March, 2007 Slide no. 1 HVDC Link Romania – Turkey Short presentation George VISAN Director, Investment Projects Management Direction

March, 2007 Slide no. 2 Pasakoy A major and complex project to be considered and developed

March, 2007 Slide no. 3 Where we are now ? Scope of MOU -1 between Transelectrica and TEIAS for the elaboration of the system study is achieved; System study was analysed and finished by signing the Joint Position Paper of 26 december 2006 ; What to do next ?

March, 2007 Slide no. 4 Opportunity ( system ) study Preliminary Joint Position Paper Project Implementation Feasibility StudyBusiness Study Final Joint Position paper ( corporate level ) Project Approvals Project International Agreement between Romania and Turkey MOU -2 Political Joint Statement MOU - 1 Simplified Roadmap

March, 2007 Slide no. 5 Roadmap – major phases and milestones Phase 1 – elaboration of the system study ( opportunity study ) –Corporate Level : Transelectrica and TEIAS –Cooperation instrument : MOU 1 –Delivrable : Opportunity study – April 2006 –Validation : Preliminary Joint Position Paper ( P-JPP ) to be included in MOU 2 Phase 2 – elaboration of the feasibility study and business study –Corporate Level : Transelectrica and TEIAS –Cooperation instrument : MOU 2 –Delivrables : Feasibility study Business study –Validation : Final Joint Position Paper ( F-JPP ) Corporate approval of the business study and the feasibility study

March, 2007 Slide no. 6 Phase 3 – Preparing implementation –Project organization ( project company ) –Financing structure –Project implementation plan Phase 4 – Project Approvals –Approval of the feasibility study in Romania (by Governmental Decision) –Approval of the feasibility study in Turkey –International agreement between Romania and Turkey Phase 5 – Implementation –Transelectrica –TEIAS binding agreement to jointly build the HVDC link Phase 6 – Preparing technical and comercial operation of the HVDC link Roadmap – major phases and milestones

March, 2007 Slide no. 7 Preparing Phase 2 Transelectrica’s proposal : –To meet in May TEIAS for negotiating MOU -2 for the Feasibility study and the Business study; –Preliminary JPP to be included in MOU -2; –Draft MOU-2 to be prepared by Transelectrica and send in advance to TEIAS

March, 2007 Slide no. 8 Feasibility study -1 Structure of the feasibility study : –Part 1 – HVDC link – Conection to the Romanian Transmission grid –Part 2 – HVDC link – Conection to the Turkish Transmission grid –Part 3 – HVDC link – Undersea cable TOR : –To be written; –To include prefeasibility needs –Needed technical assistance for TOR –Transelectrica intends to use : the expertise of Fichtner ( available in Romania and with previous expertise in similar projects ) To cooperate with sister TSO companies having direct experience in such HVDC projects ( ex : Statnett /Norway ); –TEIAS position : TBD ( to be defined )

March, 2007 Slide no. 9 Feasibility Study - 2 Financing engineering services for the feasibility study : –Financing scenarios : Without grant ( 100 % financing by Transelectrica and TEIAS with 50/50 % split for part 3 ) : –Advantage : supply independence of the engineering company; –Superior bankability for the project financing; With grant for part 3/undersea cable : –Advantage : reducing financing effort –If grand to be taken, from where and when ? Recommended scenario : without grant (100% corporate financing ); Contracting engineering services : –Contracting procedure in accordance with legislation and type of financing; –To involve as much as possible local expertise –Romania : Fichtner and ISPE

March, 2007 Slide no. 10 Business study Extremely important and sensitive; TOR to be written; –Consultancy partialy needed To be done in parallel with the feasibility study; Contracting : with international technical assistance Financing : proposal - jointly by Transelectrica and TEIAS ( 50/50% split ) To explore and facilitate involvement of private investors from Turkey and Romania in order to : –Increase the commercial use of the HVDC link –Reduce the cost of financing;

March, 2007 Slide no. 11 Business study – main chapters in TOR Marketing analysis –Clients ( for transmission services ); –Volumes and periods –Contracts and prices; Regulatory analysis –Requirements of the national authorities; Acceptance in the RAB ( regulated asset base ); –EU requirements, including UCTE, ETSO Definition of the business model Definition of the ownership model –Ownership structure; private investors; Definition of the business plan –Compatibility cross-checkings –Sensitivity analysis