Toll Motorway Program in Poland Marek ROLLA Director of Road Network Department General Directorate of National Roads a

1. Toll Motorway Program in PolandMarek ROLLADirector of Road Network DepartmentGeneral Directorateof National Roads and MotorwaysMarch2006

2. Motorway Program Polish Toll Motorway Program includes: • A1Motorway:Gdańsk-Toruń-Łódź-Częstochowa-Gliwice-Gorzyczki(Czech Republic border) total length 564 km, • A2 Motorway: Świecko(German border)-Poznań-Warszawa-Siedlce-Kukuryki (Belarusian border) total length 651 km, • A4/A18 Motorway: Zgorzelec/Olszyna(German border)-Wrocław-Opole-Gliwice-Katowice-Kraków-Tarnów-Korczowa (Ukrainian border) total length 779 km.

3. The legal base for Program • The Act dated 10th of April 2003 about the detailedrules concerning preparation and realization of investments regarding national roads. • The Act dated 27th of October 1994 about Toll Motorway. • The Adjustment to The Act about Toll Motorway and National Road Fund, dated 14th of November 2003. • The Act dated 2nd July 2004 introducing freedom of economy which changes the Act about Toll Motorway and National Road Fund.

4. Toll Motorway Financing • Traditional financingFinanced from sources gained by the government: budget sources, PHARE grants, ISPA grants, other EU’s funds, loans from international financing institutions (World Bank, European Investment Bank, European Bank of Reconstruction and Development) • Concession financing • financed from public - private sources in the proportion respecting the risk and the involvement of each partner. Can be carried out in the BOT, BOO, BOOT, DFBOT systems. Private sector brings its know-how, project management skills what will be occurred in the higher quality and efficiency of the investment.

5. National Road in Poland - 2005

6. Concession financing systems BOT (build, operate, transfer) – builder consortium constructs the motorway, operates and after specified period of time the concessionarie transfers the motorway to the public partner. BOO (build, own, operate) – private partner executes the project of the motorway, within specified period of time performs the function of the administrator and operates the motorway BOOT (build, own, operate, transfer) – private partner executes the motorway project, within specified period of time performs the function of the administrator and operates the motorway. When the concession is terminated the private partner transfers the motorway to the public sector.

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

8. Public-Private Partnership • From 1997 up to 2004 private investor (concessionaire) was granted a concession forconstruction and operation (or only operation) the motorwaysection • The system covers almost all finance methods between • completely private financing and traditional financing. • Financial sources for the motorway construction (excluding • costs of real estate and preparatory works which are financed • bythe General Directory - GDDKiA) the concessionaire has togain on its own sphere. • Share in the total costs of each partner depends on its risk andits duties in the investment. • The whole process of constructing andoperating is prepared and executed by the concessionaire onits own risk. • Nowadays there are only agreements conceiving with construction and operation of motorways.

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

10. National Road Fund – Main Incomes • Petroleum Taxation. • Vignette tolls • Paying Interest on Fund’s sources. • Incomes from holding and selling shares. • Fees collected by General Directorate. • Payments settled up by concessionaires. • Incomes from rent buildings purchased in order of running the investments. • Fees for specification preliminary tender condition. • Loans drawn on behalf of National Road Fund. • Incomes from fine papers. • Incomes from obligations emitted on behalf National Road Fund by National Economy Bank (BGK).

11. National Road Fund – Main Purposes • Co-financing of real estate acquisition, preparing of investment process, rebuilding process, renovation, maintenance and road investments protection • Setting up payments for private partners in order carrying up duties definited in concession agreements, for instance: • a. Recovering of costs conceiving with keeping uninterrupted accessibility to motorway, its maintenance and serviceability • b. Changeable payment depended on definited conditions execution by concessionaire/ private partners • c. Allowances to cover actual financial deficiency in title of motorway exploitation in order keeping financial liquidity in payments settled up in conceiving with motorway investment process

12. The basic tasks for private partner: • Collecting financial sources for the construction and undertaking operating of the motorway • Preparing technical documentation required to undertake the motorway construction, obtaining permission for the construction and other arrangements required by particular regulations • Screening and monitoring technical- building and exploitation regulations concerning motorways, environment protection and relics protection • Keeping the timing of the investment process • Maintaining the motorway according to standards specified in the law and in the agreement as well

13. The basic tasks for concessionaries: • Making possible to the General Director of National Roads and Motorways accomplishing, in the discretional period of time, controlling of the construction and operation of the motorway as well as submitting data and documents in this respect • Maintenance of the motorway by conducting regular repairs and modernization works • The tolls collection • Traffic safety management by elaborating rescue service and controlling the technical condition of the motorway

14. Motorway Projects Implementation

15. Concessions already issued • A1 Motorway, Gdańsk - Toruń section, 152 km long • A2 Motorway, Świecko – Konin section, 255 km long • A4 Motorway, Katowice-Kraków section, 61 km long

16. A1 Motorway Gdańsk - Toruń Basic Data • Total length 151,9 km • The concession issued on 25 August 1997 • Concession period - 42 years • Concessionaire – Gdańsk Transport Company S.A. • Concession Agreement - initiated on 14 August 2002 signed on 31 August 2004 • Total transaction costs aprox. 700 mln EUR • Financial structure: - equity 5% - commercial credits 20% - EIB credit 75% • The guarantees of State Treasury required • The cancelation 62,4km section Nowe Marzy – Toruń on 10 March 2006

