value represents a standard assessment in the case of project-based financing structures (“project finance”), in the absence of which comparing the analysed project implementation options would not be able to produce results that are critical in selecting the best implementation option.

In order to make it possible to compare the procurement options, considering the different distribution of the payments in time, depending on the respective procurement

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option, all the relevant payment sources from both procurement options (including the expected monetary values of the relevant risks) were compared based on the Net Present Value (NPV).

Taking into consideration that the “Value for Money” analysis relies on comparing all the costs generated by the project, in both the traditional procurement option and the procurement option under a PPP/concession, the financing costs, as well, are included in the formulated estimates. Since discussions with potential finance providers represent a long-term process at the end of which the financing terms and conditions in their final form shall be set forth, the “Value for Money” analysis took place by studying several assumptions concerning the financing terms, and the results obtained were positive in each analysed scenario.

5.4.2 FINANCIAL MODEL The main objective of the financial analysis is the calculation of the project financial

performance indicators (its profitability). This analysis is carried out from the infrastructure Administrator’s perspective (the perspective of the private partner in the PPP scenario or that of the Ministry of Transportationin the scenario which sees the project implemented exclusively from public budgetary sources).

The financial analysis used as input data the results of the traffic study and data on the technical assessments concerning the investment cost, while also being underpinned by the technical regulations in force in Romania.

The cost/benefit analysis relies on the principle of comparing the costs of the proposed project alternatives within the current setting. The theoretical model applied is the DCF – Discounted Cash Flow – model, which quantifies the difference between the benefits and the costs generated by the project during its period of operation, adjusting this difference with a discount factor, an operation that is required in order to “align” a future value to the reference year of the costs assessment.

The cost/benefit analysis is carried out using constant prices, for the analysis reference year – 2018, made equivalent to the reference year with discounted costs. Therefore, all the costs are expressed in 2018 constant prices.

The discount rates used to estimate the Project rate of return were 5% for the financial analysis and 5.5% for the socioeconomic analysis, respectively.

The project financial analysis model shall analyse the consolidated and incremental cash flow generated by the project, as per the estimates of investment costs and maintenance costs generated by the implementation of the project, assessed over the entire analysis period.

The indicators employed in the financial analysis are:

• The Financial Net Present Value of the project; • The Financial Internal Rate of Return of the project; • The Benefit/Cost Ratio; • The Cumulative Cash Flow.

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The Financial Net Present Value (NPVF) represents the value that results by deducting the present value of the projected costs of an investment from the present value of the projected benefits.

The Financial Internal Rate of Return (FIRR) represents the discount rate in relation to which a flow of costs and benefits expressed in monetary units has a discounted value of zero. The internal rate of return is compared to reference rates in order to assess the performance of the proposed project.

The Benefit/Cost Ratio (C/B R) emphasizes the extent to which the project benefits cover its costs. If this ratio has proper values, the project does not generate sufficient benefits and requires (additional) funding.

The Cumulative Cash Flow represents the total monetary amount of the annual resulted treasury cash flows over the entire analysed time frame.

The above-mentioned performance indicators shall be determined both for the PPP Scenario, as well as for the Scenario with project implementation exclusively from public budgetary sources.

The value of the total capital investment required to build the motorway is1.201 billion Euro (VAT-inclusive), scheduled over a 4-year period, with staging percentages aligned to the investment master schedule. The following staging of the capital expenditure was taken into consideration:

• design and construction year 1-5%, • construction year 2-25%, • construction year 3-35%, • construction year 4-35%.

The analysis time frame of the financial analysis shall be 30 years, the first 4 of which being reserved for the financial closure, design and execution phases, whereas the following 26 years for operation.

Year mil. Euro

2019 60.05 2020 300.25 2021 420.35 2022 420.35

Therefore, the time frame of the projected costs and revenues generated by the Project implementation is 30 years, of which the analysis years 1-4represent a financial closure, the design and construction period, whereas the subsequent 26 yearsare the period of operation under a public-private partnership (PPP).

According to the law, the public partner may cover no more than 25% of the project value, whereas the private partner shall cover at least the remaining 75% of the project value. In terms of cost sharing, we assumed in the reference scenario that the public partner shall

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cover 25% of the investment costs, includingthe operating costs, whereas the private partner shall cover 75 % of the project and operating costs.

Additionally, according to the law, we took into account the possibility that the private investor receives a successful completion bonus (80million Euro at the most), provided that the investment is completed one year earlier than projected, as well as an availability-based premium that wouldreach no more than 61million Euroa year (VAT-exclusive).

The discount rate used by the financial analysis to estimate the Investment Project financial yield was 5%. This percentage was identified as falling within a reasonable range in relation to representative sample groups of similar projects from the European Economic Area.

In order to estimate the economic rate of return when also considering the project implications and impact from a socioeconomic point of view, one shall use the 5.5% rate in the calculation of performance indicators. The discount rate increase is due to additional risks considered, given that the project directly touches environmental issues.

Therefore, we considered that an investment is profitable from a financial and economic standpoint, respectively, if it displays an internal rate of return higher than the adopted discount rate; the same applies if the net present value is positive and the ratio between benefits (discounted income obtained by the investor) and costs is improper.

5.4.3 FINANCIAL ANALYSIS RESULTS OF THE PPP SCENARIO Financial Internal Rate of Return Calculation – PPP Scenario Assumption:the public partner’s contribution is 0% for the investment and0% for the operating costs, and does not receive the successful completion bonus. - euro -

