Final concept Road Show Dutch companies in Romania Water sector, October2012

Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

Dutch Water Technology Road Show Romania 2012 Draft Proposal

1. UPDATES FROM THE ROMANIAN WATER SECTOR 2012 1.1 Identified problems and lessons in Sector Operational Program Environment POS1(20072013). Extension to POS2 ( EU funding programme 2012-2020)

By POS1 we understand the Sectorial Operational Program ( Romanian SOP) under development since 2007 and with good premises to end by 2015.

POS1 in water sector is the most performant EU funded project in Romania. More than 74% of allocated funds were approved and more than 70% were already spend in different stages of water projects.

We identified also problems and lessons to be learned in this period of planning and execution of POS1 that can be summarized as follows: Project Planning Phase: 1.1.1. The planning of projects has been done without the correct evaluation of Masterplans in the regions. Because of this item, the whole process has not been correlated with the local funding available and the non -imbursable EU financial instruments .

Lesson: For the next POS2 funding program, the actualization of current Masterplans should be realized this year 2012 and sent to the Ministry of Environment in last month of 2012.

Project preparation Phase: 1.1.2 . The “guessed� design parameters gives unrealistic design work, in some regions.(were not known few important technical parameters like specific consumption, inflows, etc).

1.1.3.Sludge management has not been treated in this POS 1 phase in a correct matter because lack of technical solutions or fear to tackle the problem.

1.1.4.Lack of commercial abilities and skills in water companies created in some steps, pressures on the cash flows of local water companies. Improving the tariffs structures needed to be realized.

Lesson: Better open and creative cooperation between final client ( water company) and consultants teams in identifying problems and adopting (new) solutions related to new technologies/equipment to be adopted . Creation and implementation of management courses for water operating companies management teams.

1.1.5. Lack of related information when the project design starts( geological data, topographical measurements, hydrological data). These data are to be prefered by related bodies, like Town Halls or other regional specialized companies .

Lesson: For the next POS2, the start of achieving related project data should start early, in order for next preparation phases to use the data already achieved.

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Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

Project Implementation Phase: 1.1.6. Weak and heavy public acquisition procedures.

1.1.7. Substandard design works required extra works in implementation and also works to be extra-budgeted. The processes were prolonged for longer periods of time.

1.2. Management Authority POS ( AM POS Mediu in Romanian language) requirements for the next 2012-2020 EU funding projects: 1.2.1. Final clients will be same Regional Operating Companies ( ROCs). Regional projects to be financed.

1.2.2.The maxim amount for a design work will be 800.000 Euro.

1.2.3.The maxim value of an investment project will be 80.000.000 Euro.

1.2.4.Ministry of Environment / AM POS Mediu will only have the guidance and financial final approval role. The role will be diminished, with hope of better implication of regional/ local administrations.

1.2.5. The launching of the preparation(design) of projects will be done immediately as the regional requests will be received and approved . Preparation phase to start in 2013 if possible.

1.2.6.The preparation phase of the project will be transferred to the final client.

1.2.7.Projects accepted for finance will be only in relation with EU regulations and agreed measures in the Romania- EU signed Treaty.

1.2.8. The financed projects will be accepted only if they will have an important component of adaptation to climate change and improving efficiency in water and waste water systems.

1.2.9. AM POS Mediu will keep a balanced score on the rural / urban development or on the new extension/ old repairs strategies and projects.

1.2.10. AM POS Mediu will contribute actively in the correlation of public policies at local levels, keeping balance between regional versus local projects.

1.2.11. The proposed financial scheme for project preparation phase of each project, will be as follows: Aprox 88.16% from EU funding( POS2).

Aprox 10.84% from state budget.

Aprox 1% from local budget.

1.2.12. AM POS Mediu will give special attention to the improvement of the management of the projects.

Registration Address: 80 Plantelor St. Sector 2, Bucharest; Postal Address: P.O. Box 34-13, 021412 Sector 2 Bucharest, Reg. Number: J40/1012/1992; VAT number: RO 4824749; Bank ING Bank Bucharest www. bdgroup.ro E-mail: office@bdgind.ro

Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

2. THE 2012 ROADSHOW CONCEPT The concept Road show will tackle the problems mentioned in 1.1.1-1.1.7 above and try to activate the Dutch companies in different water activity sector, in introducing their wide range of technologies and other water concepts to the Romanian water operations and local administration strategies, in order to increase the Dutch market share in water sector.

