RESUME OF BUSINES –PLAN:

1. RESUME OF BUSINES –PLAN: INTRODUCTION OF INOVATION TECHNOLOGIES ON WASTE MANAGEMENT IN KIEV AND KIEV REGION IN A PROCESS OF PREPARATION TO THE FINAL FOTBOLL MATCHES EURO 2012 Ukraine, Kiev - 2009

2. Waste management status analysis: • Almost 50 billion cubic meters of solid domestic waste (SDW) annually accumulates in Ukraine which makes up almost 11 million tons of waste buried at 4.5 thousand dumps and landfills with the total area of almost 7.6 thousand hectares • There are 248 overfilled landfills (5%), while 1 133 landfills (25%) do not meet the environmental safety requirements • Only 2.5% of SDW is burnt at two out of fourexisting incineration plants built during the Soviet times (Kiev, Dnepropetrovsk) • Due to the lack of a waste management system, about 16 thousand unauthorized dumps with the total area of 1.1 thousand ha appear in residential areas each year

3. Waste management services were found to be rendered by 1 172 organizations out of which 281 (23%) are private companies, which is 5% more than in 2006. Most private companies are located in Kherson Oblast (32), Kirovograd Oblast (27) and Kharkov Oblast (23). • The average fee for waste management services is Evro4/m3 which includes Euro2.5 for collection and transport and Euro1.5 for burial. Such fees are much lower than the international fees; therefore, they do not ensure normal plant operation and make it impossible to introduce modern technologies at the plants • Over Evro50 million was allocated for development and management of sanitation plants in 2007, which is 79% more than in 2006. Most financing was provided in Kiev (Euro17 million), Donetsk Oblast (Euro11.2 million), and Kharkov Oblast (Euro2.8 million) • The average vehicle wear rate increased from 66% (2006) to 69% (2007). The least wear rate was found in Sevastopol (25%) and Kiev (47%)

4. As stipulated by the Law of Ukraine “On Local Self-Government in Ukraine” (Article 30), the waste management issues pertain to the competence of local executive bodies which are usually in no haste, and sometimes even too slow in introducing modern waste management techniques and technologies • The key reason of such a situation is noncompliance of the local authorities with the requirements of the Laws of Ukraine “On Housing and Utility Services” and “On Waste”as regards insufficient funding of development and management of facilities in this industry sector, establishment of economically feasible tariffs, and reasonable control over the waste management process (especially the use of dumps and landfills) • Actuality of problem solution of sanitary clearing system improvement in communities, particularly in big cities, caused by preparing of infrastructure to football matches Еuro-2012 realization.

5. The offered project concerns branchof municipal services which demands considerable improvement at all levels, especially in sphere of sanitary clearing of settlements and dig cities and their agglomerations. • In structure of sanitary clearing the municipal enterprises (more than 40 %), the others – basically small private enterprises and the enterprises with the mixed pattern of ownership. The structure material bases of the enterprises where degree of deterioration of container and transport park makes more than 60-80 %. • Practically there is no infrastructure on introduction of modern innovating technologies of gathering, transportation, sorting, utilization and dumping of waste that makes the offered project actual. • In structure of consumer’s services the basic group makes the population (to 60 %), budgetary establishments (7-10 %), commercial and other organisations (to 30 %).

6. In the process of realization of the offered project the basic group of clients is made by the most solvent budgetary and commercial clients: office and administrative centers, hyper- and supermarkets, trading-entertaining and entertainment establishments where considerable volumes of waste essentially different on the morphological structure from the household concentrate. • For waste collection and transportation we propose technologies, nonconventional in Ukraine, but successfully used in many countries witch replacing usual containers in volume of 0,75-1,1 m in cubic volume on a press-compactor from 7 to 35 m cubic with 5-7 multiple degree of consolidation that allows to simplify considerably system of waste collection specialized lorry convoys with multilifts. • Instead of traditional container platforms on object is established one large-sized closed press container which is taken out in process of accumulation. • Installation of two-three such containers gives the chance to carry out separate waste collection on fractions – paper for recycling, polymers and other waste. • For collection of other categories of a waste – large-sized, building, medical, hazardous is used the similar approach which is based on use both open containers of great volume and a press-compactors.