Analysis year

Year of use

RECEIPTS 25% INV. +

AVAILABILITY-BASED

PAYMENTS

RECEIPTS, OPERATING

COSTS

INCOMES Residual Value

EXPENSES TOTAL INVESTMENT

MAINTENANCE AND

OPERATING COSTS

NET CASH FLOW

1 2 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30 3 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30 4 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30 5 1 0.00 0.00 15.19 0.00 8.05 0.00 8.05 7.94 6 2 0.00 0.00 16.26 0.00 8.05 0.00 8.05 8.21 7 3 0.00 0.00 16.53 0.00 8.05 0.00 8.05 8.48 8 4 0.00 0.00 16.25 0.00 8.05 0.00 8.05 8.20 9 5 0.00 0.00 17.07 0.00 8.05 0.00 8.05 9.01 10 6 0.00 0.00 17.34 0.00 58.56 0.00 58.56 -41.22 11 7 0.00 0.00 17.61 0.00 8.05 0.00 8.05 9.55 12 8 0.00 0.00 17.87 0.00 8.05 0.00 8.05 9.82 13 9 0.00 0.00 18.14 0.00 8.05 0.00 8.05 10.09 14 10 0.00 0.00 18.41 0.00 8.05 0.00 8.05 10.36 15 11 0.00 0.00 18.68 0.00 58.56 0.00 58.56 -39.88 16 12 0.00 0.00 18.95 0.00 8.05 0.00 8.05 10.90 17 13 0.00 0.00 19.22 0.00 8.05 0.00 8.05 11.17 18 14 0.00 0.00 19.49 0.00 8.05 0.00 8.05 11.44 19 15 0.00 0.00 19.76 0.00 8.05 0.00 8.05 11.71

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20 16 0.00 0.00 20.03 0.00 58.56 0.00 58.56 -38.53 21 17 0.00 0.00 20.30 0.00 8.05 0.00 8.05 12.25 22 18 0.00 0.00 20.57 0.00 8.05 0.00 8.05 12.52 23 19 0.00 0.00 20.83 0.00 8.05 0.00 8.05 12.78 24 20 0.00 0.00 21.09 0.00 8.05 0.00 8.05 13.04 25 21 0.00 0.00 21.35 0.00 161.04 0.00 161.04 -139.69 26 22 0.00 0.00 21.61 0.00 8.05 0.00 8.05 13.56 27 23 0.00 0.00 21.87 0.00 8.05 0.00 8.05 13.82 28 24 0.00 0.00 22.21 0.00 8.05 0.00 8.05 14.16 29 25 0.00 0.00 22.55 0.00 8.05 0.00 8.05 14.50 30 26 0.00 0.00 22.89 720.72 58.56 0.00 58.56 363.21 300.30 0.00 502.88 720.72 1765.57 1201.20 564.37 -563.52 FNPV -727.57 FIRR -3.601% B/C >1

Assumption:the public partner’s contribution is 25% for the investment and25% for the operating costs, and does not receive the successful completion bonus.

- Euro - Analysis

year Year of use

RECEIPTS 25% INV. +

AVAILABILITY-BASED

PAYMENTS

RECEIPTS, OPERATING

COSTS

INCOMES Residual Value

EXPENSES TOTAL INVESTMENT

MAINTENANCE AND

OPERATING COSTS

NET CASH FLOW

1 2 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30 3 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30 4 100.10 0.00 0.00 0.00 400.40 400.40 0.00 -300.30 5 1 79.60 2.01 13.16 0.00 8.05 0.00 8.05 86.72 6 2 79.60 2.01 13.38 0.00 8.05 0.00 8.05 86.94 7 3 79.60 2.01 13.60 0.00 8.05 0.00 8.05 87.15 8 4 79.60 2.01 13.37 0.00 8.05 0.00 8.05 86.93 9 5 79.60 2.01 14.03 0.00 8.05 0.00 8.05 87.59

10 6 79.60 14.64 14.25 0.00 58.56 0.00 58.56 49.93 11 7 79.60 2.01 14.47 0.00 8.05 0.00 8.05 88.03 12 8 79.60 2.01 14.69 0.00 8.05 0.00 8.05 88.24 13 9 79.60 2.01 14.91 0.00 8.05 0.00 8.05 88.46 14 10 79.60 2.01 15.12 0.00 8.05 0.00 8.05 88.68 15 11 79.60 14.64 15.34 0.00 58.56 0.00 58.56 51.02 16 12 79.60 2.01 15.56 0.00 8.05 0.00 8.05 89.12 17 13 79.60 2.01 15.78 0.00 8.05 0.00 8.05 89.34 18 14 79.60 2.01 16.00 0.00 8.05 0.00 8.05 89.55 19 15 79.60 2.01 16.21 0.00 8.05 0.00 8.05 89.77 20 16 79.60 14.64 16.43 0.00 58.56 0.00 58.56 52.11 21 17 79.60 2.01 16.65 0.00 8.05 0.00 8.05 90.21 22 18 79.60 2.01 16.87 0.00 8.05 0.00 8.05 90.43 23 19 79.60 2.01 17.08 0.00 8.05 0.00 8.05 90.63

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24 20 79.60 2.01 17.29 0.00 8.05 0.00 8.05 90.84 25 21 79.60 40.26 17.49 0.00 161.04 0.00 161.04 -23.69 26 22 79.60 2.01 17.70 0.00 8.05 0.00 8.05 91.26 27 23 79.60 2.01 17.91 0.00 8.05 0.00 8.05 91.47 28 24 79.60 2.01 18.19 0.00 8.05 0.00 8.05 91.75 29 25 79.60 2.01 18.47 0.00 8.05 0.00 8.05 92.02 30 26 79.60 14.64 18.74 720.72 58.56 0.00 58.56 54.42

2369.80 141.09 412.70 720.72 1765.57 1201.20 564.37 1158.01 FNPV 182.04 FIRR 6.920% B/C >1

Assumption:the public partner’s contribution is 25% for the investment and25% for the operating costs, cu successful completion bonus.