The 2012 edition of the road show should target - the partnership with local companies and include promotion of Dutch solutions also towards the private sector in Romania - to facilitate good local references and further participation in EU financed water infrastructure projects( POS2).

The public sector can remain the main focus, but the opportunities presented by the private sector should not be disregarded. Even though the most significant investments will be made by LPAs and ROCs, the bureaucracy of public sector projects is an important trade-off. In contrast, private water projects are significantly less bureaucratic, as private companies are more focused on the results than the tendering process.

For this reason, a stronger focus on local subcontractors, industrial parks and local industrial & commercial projects can be a good alternative approach for business success for Dutch companies.

In order to ensure that the interaction with the private sector (and with the public sector) is maximized, a pre-defined match-making session is to be included, with customized bilateral meetings set in advance. It is proven that direct meetings, even in a trade mission framework, are more likely to lead to successful business deals and positive future commercial spin-off. A significant part of the roadshow should be dedicated to these direct meetings.

In view of optimizing the matchmaking session, BDGroup will execute the promotion of the road show towards the Dutch companies, facilitation of the registration and the intake interviews for the confirmed participants.

BDGroup has the willingness to contribute to the increasing the market share of the Dutch companies in Romanian water sector by setting up joint ventures/ cooperation agreements in working groups , information desk for all related services , including the organization of a ONESTOP-SHOP office for Dutch water companies in Romania.

BDGroup proved by various projects developed in last years that has in-depth knowledge and network in the local water sector (opportunities and challenges), and also of what the Romanian market demand is for water technology and services. BDGroup can analyze the offer of the Dutch companies from a local perspective and provide feedback based on local experience.

As regards the region the second edition of the roadshow should focus on Transylvania. This region is one of the best developed in Romania, and it has been extremely active, from a water Registration Address: 80 Plantelor St. Sector 2, Bucharest; Postal Address: P.O. Box 34-13, 021412 Sector 2 Bucharest, Reg. Number: J40/1012/1992; VAT number: RO 4824749; Bank ING Bank Bucharest www. bdgroup.ro E-mail: office@bdgind.ro

Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

sector point of view, over the past year. Roadshow can start in Cluj county( covering CLUJ and SALAJ Counties), in the residence city of Cluj Napoca, as this city is considered the gateway to Transylvania, and it is the second best developed city in Romania (after Bucharest). The city is easily accessible by plane and it provides excellent facilities for accommodation and events.

Moreover, the most dynamic counties in the Transylvania region are neighbours of Cluj county.

More details with regard to possible roadshow itineraries are included in the dedicated section as follows.

3. PRECONDITIONS AND REQUIREMENTS • •

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Target number of participating companies 8, minimum 5 when less –“no go” The ability of group of Dutch companies to cover as many water technologies needed by local operation companies, in order to create to “complete service” if necessary(including preparation design, technologies, management of projects, etc).

The Tentative program of the road show will: - unfold over a week (5 working days) - include a combination of 3 counties - consist of: o a promotional workshop in each county ( local administration, local subcontractors, design companies, local water representatives , etc will be invited) o matchmaking session with local companies and organizations. o a visit of a reference water (under construction)project - Target Romanian audience per county: +/- 20 representatives of local and regional authorities, local companies, other key stakeholders -

Tentative period: 22-26 October 2012

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Preparation of the Dutch companies in relation with local projects in 3 counties will be done in week starting September24th, 2012.

PROPOSED COMBINATION OF COUNTIES: 1.(Cluj-Salaj) + 2.Mures + 3.(Sibiu-Alba)

Registration Address: 80 Plantelor St. Sector 2, Bucharest; Postal Address: P.O. Box 34-13, 021412 Sector 2 Bucharest, Reg. Number: J40/1012/1992; VAT number: RO 4824749; Bank ING Bank Bucharest www. bdgroup.ro E-mail: office@bdgind.ro

Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

Cluj-Salaj, event to be located in CLUJ Napoca, the capital of Cluj County The neighbouring counties of Cluj and Salaj have been included as a package in the SOP ENV financing program. In 2008, the Cluj-Salaj ROC became the first water company in Romania to receive financing under SOP ENV (194 mil EUR) for a large-scale water and sewerage project. The lead in the project belongs to Cluj county, which is one of the high-performing counties in Romania, including in the water sector. The deadline for finalizing the project is 2013.

