Feasibility Study

Public-private Partnership establishment for the

development of biomass-based heat supply service to
LEOVA district public buildings

Chisinau 2013
 Studiul de Fezabilitate

THE TITLE OF THE INVESTMENT:

” Public-private Partnership establishment for the development of biomass-based
heat supply service to LEOVA district public buildings”

BENEFICIARY:
Leova District Council

Implementator:
I.M. AVENSA Consulting S.R.L.
www.avensa.ro
angela.cascaval@avensa.ro

Experts team:

manager, business development expert, PPP – Cascaval Angela

design engineer in heating, ventilation, conditioning, audit in energetics - Bajura
Larisa
design engineer - Carabinovici Olesea
finance expert, cost-benefit analysis expert - Basceaus Oana
business development finance consultant - Golban Ana
lawyer – Iordanca- Rodica Iordanov

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CONTENT
I General data: ......................................................................................................................................7
1) Goal and objectives of the Feasibility Study (FS).....................................................................7
2) Public partner-related data ........................................................................................................7
3) Legal person-related data who elaborates the Feasibility Study .............................................11
II Description of general framework of Public-Private Partnership Project implementation : .........12
1) Title of the Public-Private Partnership (PPP) Project .............................................................12
2) Brief presentation on the existing state with elucidation of major defficiencies of current
situation resulting in need for the investment including when required the tables, graphical maps,
charts, drawings, pictures, etc, explaining the current state and need for the investment. ..........12
3) Opportunity for Public-Private Partnership Project promotion with technical and economic
substantiation that demonstrates the need and opportunity for Public-Private Partnership Project
22
4) Framing the objective in the medium- and short-term general, sectoral or regional policies. 25
5) Public-Private Partnership (PPP) Project beneficiaries ...........................................................27
6) The normative framework which regulates the field .............................................................28
III The main features of the Public-Private Partnership (PPP) Project: .............................................29
1) Public-Private Partnership (PPP) objectives ...........................................................................29
2) Outcomes achieved through Public-Private Partnership (PPP) Project implementation. ......29
3) Technical and economic scenarios for achieving Public-Private Partnership (PPP) Project
objectives (variants) .......................................................................................................................30
3.1. Formulation and description of 3 scenarios of the investment implementation ..............30
3.2. Description and argunentation through multi-criteria analysis of the selected technical
solution. ......................................................................................................................................35
4. Data on land on wich will be placed the object, the legal status of the land, modalitz /
contract form to be submitted private partner estimated area of land ............................................39
5. Dimensioning of the required infrastructure to be constructed via the Project area
infrastructurii necesare a fi construite prin proiect .........................................................................40
6.1. Proposed technological flow ............................................................................................41
6.2. Development of technical specifications of the equipment and machinery to be procured
43
6.3. Elaboration of the organigram and project operation plan ..............................................43
6. Technical description of the selected solution ........................................................................44
7. Cost estimate of each item and component from Public-Private Partnership Project frame
Estimarea de costuri pentru fiecare element şi componentă din cadrul proiectului de PPP ..........44
8. Public-Private Partnership (PPP) Project implementation plan (Activities to be implemented
with time frame) .............................................................................................................................44
9. The schedule of investment corroboration in time ..................................................................44
10. Form and manner of the Public-Private Partnership implementation .....................................45
10.1. Description of the contract performance form, including justification of the Public-
Private Partnership term and the conditions of the conclusion of the contract. .........................45
1. Contractual forms of the Public-Private Partnership implementation ....................................47
2. The implementation manner of the Public-Private Partnership contract. ...............................49
3. Partners involvement manner, benefits and risks sharing .......................................................51
4. Possible organisational and legal forms and steps to be taken ................................................53
5. Possible financing forms and Public-Private Partnership (PPP) contract duration ................55
10.2. Description of the performance of the contract, including justification of the Public-
Private Partnership Project term and conditions of the conclusion of the contract....................56
11. Description of the services/products provided under partnership framework (quantification,
pricing) ...........................................................................................................................................57
IV. Identifying and analyzing risk-sharing options for their management capacity (matrix) ............58
a. Political risk.............................................................................................................................58