Analysis year

Year of use

Receipts 25% INV. + AVAILABILITY-

BASED PAYMENTS

RECEIPTS, OPERATING

COSTS INCOMES Residual

value EXPENSES TOTAL INVESTMENT

MAINTENANCE and

OPERATING COSTS

NET CASH FLOW

1 2 100.10 0.00 0.00 0.00 600.60 600.60 0.00 -300.30

3

100.10 0.00 0.00 0.00 600.60 600.60 0.00 -300.30

4

0.00 0.00 93.16 0.00 0.00 0.00 8.05 -207.14

5 1 79.60 2.01 13.16 0.00 8.05 0.00 8.05 86.72

6 2 79.60 2.01 13.38 0.00 8.05 0.00 8.05 86.94

7 3 79.60 2.01 13.60 0.00 8.05 0.00 8.05 87.15

8 4 79.60 2.01 13.37 0.00 8.05 0.00 8.05 86.93

9 5 79.60 2.01 14.03 0.00 8.05 0.00 8.05 87.59

10 6 79.60 14.64 14.25 0.00 58.56 0.00 58.56 49.93

11 7 79.60 2.01 14.47 0.00 8.05 0.00 8.05 88.03

12 8 79.60 2.01 14.69 0.00 8.05 0.00 8.05 88.24

13 9 79.60 2.01 14.91 0.00 8.05 0.00 8.05 88.46

14 10 79.60 2.01 15.12 0.00 8.05 0.00 8.05 88.68

15 11 79.60 14.64 15.34 0.00 58.56 0.00 58.56 51.02

16 12 79.60 2.01 15.56 0.00 8.05 0.00 8.05 89.12

17 13 79.60 2.01 15.78 0.00 8.05 0.00 8.05 89.34

18 14 79.60 2.01 16.00 0.00 8.05 0.00 8.05 89.55

19 15 79.60 2.01 16.21 0.00 8.05 0.00 8.05 89.77

20 16 79.60 14.64 16.43 0.00 58.56 0.00 58.56 52.11

21 17 79.60 2.01 16.65 0.00 8.05 0.00 8.05 90.21

22 18 79.60 2.01 16.87 0.00 8.05 0.00 8.05 90.43

23 19 79.60 2.01 17.08 0.00 8.05 0.00 8.05 90.63

24 20 79.60 2.01 17.29 0.00 8.05 0.00 8.05 90.84

25 21 79.60 40.26 17.49 0.00 161.04 0.00 161.04 -23.69

26 22 79.60 2.01 17.70 0.00 8.05 0.00 8.05 91.26

27 23 79.60 2.01 17.91 0.00 8.05 0.00 8.05 91.47

28 24 79.60 2.01 18.19 0.00 8.05 0.00 8.05 91.75

29 25 79.60 2.01 18.47 0.00 8.05 0.00 8.05 92.02

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- Euro - Net discounted cash flow – PPP Scenario In the assumption where the project is funded via a PPP mechanism, the investment expected rate of return is positive, reaching 6.9-7.96%.

5.4.4 FINANCIAL ANALYSIS RESULTS OF THE 100% GOVERNMENT FINANCING SCENARIO

Financial Internal Rate of Return Calculation – 100% public financing Scenario

30 26 79.60 14.64 18.74 720.72 58.56 0.00 58.56 54.42

2269.70 141.09 505.86 720.72 1765.57 1201.20 572.42 1251.17

FNPV 262.52

FIRR 7954%

B/C >1

Analysis year

Year of use

Receipts 25% INV. + AVAILABILITY-

BASED PAYMENTS

RECEIPTS, OPERATING

COSTS INCOMES Residual

value EXPENSES TOTAL INVESTMENT

MAINTENANCE and

OPERATING COSTS

NET CASH FLOW

1

2 100.00 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

3 100.00 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

4 100.00 0.00 0.00 0.00 400.40 400.40 0.00 -300.30

5 1 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

6 2 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

7 3 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

8 4 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

9 5 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

10 6 0.00 0.00 0.00 0.00 58.56 0.00 58.56 -58.56

11 7 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

12 8 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

13 9 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

14 10 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

15 11 0.00 0.00 0.00 0.00 58.56 0.00 58.56 -58.56

16 12 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

17 13 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

18 14 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

19 15 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

20 16 0.00 0.00 0.00 0.00 58.56 0.00 58.56 -58.56

21 17 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

22 18 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

23 19 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

24 20 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

25 21 0.00 0.00 0.00 0.00 161.04 0.00 161.04 -161.04

26 22 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

27 23 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

28 24 0.00 0.00 0.00 0.00 8.05 0.00 8.05 -8.05

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- Euro -

Financial net present flow – 100% public financing Scenario In the assumption where the project is exclusively funded from public budgetary

sources, the investment expected rate of return is negative, of around -8%, provided that the net present cumulated flow remains negative over the investment’s entire period of use.

5.5 RECOMMENDED OPTION

As we have seen above, the only manner in which the investment objective may be implemented in a coherent, reasonable fashion, with minimal pressure upon an already programmed state budget, which does not include the investment in question, is by carrying out the investment under a public-private partnership.

We see that, depending on the public partner’s extent of participation, the critical variables would have more or less significant effects. The public partner’s participation share of 0% places the private partner in a very delicate situation, that of failing toobtain a reasonable profit, or even in a worse position.In this context, we propose that the public partner contribute with at least 15%.

5.6. RISK DISTRIBUTION STRUCTURE FOR EACH OPTION, QUANTIFICATION OF RISKS AND ALLOTTING ALTERNATIVES AMONG THE CONTRACTING PARTIES, DEPENDING ON THE RISK MANAGEMENT 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 elaborator 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 1001 million Euro,VAT-exclusive,in nominal terms, required by Târgu Neamţ– Iaşi sector, the risk associated to this project amounts to approximately 440-520million Euro, which is44-52% of the total estimated capital value. In the traditional works procurement case, the risk borne by the Authority would be 323 mil. Euro, whereas in the PPP scenario, the Public Partner would only beara risk of 80 million Euro.

