Understanding between Romania and Netherlands Regarding the Achievement of Joint Implementation Activities Targoviste Cogeneration and District Heating Municipal Project April, 2002 Targoviste Cogeneration and District Heating Municipal Project April, 2002

The City Of Targoviste Background The town was first mentioned by the bavarian crusader Johann Schiltberger in Between it used to be the capital of Romanian Country starting with Vlad the Impaler reign. - Until 1600 when Michael the Brave succeeded in achieving the first Union of the Romanian principalities, Targoviste remains the capital of Romanian Country. -Today,Targoviste is the capital of Dambovita County inhabitants - Industrial potential- sheets and rolled goods of rustproof steel -special steels -light source facilities -laquers and dyes -lathes of different types ; oil-extracting equipement

Dutch – Romanian Joint Implementation Activities On December 11,1997, Romania and The Netherlands signed The Kyoto Protocol regarding the reduction of emissions that are generating climate changes, especially the CO 2 emissions. On December 11,1997, Romania and The Netherlands signed The Kyoto Protocol regarding the reduction of emissions that are generating climate changes, especially the CO 2 emissions. The Romanian Government ratified the Kyoto Protocol on February ( Law No. 3 dated February,2001). The Romanian Government ratified the Kyoto Protocol on February ( Law No. 3 dated February,2001). The Kyoto Protocol is stimulating the realization of Joint Implementations Projects in order to reduce the CO 2 emissions whereby the investment result is the biggest one. The Kyoto Protocol is stimulating the realization of Joint Implementations Projects in order to reduce the CO 2 emissions whereby the investment result is the biggest one.

Dutch – Romanian Joint Implementation Activities Dutch – Romanian Joint Implementation Activities In 1999, Romania, Bulgaria and Slovakia signed with The Netherlands a Memorandum of Understanding related to the realization of J.I. Projects through crediting and transferring the obtained CO2 emissions reduction to the Netherlands Government, reductions obtained between the years 2008 and In 1999, Romania, Bulgaria and Slovakia signed with The Netherlands a Memorandum of Understanding related to the realization of J.I. Projects through crediting and transferring the obtained CO2 emissions reduction to the Netherlands Government, reductions obtained between the years 2008 and 2012.

CO 2 emission reduction crediting and transfer COMENOR ERUs Emission Reduction Claims on ERUs E RU- PT Public Procurement ERUs= Emission Reduction Units

Why J.I. Projects Mton CO2 TWh Fossil Fuel Generation and related Carbon Dioxide Emissions 2 00,511,5 NL RO kg CO 2 /kWh

Joint Implementation Projects Contracts & Agreements RO. Government IFC Agreement of Cooperation CL, TERMICA, NUON NL- Government NCC S.C. Comenor Târgovişte S.R.L. Memorandum of Understanding Engineering, Procurement & Contracting (EPC) Intretinere si Exploatare (O&M) PPA, HSA & GSA

Romanian Benefits Mitigation of Heat supply deficit in Targoviste City Mitigation of Heat supply deficit in Targoviste City Encouragement of other foreign investments in the municipality infrastructure Encouragement of other foreign investments in the municipality infrastructure Improved air quality Improved air quality Decrease of CO 2 emissions Decrease of CO 2 emissions Complying with UE environmental standards Complying with UE environmental standards

Romanian Benefits Utilization of the latest technology Utilization of the latest technology Reducing fuel consumption,discharging the balance sheet. Reducing fuel consumption,discharging the balance sheet. Creating new skilled jobs in The City of Targoviste Creating new skilled jobs in The City of Targoviste Economic benefits: energy power cheaper than the alternative. Economic benefits: energy power cheaper than the alternative.