Besides the project implemented by the Cluj-Salaj ROC (Somes Water Company), there is another large-scale water project in the area of Cluj county, also financed through SOP ENV. This is a regional project, focused on the Aries river region, and it covers the cities of Turda and Campia Turzii. The project is implemented by Aries Water Company, and it is valued at 74 mil EUR. The combined value of these 2 projects makes Cluj county one of the largest recipient of EU funding for water infrastructure – 268 mil EUR. Moreover, the Ministry of Environment and Forests will also support investments in a sewer system and wastewater treatment station in Bontida commune, Cluj county, as part of the Integrated Control of Nutrient Pollution Project, funded by World Bank.

Quality of water and early warning systems in Cluj are other possible projects to be developed in Cluj area.

LPAs in Cluj county are very active in the water sector, but there are also opportunities for water projects in the private sector. The county, and especially its residence, Cluj-Napoca, experienced an economic boom between 2004 and 2009, only slowed down to some extent by the onset of the economic crisis. Cluj-Napoca has a long-standing reputation for being an economic leader and power-house in the Transylvania region, and at national level, it is second only to Bucharest in terms of performance.

Cluj county is one of the most dynamic scenes in terms of developing industrial parks and residential parks, and it is the new destination of choice for foreign investors in Western Romania.

Cluj county is having a well established Dutch business community, which will be interested in supporting the future Dutch ventures in their area.

Note: Road Show with Dutch companies will be actively supported by the Business Office of Cluj Town Hall and ( part of the )meetings will be held in Cluj Napoca Town Hall.

Mures The contract for the water and sewerage project in Mures county was signed in April 2011, for a value of 110.8 mil EUR. The recipient of this SOP ENV funding is the Mures county ROC, Aquaserv (headquarters pictured below). Given the late date of signing, public tenders for this projects should be launched soon, and accelerated, a fact also recently emphasized by the Ministry of Environment.

Registration Address: 80 Plantelor St. Sector 2, Bucharest; Postal Address: P.O. Box 34-13, 021412 Sector 2 Bucharest, Reg. Number: J40/1012/1992; VAT number: RO 4824749; Bank ING Bank Bucharest www. bdgroup.ro E-mail: office@bdgind.ro

Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

( Source: BDGroup archive) Located in the very center of Romania, Mures county is well connected to Cluj county, both in terms of transport and economic cooperation. It has also taken the lead from its neighbour in terms of industrial parks. A 50 mil EUR investment was made in the Mures Industrial Park, situated 10 km from the county residence, Targu Mures. The park was inaugurated in 2005, and it is the initiative of the Mures County Council, in collaboration with the Centre Regional Development Agency, which acted as managing authority for the PHARE funding used to develop the park. The park’s proximity to the Targu Mures International Airport, as well as the multiculturalism of Mures county, makes the location very attractive to investors.

In Mures, 2 proeminent Dutch based companies will be interested to participate in meetings with Dutch water companies assisting them in keeping the water quality in their production processes ( Heineken, Friesland Campina).

Also Mures county has a good reputation and opening for the Dutch water programs, as presented in appendix 1 , attached to this paper.

Sibiu-Alba In Sibiu there are 2 water operational companies, one APA CANAL SA located in Sibiu, the other one in Tarnaveni ( APA Tarnave Mari SA). Both companies are developing EU funded projects, ending in 2015 .

German and American companies already presented in the region, proposed some solutions as alternatives to the possible Dutch technologies ( as rural sanitation in small towns, pictured below).