Risk matrix for Târgu Neamţ– Iaşi sector

29 25 0.00 0.00 0.00 0,00 8.05 0.00 8.05 -8.05

30 26 0.00 0.00 0.00 720.72 58.56 0.00 58.56 340.32

300.00 0.00 0.00 720.72 1765.57 1201.20 564.37 -1066.39

FNPV -958.64

FIRR -7650%

B/C >1

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- PPP assumption -

Risk Allocation of risks Impact Allocation of risks

Authority (%) Private partner

(%) Total

MIL.EURO Authority (%) Private partner

(%)

Risks related to the location and additional aspects - location conditions 0 100 1 0.00 1.20 - general permits 100 0 1 1.20 0.00 - specific permits 50 50 1 0.60 0.60 - location preparation 0 100 1 0.00 1.20 - ownership title 100 0 1 1.20 0.00 - environment - contaminations 50 50 1 0.60 0.60

- environment - other issues 0 100 1 0.00 1.20 - environment - fossils and artefacts 0 100 1 0.00 1.20

- access to the location 100 0 1 1.20 0.00 - protests 50 50 1 0.60 0.60 - offenders 50 50 1 0.60 0.60

Design and construction - design/construction price increase 0 100 6 0.00 6.01

- events leading to delays in completing the works 0 100 12 0.00 12.02

- project and work compatibility with the standards

0 100 1 0.00 1.20

- approval of traffic signs 50 50 1 0.60 0.60 - approval of the technical project 50 50 1 0.60 0.60

- geologic and geotechnical assessment 0 100 1 0.00 1.20

- compliance with environmental requirements 0 100 1 0.00 1.20

- project changes carried out by the private partner 0 100 1 0.00 1.20

- sanitary and safety requirements

0 100 1 0.00 1.20

- design errors 0 100 1 0.00 1.20 - project set to include the life span of its elements 0 100 1 0.00 1.20

- project management and integration 0 100 1 0.00 1.20

- design costs 0 100 1 0.00 1.20 Specific construction risks

- construction according to the project specifications, the laws and regulations

0 100 12 0.00 12.02

- compliance with permits and approvals 0 100 12 0.00 12.02

- health/environment/safety 0 100 1 0.00 1.20 - state safety/quality inspections 0 100 1 0.00 1.20

- construction and construction costs 0 100 12 0.00 12.02

- reconstruction of pipelines and cables 0 100 12 0.00 12.02

- work force 50 50 22 10.81 10.81 - unfavourable climatic changes 50 50 19 9.61 9.61

- project management and implementation 0 100 6 0.00 6.01

147

- issues with the supply of materials 0 100 6 0.00 6.01

Operation and maintenance General risks

- increase of operation/maintenance costs 0 100 6 0.00 6.01

- services not provided in due time and according to service requirements

0 100 6 0.00 6.01

- motorway not available for use 50 50 6 3.00 3.00

Specific operating risks - leadership taken over by subcontractors 0 100 1 0.00 1.20

- monitoring of service requirement fulfilment 0 100 1 0.00 1.20

- impossibility of providing adequate and experienced personnel

0 100 1 0.00 1.20

- equipment employed 0 100 1 0.00 1.20 - third party liability 0 100 1 0.00 1.20 - latent defects 0 100 24 0.00 24.03 - responsibility for motorway quality when in use, after the operating stage

0 100 120 0.00 120.15

Market risks - The existence of a competing project AT THE TIME OF THE PROCUREMENT

0 100 1 0.00 1.00

- The existence of a competing project SUBSEQUENT TO THE PROCUREMENT

100 0 36 36.05 0.00

- decrease of tax-based revenues 0 100 12 0.00 12.02

- decrease of third party income 0 100 12 0.00 12.02

Financial risks - financial closure 0 100 60 0.00 60.08 - maintaining availability for the debt service responsibility

0 100 0

- additional financing 0 100 60 0.00 60.08 - negative changes under financing 50 50 0

- refinancing 50 50 0 - inflation 50 50 0 - failure in allotting funds required to make payments 100 0 0

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

- subcontractor insolvency 0 0 0 Legislation changes

- general legislation changes 100 0 12 12.02 0.00 - legislation changes between the contract conclusion date and the service provision starting date

0 0 6 0.00 0.00

- involving capital costs 100 0 2 2.00 0.00 - not involving capital costs 0 100 2 0.00 2.00

148

- discriminatory legislation changes 100 0 2 2.00 0.00

- specific legal changes 100 0 2 2.00 0.00 Third party actions

- closure of adjacent roads 0 100 0 - other actions/omissions of third parties (state authorities/local government bodies, other than the private authority or entity) affecting the project

50 50 0

Force majeure - force majeure events with consequences upon the project

50 50 1

Project-related general risks - compensation events 100 0 - relief events 50 0 - changes of authorities 100 0 - insurance 0 100 5 0.0 5.0

TOTAL 522 84.70 437.54

Public partner

Private partner

Risk matrix for Târgu Neamţ – Iaşi sector

- classic public procurement assumption -

Risk Allocation of risks Impact Allocation of risks

Authority (%) Private partner (%)

Total - mil. Euro-

Authority (%) Contractor (%)

Risks related to the location and additional aspects - location conditions 50 50 1 0.6 2.4 - general permits 100 0 1 1.2 0.0 - specific permits 50 50 1 0.6 0.6 - location preparation 0 100 1 0.0 1.2 - ownership title 100 0 1 1.2 0.0 - environment - contaminations

50 50 1 0.6 0.6

- environment - other issues 50 50 1 0.6 0.6 - environment - fossils and artefacts

50 50 1 0.6 0.6

- access to the location 100 0 1 1.2 0.0 - protests 50 50 1 0.6 0.6 - offenders 50 50 1 0.6 0.6 Design and construction - design/construction price increase

100 0 6 6.0 0.0

- events leading to delays in completing the works

50 50 12 6.0 6.0

- project and work compatibility with the standards

50 50 1 0.6 0.6

149

- approval of traffic signs 50 50 1 0.6 0.6 - approval of the technical project

50 50 1 0.6 0.6

- geologic and geotechnical assessment

100 0 1 1.2 0.0

- compliance with environmental requirements

100 0 1 1.2 0.0

- project changes carried out by the contractor

0 100 1 0.0 1.2

- sanitary and safety requirements

0 100 1 0.0 1.2

- design errors 50 50 1 0.6 0.6 - project set to include the life span of its elements

50 50 1 0.6 0.6

- project management and integration

50 50 1 0.6 0.6

- design costs 100 0 1 1.2 0.0 Specific construction risks - construction according to the project specifications, the laws and regulations

50 50 12 6.0 6.0

- compliance with permits and approvals

50 50 12 6.0 6.0

- health/environment/safety 0 100 1 0.0 1.2 - state safety/quality inspections

50 50 1 0.6 0.6

- construction and construction costs

50 50 12 6.0 6.0

- reconstruction of pipelines and cables

50 50 12 6.0 6.0

- work force 50 50 22 10.8 10.8 - unfavourable climatic changes

50 50 19 9.6 9.6

- project management and implementation

50 50 6 3.0 3.0

- issues with the supply of materials

0 100 6 0.0 6.0

Operation and maintenance General risks - increase of operation/maintenance costs