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 Studiul de Fezabilitate

b. Legislative risk ........................................................................................................................59

c. Financial and economic risk....................................................................................................60
d. Risk of execution Riscul de executare ....................................................................................61
e. Environment risk etc. ..............................................................................................................62
Allocation of risks ..........................................................................................................................63
V. Factors that ensures sustainability of PPP project: ........................................................................64
1. The main technical and economic indicators of investment (total investment value,
investment scheduling, and investment identification and objectives definition, including
specification of the reference period); ............................................................................................64
2. Sources of investment financing (own funds, bank loans, budget funds for state / local
budget, foreign loans contracted or guaranteed by the State; nonreimbursable external funds,
other legally constituted sources); ..................................................................................................93
3. Financial analysis, including calculation of financial performance indicators: internal rate of
return net discounted value and cost-benefit report. ......................................................................97
4. Risk adjustment of financial performance indicators: internal rate of return and cost-benefit
report ............................................................................................................................................102
5. The sensitivity analysis of the project ......................................................................................103
6. Estimates of the employed force by creating public-private partnership project .................104
7. Environmental impacts and mitigation solutions including its costs. ...................................104
VI General conclusions in terms of Public-Private Partnership implementation alternatives in
biomass-based pelleting in Leova district. .......................................................................................106
II. Technical drawings ......................................................................................................................107
VIII. Annexes ...................................................................................................................................107

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ABBREVIATIONS

MEBP – Moldova Energy and Biomass Project

FS – Feasibility Study
SR – South Region
PPP – Public-Private Partership
DC – District Council
EE – Economic Entity
EO – Economic operators
PI – Public institutions
PA – Public acquisitions
TS – Boiler plant
TA – Thermal Agent
NG – Natural gas
Gcal – gigacalories

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NOTIONS

Feasibility Study (FS)-the analysis of the viability of public-private partnership project containing
main characteristics of the public-private partnership objective basing on the technical, economic
and financial analysis of the planned investment;
Boiler plant –an installation or a group of installations for producing thermal energy;
Biomasa – biodegradable fraction of products, waste or residues from agriculture (including vegetal
and animal substances), forestry and related industries, as well as the biodegradable fraction of
industrial and food waste. (the defenition is insluded in European Directive 2003/30/E);
Public-Private Partnership (PPP)-a long-term contact concluded between public and private
sector to carry out public-related activities, founded on the capacities of each partner in sharing
accordingly resources, risks and benifits;
Public-private partnership project dossier- a set of documents related to public-private
partnership project starting from the initiation phase and within the project implementation phase;
Public partner-a public legal person or an association of legal persons who establishes public-
private partnership relation;
Private partner-a private legal person or a natural person and/or an association of such persons,
who become, under legal terms, a partner within public-private partnership;
Public-private partnership project-a group of activities implemented wholly or partially with
own or donor financial resources, based on the public-private partnership and resulting in public
property or services of national or local interest.
Public-private partnership subject-state-run property or the property belonging to administrative-
territorial unit, including the property of autonomous territorial unit of Gagauzia, public works and
services of local and national interest for public-private partnership;
Press release-an offical document published by the public partner in terms of initiation of
implementation of public-private partnership project in conformity with provisions of „Regulations
on standard procedures and general conditions for selecting a private partner”) approved by
Government Decree nr.476 of July 04, 2012)

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I General data:
1) Goal and objectives of the Feasibility Study (FS)

The Feasibility Study aims to idetify and analyse the investment opportunities in the establishment
of public-private partnership to provide the thermal energy to the public institutions from
Leova district with biomass-based Boiler plants including biomass pelleting.

The Feasibility Study analyses all available information to see if „component parts” can function in
such a way as to yeild a viable concept from both technical and economic point of view.

The Feasibility Study objectives are as follows:

substantiation the need for insvestment;
identification of possible forms of partnership creation;
identification of possible legal forms of the project implementation;
demonstration of the project financial durability;
presenting of main investment technical characteristics;
presenting the main investment economic characteristics which provide rational and
efficient use of the capital and the material expenses in a mode that meets the economic and
social requirements;
estimating the investment project implementation costs via Indicative Estimate ????/

2) Public partner-related data

Public Partner is represented by the Local Public Administration of Leova district –Leova
District Council situated in the South Region of the Republic of Moldova.

South Region
General description-embraces 8 districts- Basarabeasca, Cahul, Cantemir, Causeni, Cimislia,
Leova, Stefan-Voda, Taraclia, occupying 24% from the territory of the Republic of Moldova,
As compared to other regions of the country, the South Region has the lowest industrialisation
grade. The earth is one of the main natural resources, the farmland constitues 74% from all total
areas. The Region annually provides within 40-50% from the national production of grapes, circa
30.3 % of cereal production, 15-20% of sunflower production.