J.I. Cogeneration Projects History 1997: Preliminary Analysis: 11 projects (Sep) 1997: Preliminary Analysis: 11 projects (Sep) 1998: In depth evaluation: 5 projects (NCC) 1998: In depth evaluation: 5 projects (NCC) : Final Analysis: 2 projects : Final Analysis: 2 projects (Cluj-Napoca and Târgovişte) In cooperation with IFC (World Bank) In cooperation with IFC (World Bank)  Financing analysis : ING Barings  Total costs: around € 40 millions (Cluj-Napoca) around € 40 millions (Târgovişte) around € 40 millions (Târgovişte)

J.I. Cogeneration Projects History Documentation submmited to SENTER by NUON and Termica in order to participate to the ERU-PT Tender Documentation submmited to SENTER by NUON and Termica in order to participate to the ERU-PT Tender Octomber 2000: The project was selected to participate for the ERU-PT Tender Octomber 2000: The project was selected to participate for the ERU-PT Tender February 15th, 2001: The final proposal to SENTER February 15th, 2001: The final proposal to SENTER April 2001:The Minister of Economic Affairs of Netherlands agrred to award the offer with a contract concerning the generation and delivery of claims on ERUs at a price of EUR9 / ERU for a total contract value of EUR only after the following compulsory elements will be achieved: April 2001:The Minister of Economic Affairs of Netherlands agrred to award the offer with a contract concerning the generation and delivery of claims on ERUs at a price of EUR9 / ERU for a total contract value of EUR only after the following compulsory elements will be achieved:

J.I. Cogeneration Projects History A copy of the deed of foundation of the project company, including a specification of the shareholders and their share in the project company A copy of the deed of foundation of the project company, including a specification of the shareholders and their share in the project company A copy of the concession agreement in which the transfer of ERUs from the project company to NUON Warmte NV is specified A copy of the concession agreement in which the transfer of ERUs from the project company to NUON Warmte NV is specified A proof of financial arrangements A proof of financial arrangements A proof of credit and participation arrangements and a proof of insurance A proof of credit and participation arrangements and a proof of insurance

J.I. Cogeneration Projects History A copy of The Environmental Impact Study A copy of The Environmental Impact Study A copy of a letter issued by the appropriate Romanian governmental institution which contains the conformation that the hardware to be delivered in the framework of this project is free of import duties A copy of a letter issued by the appropriate Romanian governmental institution which contains the conformation that the hardware to be delivered in the framework of this project is free of import duties A full guarantee by NV NUON on the delivery of Claims on ERUs and the fulfillment of financial obligations in case of non delivery A full guarantee by NV NUON on the delivery of Claims on ERUs and the fulfillment of financial obligations in case of non delivery

Targoviste Project Description Targoviste Project Description Installed capacity: 26.4 MWe / 32.8 MWth Installed capacity: 26.4 MWe / 32.8 MWth Heat gaz engines ( total net efficiency 88%:  e =39% şi  th =49%) Heat gaz engines ( total net efficiency 88%:  e =39% şi  th =49%) Total Costs : 37 millions € Total Costs : 37 millions € The annual total energy power output: 147,127 MWh The annual total energy power output: 147,127 MWh The total heat energy output: 224,145 Gcal (70% by cogeneration and 30% by Heat Only Boilers) The total heat energy output: 224,145 Gcal (70% by cogeneration and 30% by Heat Only Boilers)

Urgently Steps to Follow Obtaining notice from The National Regulatory Agency (ANRE) regarding the heat and power energy tariff. Obtaining notice from The National Regulatory Agency (ANRE) regarding the heat and power energy tariff. Finalizing the negotiations with S.C. Electrica S.A. Finalizing the negotiations with S.C. Electrica S.A. The foundation of The Project Company (PC) The foundation of The Project Company (PC) PC signs the PPA with Electrica S.A., S.D. Târgovişte PC signs the PPA with Electrica S.A., S.D. Târgovişte PC negotiates and signs : PC negotiates and signs : The contract for gas supply The contract for gas supply

Next Steps Carry out the detailed design of the project Carry out the detailed design of the project The final negotiation of financing The final negotiation of financing The final decision to realise the project The final decision to realise the project To sign the Financing Agreement To sign the Financing Agreement To sign the contract for the project implementation To sign the contract for the project implementation Start date of works: 2003 Start date of works: 2003 End date of works: 2004 End date of works: 2004 Operating date : June 2004 Operating date : June 2004