Potential for Tram in the City of Skopje, Project Introduction Gjorgjievski Kristijan | 13 October 2011

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; –Phase III – Advisory in the selection process and contracting negotiations 2

3 Planned Tram Network (Feasibility Study 2007) Line 1 Line 1 alternatives Line 2 Line 3 Line 4

4 Estimated Passenger Flow (Peak Hour)

5 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 have two branches ■Yearly passengers assumptions –250 workdays, 115 holidays –holiday = 0.5 × workday

6 Other Analysed Technical Issues ■Modification of tram stop allocation ■Track alignment (side or central) ■Tariff system ■Bus reorganization

7 Proposed Versions

8 Investments and Operational Cost Version 2a - Novo Lisice - Centar - Gjorce Petrov

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Financial analysis of a possible version ■Optimum operative subsidy, with 10% initial investment –10 % initial investment granting –optimum operative subsidy (to reach at least 11 % interest rate on equity and not to have negative cumulative cash-flow) –no ticket price reduction (except for students and pensioner) 13 october 2011 | Kristijan Gjorgjievski|10 Financial Indicators Net present value68.26 M Eur Benefit – Cost Ratio(BCR)1.217 Net discounted profit (NPV – PV of equity investment)54.19 M Eur Interest rate on equity11.00 % Total Subsidy PV68.58 M Eur

The Study - Conclusions ■It is financially feasible to introduce the Tram as an environmentaly friendly high capacity transport mode in the City of Skopje; ■Among line options investigated, nr 1 proved to be most beneficial and financially feasible (12km long trunk line); ■Later further development is possible (line 2, 3); ■ Sustainable public financing is needed 10 % initial investment granting optimal operative subsidy ■Risks to be mitigated (cost overrun, time overrun, policy failure, car invasion). ■Need for changes in legislation, due to a new way of transport ■Additional measures: 1.Modification of local transport strategy. 2.Reorganisation of JSP 11

Next steps ■The city of Skopje decided to proceed with the next phase, i.e into project preparatory phase ■Animation of possible investors and organizing round table (end of November 2011) ■Expected tender announcement – End of January october 2011 | Kristijan Gjorgjievski|12

Questions ?

Thank You for Your Attention! The study was prepared by Dr. Csaba Orosz, Dr. Janos BERÉNYI Dr. Tibor Princz-Jakovics Dr. Peter Bocz,

Backup slides 13 october 2011 | Kristijan Gjorgjievski|15

16 PPP (DBFM) Structure

27th of June Present traffic flow to the centre (morning peak hour) Тековен проток на сообраќајот во центарот car bus

Public subsidy, Version 2a/4 15th of April Negotiation point