100 0 6 6.0 0.0

- services not provided in due time and according to service requirements

0 100 6 0.0 6.0

- motorway not available for use

50 50 6 3.0 3.0

Specific operating risks - leadership taken over by subcontractors

0 100 1 0.0 1.2

- monitoring of service requirement fulfilment

50 50 1 0.6 0.6

- impossibility of providing adequate and experienced personnel

50 50 1 0.6 0.6

- equipment employed 50 50 1 0.6 0.6 - third party liability 50 50 1 0.6 0.6 - latent defects 50 50 24 12.0 12.0 - responsibility for motorway quality when in use, after the warranty period

100 0 120 120.2 0.0

Market risks - The existence of a competing project AT THE

100 0 1 1.0 0.0

150

TIME OF THE PROCUREMENT - The existence of a competing project SUBSEQUENT TO THE PROCUREMENT

100 0 36 36.0 0.0

- a traffic volume decrease 100 0 12 12.0 0.0 - decrease of third party income

0 100 12 0.0 12.0

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

0 100

- additional financing 100 0 24 24.0 0 - negative changes under financing

50 50

- refinancing - inflation 100 0 - failure in allotting funds required to make payments

100 0

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

- subcontractor insolvency Legislation changes - general legislation changes 100 0 12 12.0 0.0 - legislation changes between the contract conclusion date and the service provision starting date

0 0 6 0.0 0.0

- involving capital costs 100 0 2 2.0 0.0 - not involving capital costs 50 50 2 1.0 1.0 - discriminatory legislation changes

100 0 2 2.0 0.0

- specific legal changes 100 0 2 2.0 0.0 Third party actions - closure of adjacent roads 0 100 - other actions/omissions of third parties (state authorities/local government bodies, other than the private authority or entity) affecting the project

100 0

Force majeure* - force majeure events with consequences upon the project

50 50 1

Project-related general risks - compensation events 100 - relief events 50 - changes of authorities 100 - insurance 0 100 5 0.0 5.0 TOTAL 440 322.8 117.1 Authority Contractor

*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 motorway, in the case of a PPP-based procurement,

151

reveals that the total quantified risk for the public partner, a risk of exceeding the estimated value (for construction and operation) considered for implementation, may exceed the estimated contribution value by up to14% of the estimated value (the total current value of design and execution), that is by approximately 317 million Euro. This value entails, as opposed to a classic procurement, decreasing by up to 4 times the amount by which the public partner’s financial contribution risks to be exceeded.

It is noticeable that, with the PPP procedure, most of the risks comprised in the risk matrix (as values) are to be transferred to the private partner.The risks to be borne by the Authority would decrease by up to 75% in the PPP case.

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,

- 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 other projects, as well.

5.7PROJECT GENERIC POSSIBILITY OF MOBILISING THE FINANCIAL RESOURCES REQUIRED TO COVER COSTS (PROJECT SUSTAINABILITY DEGREE)

As we described in chapters 5.3and 5.4, the motorway economic indicators are: RIR >

5.5% and RRIF >5%, leading to the idea that the project has the capacity to mobilise the resources required to cover its costs.

As an argument in favour of the need to secure the financial resources required to cover the costs, we will mention that, in accordance with the Transportation Masterplan, Târgu Neamţ – Iaşi Motorwayis deemed a priority, as provided by a strategic document (GTMP), while also falling under a law which stipulates its implementation.

152

5.8. ROAD TRAFFIC MONITORING SYSTEM, OTHER SYSTEMS

5.8.1 ROAD TRAFFIC MONITORING SYSTEM AND OTHER SYSTEMS IN ROMANIA

The Intelligent Transportation Systems (ITS), also called telematics systems for transportation, includea wide range of tools and services derived from the information and communication technologies.

These systemshave the capacity to render significant benefits in terms of operating efficiency, the quality of services, infrastructure management, while simultaneously improving the safety of user information services and lowering the environmental impact. ITS systems are used:

- for traffic management automation; - as support for public transportation operations; - for management upon request; - in providing traveller information and trip planning services; - for the car park and freight management; - for the management of incidents and as support for emergency services; - in relation to the toll electronic payment and collection services; - in the context of advanced technologies fitted to motor vehicles. Intelligent Transportation Systems for motorways and national roads

In order to avoid congestion, there are numerous ITS applications designed to aid traffic managementand provide support to drivers cruising on motorways and national roads.

Traffic monitoring systems collect traffic data, concerning the vehicle and the infrastructure, and provide information to other categories of services and systems. The main subsystems comprised in this categoryare: sensors (inductive loops, CCTV cameras, radar sensors), the communication infrastructure, the local processing units, the central processing units.

Therefore, these systems may be used to/as:

- regulate access to motorways and beltways by means of automated traffic routes; - provide traffic information and direct drivers by means of message signs (VMS) or

devices fitted to vehicles; - controltraffic speed across congested motorways in order to streamline the total

vehicle flow (thus avoiding the spread of congestion); - automatic incident detection systems designed to automatically submit messages to

traffic control centres and provide immediate warnings to drivers; - Intelligent Speed Adaptation (ISA) systems, intended to permanently maintain

speed limits – and even dynamically change these limits depending on road and weather conditions.

153

Keeping in mind the increase in the number of long-distance and international trips, international interoperability is required so that ITS devices fitted to vehicles should be able to communicate with the ground equipment from any point along a route and receive trip-related information in any country.

The image below displays the main ITS systems installed on national roads and motorways in Romania.

Map of the national road network and the main ITS systems (national roads and motorways)

Current facilities in Romania

For the time being, our country possesses various automatic road traffic recording, classification, monitoring and surveillance equipment items.