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Proportion of the population constitues 15%

from the total population of the Republic of
Moldova. The natural increase in the Region
shows moderate level of decline being the
lowest compared to other regions of the
country. The density of the population is on
average 75 persons/ km2, the lowest density
compated to other regions.

Development of infrastructure
The South Region has a developed network and
extended and divercified range of roads and
access roads of intra and interregional type. The
total length of public roads in South Region is
22.3 % from the total length of the country.
There are roads in the Region linking all urban
centres.
Share of public utility infrastructure in the
South Region is below the national average. In
general, cities have greater extent of public
utility infrastructure compared to the rural
localities. The differences are explained at the Fig. 1 The map of the Republic of
level of water supply, sewerage, roads, natural Moldova delimitating the South Region
gas, etc.
Gas supply network in the region is expanding every year, but compared to the national rate, the
regional indices are low. In 2005 the share of gasified residential houses was 34.22%. The highest
level was recorded in Taraclia (84.2%), and the lowest level was recorded in Leova district
(2.8%)

Leova district is situated in the South-West of the

Republic of Moldova, at a distance of 100 km from
the capital city of the country, Chisinau city. It is
neighbouting with: Hincesti district in the North,
Cimislia district and administrative-territorial unit
Gagauzia in the East, Cantemir district in the South,
Romania (Vaslui county) in the West.
Total Area of the district is 76.5 thousand ha,
including:
Arable farmland - 37,1 thousand ha;
Forests - 10,1 thousand ha;
Pastures - 13,6 thousand ha;
Area under water - 1,6 thousand ha.
Agricultural sector has a significanr proportion in the

Fig. 2 map of Leova district 8

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district economy. Thus, the following companies activate: 7 agricultural production cooperatives,
25 companies with limited liabilities, 4 joint-stock companies, 5 joint-ventues, over 1000
agricultural farms.

There are 39 localities in the district including 2 towns: Leova and Iargara, 23 communes and 14
villages. [ 1]
District population within the last three years is presented in the table below: [ 2]
Table 2.1. Stable population of Leova district, thousands of inhabitants:
Year
2011 2012 2013
Leova district 53,8 53,6 53,3
Urban area 15,7 15,6 15,5
Rural area 38,1 38,0 37,8

Thus, according to the aforestated table out of the total population of Leova district in 2013 the
urban population is 29,08 %, rural population -70,92%. This suggests that the district population is
mostly rural.
Also, the table shows the trend of depopulation of the country, a phenomenon that involves many
adverse consequences.

Infrastruture development
In Leova district the towns have public utilities infrastructure- water supply, sewerage, roads,
natural gas, etc –a higher degree compared to the rural localities.
The situation in the region in „providing heat from renewable resources”has improved in recent
years. Thus, due to the financial support of the Project EU-UNDP „Moldova Biomasss and Energy
Project ”currently in Moldova 5 biomass-based Boiler plants (straw, briquettes, pellets) were
installed in the public institutions from the following localities: Tomaiul Nou, Seliste, Cazangic,
Sarata Noua.

Tomaiul Nou village s a locality situated at the latitude 46.6227m, longitude 28.5527m and altitude
120 m over the sea level. This locality is administrated by Leova town. According to 2004 census
the population is 419 inhabitants. Direct distance from Chisinau city is 51 km.

Seliste village is situated at the latitude 46.5263m, the longitude 28.4313m and altitude 44m over
the sea level. This locality is administrated by Cazangic village. According to 2004 census the
population is 298 inhabitants. Direct distance from Leova town is 20 km. Direct ditance from
Chisinau city is 67 km.

1
sursa: http://www.primaria.md/p/125
2
sursa: http://www.statistica.md
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 Studiul de Fezabilitate

Cazangic village is situated at the latitude 46.5094, longitude 28.4366 and altitude 51 m over the
sea level. This locality is administrated by Leova town. According to 2004 census the population is
961 inhabitants. Direct distance from Leova town os 20 km. Direct distance from Chisinau city is
68 km.

Sarata Noua village is situated at the latitude 46.4908, longitude 28.3899 and 49 m over the sea
level. The locality is administrated by Leova town. According to 2004 census the population is 1
476 inhabitants. Direct distance from Leova town is 15 km. Direct distance from Chisinau city is 73
km.

In conclusion:
Leova district is characterised by:
the lowest ratio of localities connected to natural gas network from the South Region
over 60% of district total area is occupied by farmland (48%) and forests (13%) what
confirms the opportunity of biomass utilisation.