Registration Address: 80 Plantelor St. Sector 2, Bucharest; Postal Address: P.O. Box 34-13, 021412 Sector 2 Bucharest, Reg. Number: J40/1012/1992; VAT number: RO 4824749; Bank ING Bank Bucharest www. bdgroup.ro E-mail: office@bdgind.ro

Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

( Source: BDGroup archive) A 100 mil EUR project was awarded in April 2011 to Sibiu county for expanding and rehabilitating water and wastewater infrastructure in the agglomerations Sibiu-Selimbar, Cisnadie, Rasinari, Mohu, Avrig, Marsa, Ocna Sibiului and Fagaras. Even though Fagaras is actually a town in Brasov county, geographical proximity to the city of Sibiu (Sibiu county residence) makes it eligible for servicing by the Sibiu ROC, Apa-Canal Sibiu. In 2008, Sibiu county also signed a 89 mil EUR contract for the towns of Medias, Agnita and Dumbraveni, which are serviced by the ROC Apa Tarnavei Mari. This means that, in total, Sibiu county has been awarded 189 mil EUR for developing its water infrastructure.

It is not surprising that a relatively small county like Sibiu, with a relatively small city of residence, has received such substantial funding. The county has a reputation for excellent public management, especially the city of Sibiu. The LPAs in Sibiu county are considered among the most efficient and forward-thinking in Romania, and they are constantly working on increasing the attractiveness of the county, as well as its level of development.

An example of this public support and involvement is the number of industrial parks in Sibiu county.

Currently, at national level, Sibiu county is second only to Brasov county in terms of the total surface of industrial parks.

Besides good road and rail connections, Sibiu has an international airport which connects the city to key European cities such as Munich, Stuttgart, Florence, Milano, Rome, etc.

In Alba County, we found a regional operating company and willing subcontractors to meet the Dutch companies. Alba is a central Romania county, finalizing in 2014 a POS1 funded project valued of 90 million Euro. The capital is Alba Iulia, but meetings will take place in Sibiu.

Registration Address: 80 Plantelor St. Sector 2, Bucharest; Postal Address: P.O. Box 34-13, 021412 Sector 2 Bucharest, Reg. Number: J40/1012/1992; VAT number: RO 4824749; Bank ING Bank Bucharest www. bdgroup.ro E-mail: office@bdgind.ro

Business Development Group SRL 16, Vasile Alecsandri St, 010639 Bucharest, Romania Tel/Fax: 0040-21-3179870 0040-21-3179871

Appendix 1: List past water projects in Aquaserv Tg.Mures( including Dutch).

Denumire Program/Proiect

Valoare

Surse de finanţare

Perioada de derulare

Obiective urmărite

Mudp I

6,6 mil. USD

50% - Împrumut BERD, 45% - Buget de stat, 5% - Buget local.

1995-2001

Reabilitarea infrastructurii de apăcanal

Donaţie din partea Guvernului Olandez 26.800 USD – contribuţie proprie AQUASERV

1998-2000

Reducerea emisiilor de CO2 prin reducerea consumului de energie electrică

Programul Olandez apă 1,1 mil. USD potabilă

Programul Olandez Ape Uzate

1 mil. USD

Donaţie din partea Guvernului Olandez 44.750 USD – contribuţie proprie AQUASERV

1998-2000

Reducerea emisiilor de CO2 prin reducerea consumului de energie electrică

EcoLinks

49.456 USD

Donaţie USAID

2000-2001

Reducerea pierderilor de apă

ISPA

27,9 mil. Euro

20,9 mil. $ - finanţare nerambursabilă din partea Uniunii Europene, 7 mil. $ - credit BERD

2000-2006

Aducerea infrastructurii de apă-canal la nivelul cerinţelor UE

Ciocârlia

50.000 NLG

30.000 NLG – finanţare nerambursabilă acordată de Comisia Matra a Ministerului Afacerilor Externe din Olanda 20.000 NLG – contribuţie proprie AQUASERV

1998-2001

Schimbarea pozitivă a mentalităţii privind gospodărirea resurselor şi construirea unor căi de comunicare între diferiţii reprezentanţi ai societăţii civile

finanţare nerambursabilă acordată în cadrul programului PROGRES derulat de PHARE

Martie 2001

Instruirea personalului din administraţia locală şi gospodărie comunală

Dezvoltarea 64.645 Euro competenţelor şi abilităţilor profesionale în administraţia publică locală

Registration Address: 80 Plantelor St. Sector 2, Bucharest; Postal Address: P.O. Box 34-13, 021412 Sector 2 Bucharest, Reg. Number: J40/1012/1992; VAT number: RO 4824749; Bank ING Bank Bucharest www. bdgroup.ro E-mail: office@bdgind.ro