Across the network of motorways:

equipment designed for dynamic weighing, size measurement, classification and monitoring the observance of regulations;

road traffic metering equipment, fitted with: traffic meters with intrusive techniques:

- meters with inductive loops, - meters with inductive loopsand piezoelectric sensors;

traffic meters with non-intrusive techniques: - meter with infrared and ultrasound technology, - meter with radar technology,

NETWORK OF MOTORWAYS AND NATIONAL ROADS IN ROMANIA

154

- meter withimage analysistechnology; video monitoring equipment; incident detection equipment – by means of video analysis; licence plate recognition and road vignette monitoring / fining equipment; weather and road measuring, forecast and warning equipment; information system using variable message signs.

Across the network of national roads:

equipment designed for dynamic weighing, classification and monitoring the observance of regulations imposed for national roads;

road traffic metering equipment with inductive loopsand piezoelectric sensors; licence plate recognition and road vignette monitoring / fining equipment.

In addition to the items above, there is equipment for road network inspection, assessment, analysis and management owned by CESTRIN:

road surface multifunctional analysis equipment; equipment designed to measure deformations of road layers; road profilometer, in the form of a longitudinal profile analyser, used for the

continuous measurement of road flatness; equipment designed to measure the lateral skidding coefficient (SCRIM); equipment for the continuous measurement of the deformations of granular

strata (vibrating drum), in the case of earthworks, foundations, soils.

Information obtained by equipment item type Dynamic weighing and road traffic classification equipment

Type of information

obtained

Operational dynamic weighingequipmentacrossMotorways

Operational dynamic weighingequipmentacross the DN (national roads)

network Weight measurement by axis and in total

Yes Yes

Average speed Yes Yes No.of axes and wheelbase

Yes Yes

Classification of vehicles

Yes (8 classes) Yes (14 classes)

Length of vehicles Yes Yes Distance between vehicles

Yes Yes

Recording of vehicle images for exceeded legal limits

Yes (the use of video cameras) No

Alerts sent to operators onexceeded

Yes No

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legal limits

Road traffic metering equipment Meters with inductive loops

Type of information obtained

Operational meters across Motorways (with double inductive loops)

Operational meters across the DN network

(with a single loop) Traffic volume, cumulated and by time interval

Yes Yes

Average speed Yes No Classification of vehicles (depending on vehicle footprint)

Yes (8+1 classes) No

Direction of travel Yes No Distance between vehicles (in seconds)

Yes No

Meters with inductive loopsand piezoelectric sensors

Type of information obtained

Operational meters across Motorways (with double inductive loops)

Operational meters across the DN network

(with a single loop) Traffic volume, cumulated and by time interval

Yes Yes

Average speed Yes Yes No.of axes and distance between axes

Yes Yes

Classification of vehicles (depending on vehicle footprint)

Yes Yes (14 classes)

Length of vehicles Yes Yes Direction of travel Yes Yes

Meters with infrared and ultrasound technology They only operate across the network of motorways and provide the following

information: - detection of vehicles, queues, persons and other objects present on the road

surface; - number of vehicles crossing the respective road section; - classification of vehicles in 8+1 classes,depending on their length (ANNEX 1 -

Table 1); - vehicle height; - distance between vehicles.

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Meters with radar technology They only operate across the network of motorways and provide the following

information: - vehicle speed; - number of vehicles crossing the respective road section; - classification of vehicles in 8+1 classes, depending on their length; - distance between vehicles(in seconds).

Meters with image analysis technology They only operate across the network of motorways and provide the following

information: - vehicle speed; - number of vehicles crossing the respective road section; - classification of vehicles in 8+1 classes, depending on their length; - road surface occupancy degree.

Video monitoring equipment It only operates across the network of motorways, itcommunicates with the other

equipment items and providesinformation by displaying video flows at the traffic monitoring centre. The operator can have complete control over the cameras via the joystick and can position the cameras following the receipt of an alarm signal.

Incident detection equipment – by means of video analysis It only operates across the network of motorways. The equipment comprises a video cameraand the module designed to process the

information received from it. Alarm signals are generated if one of the following events occurs: stopped vehicle,

cruising into oncoming traffic, pedestrian, lost load, smoke/fire/fog, queue, sudden speed drop.

Licence plate recognition and road vignette monitoring / fining equipment It operates both across the network of motorways and the DN network. Detection uses video processing technology. The system reads the licence plates of

vehicles. In the case of each vehicle, the recognition system control module checks the road vignette validity for respective licence plate.

Weather and road measuring, forecast and warning equipment It operates across the network of motorways. The equipment comprises:

- complex weather station intended for measurements and primary processing of weather and road data (including the road surface condition);

- independent sensors fitted in other locations than the station itself; - weather and road information, forecast and warning system.

The weather station performs the following measurements: air temperature, relative humidity, precipitation and visibility detection, atmospheric pressure, wind direction and speed, road surface condition, soil temperature.

The equipment allows: informing operators on the weather and road conditions, the

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short-term forecast on the road surface conditions, sending warnings and alarms to operators on phenomena affecting road traffic.

Information system using variable message signs (VMS) It operates across the network of motorways. It comprises variable message signs (VMS) which display data in real time, received

from the monitoring centre. The following types of traffic information are displayed: - trip durations between particular known destinations; - congestion cases across the motorway; - information related to road works; - special events and instructions for road users; - scheduling of maintenance operations; - special weather conditions according to forecasts; - accident notifications.

Conclusions

Currently, there are 4 ITS monitoring centres (Bucharest, Valea Dacilor, Sălişte, Pecica) in charge withmanaging, operating and monitoring the ITS systems fitted to certain motorway segments: Bucharest - Piteşti, certain sections ofBucharest– Cernavodă motorway, Cernavodă - Constanţa, Orăştie - Sibiu 4, Nădlac – Arad motorways. All the information received from the equipment is analysed by human operators and then rendered on variable message signs (VMS) in order to inform travellers.

CESTRIN is in charge of managing, operating and monitoring the systems implemented across the network of national roads and some of the systems installed on motorways. A portion of these activities comprises:

- the monitoring of traffic meters/sensors; - checking the road vignette status via the ANRP (National Authority for

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Property Restitution) system; - the Pavement Management System (PMS); - national road network maintenance work planning system; - the “e-Tariff” system implemented at Feteşti bridge across the Danube.