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3) Legal person-related data who elaborates the Feasibility Study

The present Feasibility Study is developed with the financial support of UNDP via the Moldova
Energy and Biomass Project

The Designer of the Feasibility Study is:

Joint venture AVENSA CONSULTING CLL

26, Barbu Lautaru street, Ungheni town, MD 3600, Ungheni district.
Joint Venture AVENSA CONSULTING CLL.,
72/3, Columna steet, Chisinau city
tel/fax: 00373 23623742 and 00373 23620176, tel-fax: 00373 22 545711,
fiscal code 1006609001454
www.avensa.ro

Experts team:
Cascaval Angela- manager, business development expert, Public-Private Partnership.
Bajura Larisa- design engineer of heating, ventilation, conditioning systems, an audit in
energetics.
Carabinovici Olesea- design engineer
Basceaus Oana- finance expert, cost-benefit analysis expert.
Golban Ana- financial consultant, business development.
Iordanca- Rodica Iordanov - a lawyer

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II Description of general framework of Public-Private Partnership

Project implementation :

1) Title of the Public-Private Partnership (PPP) Project

The theme of the Public-Private Partnership Project:

Public-private Partnership establishment for the development of biomass-based heat supply service
to LEOVA district public buildings

2) Brief presentation on the existing state with elucidation of major

defficiencies of current situation resulting in need for the investment
including when required the tables, graphical maps, charts, drawings,
pictures, etc, explaining the current state and need for the investment.

National level

Assuming that Republic of Moldova has no its own energy resources-import covers 98% 3 of the
required energy, as well as the Republic of Moldova is a largely an agrarian country, we can
conclude that it can provide a part of the energy resources from its own sources using agricultural
waste and biomass available.

As a result, the development of the alternative energy resources (AER) continues to be a very
burning issue. This problem solution firstly neccesitates large volumes of biomass- industrial-scale
renewable energy, processing of which permits obtaining required quantities of biofuel.

Therefore, development of safe alternative energy sources creation (AES) was and remains very
actual, and problem solution requires, first of all, search for the volumes of biomass –renewable
energy on industrial scale processing of which permits to obtain the required quantity of biofuel.

A significant contribution to the development of the above sector is done by the UNDP Moldova
Energy and Biomass Project, launched in 2011, which „aims help in creating secure, competetive
and durable energy production system from renewable sources, in particular, from agricultural
waste-based biomass”. Also, it assumes the role „to increase the energy consumption from
renewable sources mainly in public institutions and households from rural communities”.

As main outcomes to be achieved , the Moldova Energy and Biomass Project aims:
• Installation of 130 biomass-based heating systems in the public institutions of the rural
communitites;

3
Source: ”ENERGY STRATEGYof the Republic of Moldova up to 2030”
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• Active involvement of local agrarian entrepreneurs in the production, store and delivery to
beneficiary of biomass-based fuel.
Up to date very good indicators for the abovementioned outcome had been achieved. Thus, about
120 fuel-burning Boiler plants [ 4] from renewable resources were installed in the pre-school and
secondary institutions in all regions of the Republic of Moldova with the financial support of the
Moldova Energy and Biomass Project ”-the number of the Boiler plants (TS) with regional
breakdown is given in the figure stated below. The above indicator represents the ratio of 92% of
the total proposed as the outcome of the project.

Fig. 2.1. The number of the Boiler plants installed in the Republic of Moldova by regions [6(2)]

According to the technical parameters of the Boiler plants (TS), the requirements are stipulated as
far as the fuel quality used is concerned. But up to present the beneficiaries of the biomass-based
Boiler plants encounter many difficulties in their operation:
Among the main bottleneck issues provided by the biomass-based Boiler plants beneficiaries
(including those from Leova district) are as follows:
 lack of reliable information in terms of biofuel quality acquired-it is due to the fact that the
quality standards were recently approved for the pellet production sector which is on the
incipient phase. Also, the reliable information can not be obtained because of lack of the
laboratory for performing analysis required for fuel quality confirmation.
 poor knowledge and competences of the staff in proper management of the thermal
systems resulting in trouble operation of the Boiler plants.
 bottleneck issues in the storage of fuel (security, record keeping) -needs increased staff
 problems with providing sufficient quantities required throughout the total heating period
of the year-even if the annual purchase contracts are signed. There will be the risk for the
economic entity not to have the contracted quantity for the delivery schedule, and the
beneficiaries have no large storage facilities rooms to meet the storage conditions
requirements.
Biomass-based existing Boiler plants are provided with required fuel purchased from the local
producers.
The pellets production domain is in the sporadic development process. The branch is characterised
by the lack of homogeneity as far as the producers’ technologies, geographical breakdown and
biomass used in the production process are concerned. Also, there is no clear and reliable
information regarding the final product quality-pellets/briquettes. It is due to the fact that in the
Republic of Moldova the legislative and normative acts of biomass-based fuel production are on the