17. Milestone part I A1 Motorway Gdańsk - Toruń 25 August 1997 Issue of Concession 14 August 2002 Preliminary sign of Draft Concession Agreement March 2002 Parliament rejects the project of the Law on National Roads August 2003 Government decides to continue the negotiations with GTC based on the Draft Concession Agreement 21-22 January 2004 Negotiation sessions with GTC

18. Milestone part II A1 Motorway Gdańsk - Toruń 24 February 2004 GTCnew price proposal (design and construction (EPC) price reduced to EUR 530 million) 4 March 2004 Submission to GTC a letter on further reduction of the EPC price 31 August 2004 Sign of Concession Agreement October 2004 Financial Model Negotiations 3 December 2004 Completion of negotiations of annexes to agreements Commencement of negotiations on Phase II Grudziądz-Toruń 21 January 2005 Memorandum of understanding on Phase II signed by Minister and GTC

19. A2 Motorway Świecko - Konin Basic Data ConcessionaireAutostrada Wielkopolska S.A. Concession period 40 years ( up to 2037) Scope of works First Financing Segment ( Nowy Tomyśl- Konin, 136 km length) execution and exploitation by Concessionaire, Poznań Bypass (13 km length) execution by State, exploitation by Concessionaire, Second Financing Segment (Świecko- Nowy Tomyśl 106 km length ) execution and exploitation by Concessionaire Full Cost of 1st Segment 875 million EURO Design and Construction Works (lump-sum) 652 million EURO

20. A2 Motorway Świecko - Konin Milestone part I 10 March 1997Issue of Concession 12 September 1997 Concession Agreement (first version) July 1998 Annex No.1 to Concession Agreement excluding Poznań Bypass from Concessionaire scope of work 29 October 1999 Annex No.2 to Concession Agreement establishing final terms of the realization 30 October 2000 Financial Closing

21. A2 Motorway Świecko - Konin Milestone part II July 2001 Commencement of the work for First Financing Segment (Nowy Tomyśl-Konin, 136 km length) 21 December 2002 Start of operation for First Section (Września-Konin, 48 km length) 6 January 2003 Introduction of tolls for First Section 12 September 2003 Completion of Poznań Bypass, executed by State and transfer to Concessionaire for exploitation

22. Milestone part III 27 November 2003Commencement of operation the Second Section (Poznań-Września,37.5 km length) 1 December 2003 Introduction of tolls for passage through the Second Section (Poznań-Września, 37.5 km length+13 km length of Bypass = 50.5 km) 27 October 2004 Start of operation for the Third Section Section (Nowy Tomyśl-Poznań, 50km length). 3 November 2004 Indtroduction of tolls (Nowy Tomyśl- Poznań, 50km length) A2 Motorway Świecko - Konin

23. A2 Motorway Świecko - Konin To be executed next • Second Financing Segment (Świecko-Nowy Tomyśl, 104,5 km length) • The negotiations have been resumed • Private partner presented the proposal of common financing of Segment I and II. This proposal is taken into account with participation of EBI and Department of Finance. • Commencement of works foreseenin 2007 • Completion of the Second Financing Segment is predicted up to the end of 2009

24. A4 Motorway Katowice - Kraków Basic data • Total length 61 km • The concession issued on 15 of March 1997 • Concession period 30 years • Concessionaire – Stalexport S.A. since 28 July 2004 Stalexport Autostrada Małopolska S.A. • Concession Agreement – signed on 19 of September 1997 • Construction capital costs: - Phase I 109 mln PLZ - Phase II(a) 126 mln PLZ - Phase II(b) 139 mln PLZ

25. A4 Motorway Katowice - Kraków Total costs of completed Phase I • Construction of toll collection system: Toll Collection Point in Brzęczkowice Toll Collection Point in Balice • Introduction of Motorway Maintenance Plaza in Brzęczkowice • Construction of telecommunication and traffic management and emergency call system • Implementation of traffic safety system • Closing of „Jeleń” interchange Total 108,6 MPLZ

26. A4 Motorway Wrocław - Katowice • Wrocław - Kleszczów already constructed - traditional system - 144 km long • Total existing motorway construction costs - 1 833 mln PLZ • Expected GDDKiA toll system • Total length - 187 km

27. Tolls and Traffic on A2 and A4 Present Status • A2 cars 3 x 11 PLZ, trucks 3 x 63 PLZ • ADT 7,000 – 15,000 vehicles per day in 2005 • A4 cars 2 x 6.5PLZ, trucks 2 x 24.5PLZ • ADT 21,000 vehicles per day in 2005 • ADT 17,000 vehicles per day in 2001

28. Further PPP projects • A2 Motorway, Konin– Stryków sect., 94.5 km length, operation only • A2 Motorway, Stryków- Konotopa sect., 104.5 km length • A1 Motorway, Stryków –Pyrzowice sect., 188.5 km length • A4 Motorway, Kraków- Tarnów sect., 60 km length agreements for construction and/or operation&maintenance planned to be issued on 2006/2007