Improvement of communication among systems Creation of unified software base at a nationallevel in order to avoid integration and

interoperability issues The data exchange has to comply with the European DATEX II standard. Road authorities and road operators set to provide dynamic data on road conditions,

collected and updated, shall make sure that the data is in DATEX II format or any other format that can be automatically read, compatible and interoperable with DATEX II.

European map of countries that employ DATEX II data exchange

5.8.2 ROAD TRAFFIC MONITORING SYSTEM PROPOSALS The design and execution of Traffic monitoring systemsshall take into account the

provisions above, as well as the national and European technical regulation in force and the best practices in the field.

5.9THE MOTORWAY TOLL AND THE TOLL CHARGING SYSTEM

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 calculated 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 8.8 Euro,VAT-exclusive, whereas for an HGV and a Bus the amount of 12.6 Euro, VAT-exclusive.

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The amount of the motorway toll may be subject to indexation on March 1stof each year,proportionate to the increase rate of the previous year’s net average salary

The fee level for each vehicle category is below the average value of the tolls charged in the European Union member states.

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.

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 toll charging system, whichshall comply with the European normatives in force at the time of its execution and provide easy access to the motorway.

For example, along Tărgu Neamţ - Iaşi Motorway, toll charging systems shall be fitted in Târgu Neamţ, Paşcani, Tîrgu Frumos, Iaşi. 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 Târgu Neamţ – Iaşi 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 total investment value.

The PPP contract is structured into two main stages, as follows:

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- the design and execution period, lasting no more than 48 months after the signing of the contract;

- the operation period, lasting26years from the end of the construction stage.

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 no more than 80 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 no more than 80 million Euro.

5.11. MAIN ACTIVITIES CARRIED OUT DURING EACH CONTRACTUAL 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.

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 weight.

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

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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

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 thecompetitive 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 sign the

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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 to them.

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.

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 closuredate (the date when funding is obtained for the entire project) and shall fall within the 48 months allotted to the first stage, in which time the private partner is bound to finalise the motorway construction in its entirety.

The operation period

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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 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 5.13.

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, THE PAYMENT MECHANISM, THE PRIVATE PARTNER’S INCOMES

The project costs shall be borne by the private partner and mainly consist in the following:

- 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,

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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 the motorway, important works of art. 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:

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).

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).

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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 Târgu Neamţ – Iaşi Motorway project, the availability-based payment represents a payment that is set forth and partially 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 annualmaximum 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 30 years, the private partner has not managed to obtain, due to lower traffic figures, the envisaged profit.

The investment costs consist in:

- design and execution costs – 1001 million Euro (VAT-exclusive), - costs for toll systems – 12 million Euro (VAT-exclusive), - costs for security systems – 2 million Euro (VAT-exclusive).

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The security systems provided do not meet the latest Romanian and European requirements in the field and have to be upgraded to their level. A toll charging system was provided.

Toll systems were provided for all road nodes, namely road node DN 2, DN 28 A, road node DJ 208andDN28.

The cost per crossing point pertaining to a road node is 3.05 mil. Euro

Note:

- toll charging equipment maintenance - approximately 50% of the total investment costs for the toll system - estimated at 3% of its value, per year (no increase of these costs is envisaged); another aspect considered wasreplacing the equipment every 15 years.

- the amount of personnel - these expenses were estimated based on the following number of employees:

management and administration - 8 persons; permanent personnel for ITS and administration (3 shifts) - 3 persons; permanent personnel for maintenance centres (3 shifts) - 3 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);

- 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.

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

The maintenance costs are presented in the economic/financial analysis, the said analyses being included in the Substantiation study.

Maintenance, repair and rehabilitation costs

- ongoing maintenance and ongoing repair costs/ km: 0.09 mil. Euro. - periodicmaintenance and ongoing repair costs/km: 0.78 mil. Euro. - rehabilitation costs (milling and road system reinforcing / restoration depending on

the sizing criteria pertaining to the road system initial design) /km, after 20 years:2 mil. Euro.

Operating costs

The operating costs considered were estimated at 0.2 mil. Euro / kmandincludethe lighting and toll charging equipment maintenance / changing costs.

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.

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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.

Analysis year Year of use

TOTAL MAINTENANCE

AND OPERATING

COSTSmil. Euro (VAT-inclusive)

1 0.00 2 0.00 3 0.00 4 0.00 5 1 8.05 6 2 8.05 7 3 8.05 8 4 8.05 9 5 8.05 10 6 58.56 11 7 8.05 12 8 8.05 13 9 8.05 14 10 8.05 15 11 58.56 16 12 8.05 17 13 8.05 18 14 8.05 19 15 8.05 20 16 58.56 21 17 8.05 22 18 8.05 23 19 8.05 24 20 8.05 25 21 161.04 26 22 8.05 27 23 8.05 28 24 8.05 29 25 8.05 30 26 58.56

Average value/year 21.71

According to the calculations performed for this motorway section, its average

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maintenance and operating costs can be estimated, for the 2023 – 2048 period, at approximately18.1million Euro/year (VAT-exclusive)and 21.71 million Euro/year (VAT-exclusive), respectively. The total operating and maintenance cost is estimated at 471million Euro (VAT-exclusive)and 565 million Euro (VAT-inclusive), respectively.

Estimated incomes from the motorway toll

Analysis year

Year of use

TOTAL INCOMES FROM ROAD TOLL,

mil. Euro (VAT-inclusive)

1 0.00 2 0.00 3 0.00 4 0.00 5 1 17.55 6 2 17.84 7 3 18.13 8 4 17.83 9 5 18.71

10 6 19.00 11 7 19.29 12 8 19.58 13 9 19.87 14 10 20.17 15 11 20.46 16 12 20.75 17 13 21.04 18 14 21.33 19 15 21.62 20 16 21.91 21 17 22.20 22 18 22.49 23 19 22.77 24 20 23.05 25 21 23.33 26 22 23.60 27 23 23.88 28 24 24.25 29 25 24.62 30 26 24.99 Average Value 21.16 TOTAL Value 550.26

In regard to incomes, we will mention that the traffic forecast relies on a pessimistic traffic evolution assumption, namely a projection agreed upon with JASPERS, instead of one

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related to the general evolution coefficients published byCESTRIN.