4
source: http://www.biomasa.aee.md/img/docs/mebp_proiecte-de-incalzire_10-06-13_ro.pdf
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development stage, and therefore it is difficult to assess the final product quality. Moreover, if the
producers choose to sell their product within the country, they are not obliged to demonstrate the
product quality and the type of raw material (biomass used). The survey conducted shows that
majority of the producers are aware of the importance of the product quality and create the
improvised laboratories to test the products. Also, the local producers provide the samples for the
international clients who require quality confirmation and express their opinion on them[ 5].
The production of biofuel (pellets/briquettes) in the Republic Moldova according to Moldova
Energy and Biomass Project data is performed by approximately 77 producers as shows the table
below.

Table 2.1. List of producers by regions [ 6]

Localitaty Num Type of fuel Raw
ber Briquette pellet material
of t/year t/year A map of the region
prod
ucers
North
Sîngerei 3 2000 (x2); straw
250-300 n/a
kg/h
Falesti 1 straw, shell
4500 n/a of
sunflower
Otaci 1 energy
n/a 2000
crops
Glodeni 1 2000 n/a straw
Drochia 3 2000 – straw;
500
4500 sunflower;
Floresti 2 4500 n/a straw
Rîscani 3 100 kg/h- wood waste
n/a
4t/24h straw
Balti 4 shell of
40
24 kg/h - sunflower;
t/day
1,5 t/h straw; wood
1500
waste
Edinet 1 800
n/a straw
kg/h
Donduseni 1
Soroca 2 120 8 t/h straw, wood
waste
Briceni 1 2000 n/a wood waste
Ocnita 2 5000 11000 different
Center
Chisinau 11 10-20 500 different
t/day kg/h –
120 - 1000
5000 t/year
5
Sursa: Studiu de piaţă privind soluţiile accesibile de încălzire pe bază de biomasă a gospodăriilor din mediul rural”
6
Sursa : 1 - ”Studiu de piaţă privind soluţiile accesibile de încălzire pe bază de biomasă a gospodăriilor”, Chișinău 2012
2 - http://biomasa.aee.md/map-map-2/
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Dubasari 2 straw, shell

250 kg/h - of
n/a
1800 sunflower,
wood waste
Straseni 3 straw, shell
1250
of
1200 500
sunflower,
kg/h
wood waste
Orhei 2 Field (wild)
600 kg/h -
n/a crops, wood
4000
waste
Hancesti 4 500 Wood,
1000 (x2)
kg/h- agro-waste
Telenesti 2 500kg/h 400- straw, agro-
500kg waste
/h
Calarasi 2 150 kg/h n/a wood
1000
Criuleni 2 Wood
4500 waste, shell
n/a 300 of
kg/h sunflower,
straw
Soldanesti 2 200 kg/h - Wood
1500 waste,
3000
straw,
others
Causeni 1 straw , agro-
500 n/a
waste
Rezina 3 300
200-300 Wood
kg/h-
kg/h - 600 waste, straw
1200
Ialoveni 2 2,5
t/day
- Wood waste
1000
1500
Ungheni 1 500,
- straw
300kg/h
Bender 1 750-800 1000 Wood waste
kg/h kg/h
South
straw, agro-
Leova 2 500 kg/h n/a
waste
Stefan Voda 2 4500 (x2) n/a straw
1000 (x2)
straw, vine
- 5000 –
Cahul 4 1000 and wood
6400
waste
(18t/day)
Field(wild)
Cimislia 2 1000 (x2) 1000 crops,
wood,
Shell of
160 -300
Comrat 3 n/a sunflower,
(x2) kg/h
wood waste
Taraclia 1 300 - straw
Ceadar 1 2000 Shell of
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Lunga sunflower

The table shows that:

▪ in the South Region of the country only 2 producers of pellets of small capacities operate,
1000 t/year, they are located in Cahul and Cimislia districts. 12 producers make briquettes
with annual capacity of 28 000 t/year.
▪ in the Center Region 16 producers of pellets out of 37 producers produce 15 000 t/year of
pellets, and 22 economic entities produce circa 25 000 t/year of briquettes.
▪ in the North region of the country 22 producers of biofuel produce circa 32 000 t of
briquettes and 17 000 t of pellets annually.
Therefore, the conclusions based on the table 2.1 show that the South Region of the Republic of
Moldova is the most vulnerable in terms of biomass-based fuel production capacity and it requires
more attention than other regions.