7. Using of the above-stated technologies at service of large waste manufacturers gives essential advantages to the present project in comparison with other operators on the market. Strong points of the Project: • selection of specialised equipment for waste transportation, • using of sorting waste technologies, which allow to take out a secondary resources to use in industrial production, • possibility of replenishment of a profitable part of the project at the expense of sale of secondary resources • reduction of an environmental load, landfill areas, harmful emissions in atmosphere and ground waters. • As competitors use traditional forms of servicing, to speak about their competition in rendering of a new type of service to clients it is not necessary. Tendencies of annual growth of waste volumes on 5-7 % considerably expand volumes of rendered services and financial streams from the given kind of activity. Weak points of the Project: • absence of the legislation in sphere of environmental protection , adapted only for the foreign. • not settled questions of pricing on services of sanitary clearing, • unstable political and economic situation in the country that considerably influences level of payment of the received services

8. The project goal –via introduction of innovative waste management technologies: • Improve sanitary and ecological state in Kiev and Kiev region in a process of preparing to football matches Еuro-2012 realization • decrease the amount of buried domestic, construction and other industrial waste on landfills by at least3-7timesin Kiev and Kiev region • considerable reduction in the pollution of atmosphere and underground water-bearing formations • implementation of an action plan aimed at remediation of unauthorized dumps and existing landfills, thereby considerably increasing the operation life of the existing landfills and the standard volume of waste buried at the said landfills • obtaining a considerable volume of waste energy to be reused in industrial production • making use of the sorted-out waste residue, as alternative fuel, to obtain electric and thermal energy for production and local community needs.

9. Proposition on goal achievement and improving of waste management system : Creation of transport and technological complexes in Kiev and Kiev region on introduction of: • separate collection and utilization of waste produced by the network of recreation centers, crowded areas, in network of office and administration buildings, entertainment buildings in the city’s areas their agglomerations, using specialized vehicles and 12-35-m3 bulk bins with compactors • collection and utilization of construction waste, formed in process of repair and reconstruction of current and future building objects with production of secondary crushed stone for using in road construction and concrete production. • collection and utilization of outsize waste, formed in result of population municipal and operation activity • production of alternative fuel for using in industrial manufacturing (concrete industry) • gasification of the combustible fractions, sorted waste, for the purpose of production of electric and heat energy for industrial production needs At present the given market segment are not spread by operators and has an elemental character with using unspecialized equipment and need innovational technologies solution.

10. Creation in Kiev region of waste sorting and handling complexes at the existing landfills, and also waste transfer station in city regions will allow to optimize using of current park of waste collection equipment belongs to transporter-enterprises. Sorted waste (light combustible fraction) will be using as alternative fuel on energy generating station, and secondary crushed stone formed in the process of construction waste utilization – in road construction and concrete production • Realisation of the pilot project of power generating station with use steam-plazma installations for industrial production maintenance (2 blocks for 2 MVT/HOUR.), and also 30 Gkal of thermal energy for consumption by the managing objects placed in region. • Creation of regional center on ecological safety utilization of medical waste, medical product, plant-protecting agents, food and other supplements, products and other goods, with expired date • Development and implementation of state-of-the-art technology programs aimed at reclamation of unauthorized dumpsand both existing and closed landfills, which will mitigate the environmental impact and will ensure sanitary and epidemiological welfare of the population.

11. FINANCINGCOSTS Total cost of the Project13,9 mln. Euro, including: - Independent production complexes on waste collection, formed in network of shopping and administrative centers: • Mixed domestic waste – 710,5 thou. euro • Separate collection of domestic waste– 1 518,4 thou. euro - Collection of outsize waste, electronic and electro technical waste, motor transport– 381,6 thou. euro - Collection of construction waste – 336,8 thou. euro - Mobile complex for outsize and domestic waste, producing secondary fraction and alternative fuel for energy supplying objects– 2 289,7 thou. euro - Mobile complex for utilization of construction waste, producing secondary concrete fraction to be used in building industry and road construction– 884,8 thou. euro - Specialized equipment for alternative fuel transportation for concrete industry needs– 3 057,6 thou. euro - Energy generating enterprise producing synthesis gas and energy power from alternative fuel, formed from waste– 4 690,4 thou. euro

12. Drawdown– 12 months, according schedule of financing • Term of financing– 120 monthswith 6% annual rate, with monthly interest payment • Period of grace– 12 months • Credit repayment– after drawdown, monthly during 9 years by equal parts • It’s possible: - attraction of strategy and financial investors, • creation and management of joint venture, • Investor’s participation in capital • Investment payback period– 50 months • Profitability index– 2,4 • Gross profit margins– 87% • Operating profit margins– 50% • Net profit margins– 18%

13. Monthly schedule of project investing, Euro Borrowed (credit) funds - 100%

15. Principal item of income under the project and mid-market prices of rendering services and sales

16. Rendering services volume structure and mass of utilized row materials in 1-2 years of project realization

17. Rendering services volume structure and sales of utilized row materials in 1-2 years of project realization

25. Cumulative profile of project’s risks Pic 1. Cumulative index of event probability

26. Project sensibility to variable expenses changing Level of variable expenses, % to the planning

27. Project sensibility to product cost changing Cost service level

28. Project sensibility to the planning production volume changing Rendering service volume

29. Specialized transport and container with big capacity (12-35 cubic meters)