1. Compania Naţională de Căi Ferate National Railway Company “CFR” S.A. Bucharest, October 6 th, 2015 Building the new railway economy Challenges & Opportunities Dan M. COSTESCU, Chief Executive Officer

2. Network length: 10 629 km Double line: 2 909 km Electrified line: 4 028 km Number of stations: 930 Network characteristics

3. Institutional separation and open access to the railway infrastructure in accordance with the EU Directives (1998) Infrastructure Manager (CFR S.A.) Infrastructure Manager (CFR S.A.) National Passenger Operator (CFR Calatori) National Passenger Operator (CFR Calatori) National Freight Operator (CFR Marfa) National Freight Operator (CFR Marfa)

4. Institutional separation and open access to the railway infrastructure – Railway Undertakings that concluded the access contract on the railway infrastructure managed by CFR S.A. in 2015 Type of license Number of undertakings Owner Passenger and Freight 3Private Freight21 1 State owned, 20 Private Passenger4 1 State owned, 3 Private

5. Projects for the modernization of the railway sections

6. Modernization of Romanian railway stations

7. Rehabilitation works to bridges and tunnels on the TEN-T railway network

8. Increase in traffic safety

9. Challenges&Opportunities

10. Expensive IT solutions vs Low cost rail services

11. Innovative Digitalisation vs Overregulated and change- resistant workforce

12. Railway atomisation vs Strong Railway Administrator

13. Intra-modal competition vs Inter-modal competition

14. Sustainable business environment Assuring a level play field Recast directive Amending the national legal frame Modal Shift

15. Implementing Implementing a new legal frame & business environment 1 st Stage: Present situation, introductory steps: - Bring topic in public & political debate - Run market and econometric studies - Design the legal frame - Set the new financial mechanisms 2 nd Stage: Implementation according to an appropriate timing : -Costs internalization for road -Railway access fees reshaping -Improving the KPI of infrastructure 3 rd Stage: Including the ignition and progress of modal shift over the break-even point when the subsidy turn to profit

16. Financial mechanisms Financial mechanisms Already known, and validated by on-going activity -Own revenues – access fees -Own revenues – noncore activities -State budget - subsidies

17. Financial mechanisms Not yet tested or validated, existing or new “positive cross-subsidies” from the polluter -20-30% of environment tax (from road) -20-25% of RO-vignette tax (from road) -% of the over excise duty for fuel -100 % heavy lorries/coaches over tax Extending the concept “polluters pay” to “polluters pay to… green modes”

18. Financial mechanisms Further different developments: - to be identified after further internal analysis - to be identified by consultants - resulting from the experience or best practices of other railways

19. Impact of modal-shift over GDP Impact of modal-shift over GDP External Costs – Passengers Transport 10% modal shift from road to rail 1% of Romanian GDP

20. Modal Shift Effects Modal Shift Effects Traffic Intensity Incomes & Costs Subsidy Profit Railway subsidy turns to profit

21. Compania Naţională de Căi Ferate National Railway Company “CFR” S.A. Thank you ! Bucharest, October 6 th, 2015