Skopje Tram, Investors Roundtable

18 January 2012

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Agenda

■ 10:15 Opening words (speaker: Szabolcs Vona, Vialto & EC Harris)

■ 10.30 Greeting participants by the Mayor of Skopje

■ 10:45 Introduction of Potential Investors(speakers of the respective companies – 5 minutes each )

■ 11:45 Coffee break

■ 12:00 Introduction of the recent developments with Skopje Tram Project (speaker: Csaba Orosz PhD, Vialto & EC Harris)

■ 12:20 Questions and Answers

■ 13:30 Closing words, conclusions(speaker: Kristijan Gjorgjievski – Vialto & EC Harris)

Skopje Tram, Project Introduction

Csaba OROSZ PhD |18 January 2012

Developments in the past year

■ December 2010 – The City of Skopje engaged Vialto Consulting and EC Harris as consultants to do the following tasks:

– Phase I - Preparation of a Study for a concession project for development and introduction of light railway system for passenger transport in the area of the City of Skopje. The study includes:

• Traffic - technical analysis

• Economic and financial analysis

• Legal analysis

• Possibilities for development

– Phase II - Preparation of Tender Documentation and model contract, evaluation criteria and animation of potential investors;

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5

Planned Tram Network(Feasibility Study 2007)

Line 1Line 1 alternativesLine 2Line 3Line 4

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Proposed Versions

Bulit Service Journey approx

Version Service track length time peak off-peak evening service

name name length one dir. 6-8;13-17 5-6;8-13;17-20 20-23 per day

[km] [min] [min] [min] [min] [pcs]

A B C D E F G H I J

V1 Tram 1 Novo Lisice - Centar 5,7 5,7 16 6 10 10 132

V2a Tram 1 Gjorche Petrov - Novo Lisice 12,1 12,1 33 4 6 10 198

V2b Tram 1 Gjorche Petrov - Novo Lisice 12,1 12,1 33 6 6 10 168

V3 Tram 1 Gjorche Petrov - Novo Lisice 12,1 12,1 33 8 10 15 111

Tram 2 [Gjorche Petrov] - Sever 5,6 12,8 32 8 10 15 111

17,7

V4 Tram 1 Gjorche Petrov - Novo Lisice 12,1 12,1 33 4 6 10 198

Tram 2 Staklarna - Sever 9,6 10,2 25 8 10 15 111

21,7

V5 Tram 1 Gjorche Petrov - Novo Lisice 12,1 12,1 33 8 10 15 111

Tram 3 [Gjorche Petrov] - Agroservice 4,4 12,7 32 8 10 15 111

Tram 2 Staklarna - Sever 9,6 10,2 25 8 10 15 111

26,1

Tram lines ServicesFollow-up time

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Selected VersionVersion 2a4 - Novo Lisice - Centar - Gjorce Petrov

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Investments and Operational CostVersion 2a - Novo Lisice - Centar - Gjorce Petrov

No. Item Unit QuantityCost per

unitTotal cost

        [1000 EUR]A B C D E F1 Investment cost2 Track infrastructure track km 24.2 2 400 58 0803 Catenary track km 24.2 600 14 5204 Depot (only at East, at Novo Lisice) each 1 15 000 15 0005 Vehicles each 22 1 900 41 8006 Subtotal 1000EUR     129 4007 Technical reserve 1000EUR 10%   13 7308 Provision for inflation 1000EUR 5%   5 8659 Provision for exchange rate 1000EUR 5%   5 865

10 Total Investment Cost 1000EUR     155 28011 Operational cost ( per year )12 Vehicles running (O&M) cost km 1 665 444 0.004 6 66213 Infrastructure maintenance track km 24.2 50 1 210

14Total Yearly Operation+ Maintenance Cost 1000EUR     7 872

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Estimated Passenger Flow(Option 2a4, Peak Hour)

1920

1360

2000

2320

2800 2840

1840

900

0

626

1556

2041

2481

3158

1350

920

404

00

500

1000

1500

2000

2500

3000

3500

1 2 3 4 5 6 7 8 9

Reference point number

Es

tim

ate

d p

ea

k h

ou

r p

as

se

ng

er

flo

w

[pa

ss

/hr]

Feasibility Study

Own calculation

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Estimated Tram Passenger Flow

■ „Corridor” approach (change to tram)

– 80% of bus passengers (80 pax per bus)

– 20% of car passengers (1,5 pax per car)

■ Daily passengers assumptions

– w = 15% (peak hour factor)

– growth factor: 1% per year

– diameter shaped lines

■ Yearly passengers assumptions

– 250 workdays, 115 holidays

– holiday = 0.5 × workday

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Version 2 basic data

Line num.

Track Length Head-way

[min]

Service per day

Present traffic

Estima-ted pax

1

Novo Lisiche – Centar – Gjorche Petrov

12 km33 min

3 6

10

228

15 bus1301 car

1350 pax

44 bus1139 car

3158 pax

60 000 pax/workday(3158+1350) × 2 / 0,15

Ticket revenues

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■ It is expected that the income from ticket sales at the first year of operation will be 12.7 M Eur per year plus 1.0 M Eur as a compensation for discounted tickets.

Distribution among pass types Tram

Annual tickets 27,6%

Student monthly 32,0%

Pensioner monthly 3,1%

Other monthly 17,3%

Single 19,1%

10 rides 0,9%

Total 100,0%

Public Subsidies

■ Up to 10 % initial investment subsidy - selection criterion in the tender

■ optimum operative subsidy/availability payment - selection criterion in the tender

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 Starting

yearEnding year

Annual amount PV

(million EUR)Ticket price: 1,0 EUROperative subsidy I 4 8 3.6Operative subsidy II 9 35 1.1

Public Subsidies

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Financial Indicators of the preferred option (2a4)

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Financial Indicators (ticket price 1 Eur)

Net present value 75,69 M Eur

Benefit – Cost Ratio(BCR) 1,208

Net discounted profit (NPV – PV of equity investment) 60,16 M Eur

Interest rate on equity 11,07%

Total Subsidy PV 81,46 M Eur

The Study - Conclusions■ It is financially feasible to introduce the Tram as an environmentally friendly high

capacity transport mode in the City of Skopje;

■ Among line options investigated, Line 1 proved to be most beneficial and financially feasible (12km long trunk line);

■ Later further development is possible (extension of line 1,additional lines 2 and 3);

■ Sustainable public subsidies needed

• 10 % initial investment subsidy

• optimal operative subsidy/availability payment

■ Need for amendments in legislation, due to a introducing a new way of transport

■ Additional measures:

1. Modification of local transport strategy.

2. Reorganisation of bus services

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Next steps

■ Analysis of the feedback from the round table and possible implementation of investors’ initiatives.

■ Expected tender announcement – Q2 2012

■ Contract Award - Q4 2012

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Pre-qualification

45 days

Preparing Shortlist

15 days

Tender Applications

60 + 30 days

Tender Evaluation

30 days

Questions and Answers

Closing Words, Conclusions

Áron NEMES | 18 January 2012

Thank You for Your Attention!

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PPP (DBFOT) Structure