Additionally, the initial traffic values along Tg Neamţ – Tg Frumos section are lower, an aspect which, in relation to the entire Tg Neamţ – IaşiMotorway, are compensated by the higher traffic values across Tg Frumos – Iaşi section.

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 study that took into account both the Motorway toll tolerance study, carried out in 2012 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.

Section 1 Km 0+000 –Km 32+000

GENERAL TOTAL Complete execution

No. List No. CATEGORY OF WORKS Total (RON)

EURO

1 1 ROAD WORKS 698,284,885.38 163835875.6

2 2.1 ROAD NODE 1 (DN2) 46,498,038.98 10909654.63

3 2.2 ROAD NODE2 (DJ208) 26,624,635.60 6246835.034

4 2.3 ROAD NODE 3 (DN288) 32,650,729.03 7660713.974

5 3.1 MOTORWAY FACILITIES - CIC PAŞCANI MAINTENANCE AND COORDINATION CENTRE (KM 9+760)

14,363,903.30 3370146.946

6 3.2 MOTORWAY FACILITIES - SHORT-TERM PARKING AREA (BETWEEN KM 11+760 AND KM 12+220)

9,062,963.70 2126408.038

7 3.3 MOTORWAY FACILITIES - SHORT-TERM PARKING AREA (BETWEEN KM 22+400 AND KM 22+840)

9,062,963.70 2126408.038

8 4 RESTORATIONS OF CONNECTING ROADS 3,623,976.63 850279.5875

9 5 RESTORATIONS OF CLASSIFIED ROADS 12.747,025.60 2990785.2

10 6.1 MOTORWAY BRIDGE WORKS 715,616,894.09 167902417.6

11 6.2 MOTORWAY OVERPASS WORKS 27,630,900.23 6482931.003

12 7.1 TUNNEL WORKS • TUNNEL 1 297,018,680.01 69688341.43

13 8 ENVIRONMENTAL PROTECTION SET-UPS AND RESTORATIONS TO INITIAL STATES 13,304,698.77 3121629.894

14 9 NETWORK/GRID RELOCATION / PROTECTION WORKS 95,461,084.00 22397664.06

TOTAL, VAT-EXCLUSIVE> 2,001,951,379.02 469710091

Section 2 Km 32+000 –Km 61+000 (it includes a 7 km connecting road designed with 2 lanes per direction of traffic).

GENERAL TOTAL Complete execution

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No. List No. CATEGORY OF WORKS Total (RON)

EURO

1 1 ROAD WORKS 489,814,838.18 114923356.6 5 2.4 ROAD NODE 4 (DN28) 139,363,175.98 32698241.71 10 3.4 MOTORWAY FACILITIES–S1 SERVICE AREA (BETWEEN KM 34+440 AND KM 34+820) 17,516,276.70 4109776.096

11 3.5 MOTORWAY FACILITIES - TARGU FRUMOSSUPPORT AND MAINTENANCE STATION (KM 35+300)

7,848,487.00 1841460.078

12 3.6 MOTORWAY FACILITIES - SHORT-TERM PARKING AREA (BETWEEN KM 49+800 AND KM 50+260)

9,062,963.70 2126408.038

13 3.7 MOTORWAY FACILITIES - SHORT-TERM PARKING AREA (BETWEEN KM 59+21(1 AND KM 59+670)

9,062,963.70 2126408.038

14 3.8 MOTORWAY FACILITIES - CIC IAŞI MAINTENANCE AND COORDINATION CENTRE(KM 60+500) (ON THE CONNECTING BELT BETWEEN DN28 AND THE MOTORWAY)

14,230,565.30 3338862.368

16 4 RESTORATIONS OF CONNECTING ROADS 1,942,792.06 455829.7694 17 5 RESTORATIONS OF CLASSIFIED ROADS 35,819,408.08 8404168.856 18 6.1 MOTORWAY BRIDGE WORKS 510,398,934.49 119752923.3 19 6.2 MOTORWAY OVERPASS WORKS 69,275,688.14 16253886.15 28 8 ENVIRONMENTAL PROTECTION SET-UPS AND RESTORATIONS TO INITIAL STATES 12,570,311.60 2949323.479 29 9 NETWORK/GRID RELOCATION / PROTECTION WORKS 72,452,007.00 16999133.53 TOTAL, VAT-EXCLUSIVE 1,389,358,411.93 325979778

In addition to all of the above, sections 1 and 2 benefit from the introduction of the 3 changes mentioned in chapter 3.4, namely:

Change 1 - road node relocation from the built-up area of Târgu Frumos locality to its immediate proximity, as well as laying down a connecting road featuring a design speed in excess of 90 km/h. The connecting road would intersect national road DN28 in the form of a multiple level crossing, via a road node with connecting belts designed for traffic speeds of at least 60 km/h. Increased accessibility to the motorway is an asset that has to be capitalised on to the fullest. The estimated value of this change is 12 mil. Euro (VAT-exclusive).

Change 2 -The road node from km 61 would basically be eliminated, leaving the motorway route continue on the direction of the connecting road to DN28, built as a motorway. As such, the connecting road would basically disappear and leave instead a motorway which intersects DN28 via a multiple level crossing.The estimated value of this change is 28 mil. Euro (VAT-exclusive).

Change 3 - DN28 widening between the road node represented by the intersection of the motorway with DN28 (according to the details mentioned at CHANGE 2) and the intersection with Iaşi by-pass.The intersection of DN28 with Iaşi by-pass shall take the shape of a multiple level crossing.The estimated value of this change is25 mil. Euro (VAT-exclusive).

Mention should be made that the values pertaining to the three changes were included in the estimated motorway cost.

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.

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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. and 10 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:

• 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 nighttime;

• 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 users and the contracting 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 do not 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, and 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

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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 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 5.13.

5.14. PPP CONTRACT CESSATION AND PAYABLE COMPENSATIONS

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 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, and the 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;

• to recover the amounts invested in the project by the private partner’s shareholders

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(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 the termination for convenience by the public partner

If the PPP contract comes to an end following the 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;

• 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

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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 contracting authority, whereas the subcontractors will receive no payment following the cessation of the design and construction contract/the operation and maintenance contract.