Running the profitable business in biofuel production field is possible (based on the local producers
experience) when a company owns raw material and the investments in the technological
equipment are minimal. Concurrently, it is impossible to hold the technological process of the
pellets in strict correspondence with the rules of the environment protection and the final product
quality requirements. Thus, the investments grow by circa 50% (as compared with the minimum
investments the recovery of which require higher production volumes) for state-of-the-art
technologies and modern equipment at both production stage and preparation of biomass-based raw
material. For this reason, the development of the profitable business based on the procurement of
raw material and in compliance with the final product quality requirements is only possible at an
average investment /production capacities.
For this reason, at the market of the pellets of the Republic of Moldova which is at the initial stage,
mostly agricultural producers with own bimomass activate, but not based on their purchase. Their
involvement in the development of appropriate field will lead to secure access to quality biomass-
based fuel (briquettes, pellets, packs).

Regional level

The situation of the production of the pellets/briquettes –based fuel in the South Region of the
Republic of Moldova according to the information provided above is the most unfavourable
compared to other regions of the country.Thus, out of all producers of briquettes and pellets from
the Republic of Moldova, only 17% activate in the South. The list of producers for the region is
given in the table 2.2. and it was the basis of the information submitted by Moldova Energy and
Biomass Project.

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Therefore, the investments in the production of biofuel will contribute to secure of fuel supply
depending on demand and to the improvement in pellets/briquettes quality production by creating
the market competitiveness.

Table 2.2. List of producers of briquettes and pellets in the South Region of the Republic of
Moldova [1]
Type of fuel Country
produced of origin Average
Raw of prices of
Nr Name of a Briquett Pellets, material equipme fuel,
. company Locality es, t/year t/year used nt MDL/ton
1. “AgroBioBric Festelita, 4500 n/a straw CIS 1200
het” LLC Stefan Voda
„Fratii Leova 500 kg/h n/a straw, agri- - -
2. Chirica” LLC waste
„Promo Antonesti, 4500 n/a Field (wild) CIS 1200
Concept” Stefan Voda cultures
3. LLC
4. Agrosud- v. Bucuria, Czech
service LLC Cahul 5000 n/a straw Republic TBD
AgroAndor Straw
5. LLC Cimislia 1000 1000 cultures Poland 1200/1500
TransOil Ceadîr Shell of
6. Refinery Lunga - 2000 sunflower TBD TBD
7. Burlaceni,
Grupo Boieru Cahul 1000 1000 Straw, wood TBD TBD
Straw, agri-
waste

8. Egrejius Leova TBD TBD Ukraine 1800

Shell of
sunflower, Moldova
9. Individual* Comrat 160 kg/h n/a wood-waste (Balti) 1600

10. Cucoara,
„Master Elit” Cahul 1000 n/a straw Ukraine TBD
11. ”Azur-Com”
LLC Taraclia 300 - Straw Germany 1500
V.Cazangic
ul de Sus,
district
12. ”ROLVIO- Comrat,
GRUP” UTAG 300kg/h - straw Ukraine 2100-2200
v. Ctslita-
Prut, distr.
”Olmar Cost Cahul,
Company” extravilan Straw, vine
13. LLC (Moldo- (production 6400, and wood
Italian) factory) 18t/day - waste Italy *

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v. Gradiste,
14. ”Tehnomontaj distr.
” LLC Cimislia 1000 - different Ukraine *

Total fuel, t/year 28290 4000

This table presents totally circa 28 000 t/year of briquettes produced by 13 producers, about 3000
t/year of the pellet production by 2 economic entities operational in the districts of Cimislia and
Cahul.

The quantity of the fuel obtained by the economic entities of the region is able to cover the required
fuel for current Boiler plants (TS) from the South Region. Meanwhile, increasing the number of
Boiler plants will give the opportunity to heat the apartment buildings which are not connected to
the local heat supply network

Based on statistics data provided by the Leova District Council, currently a large number of
households, schools, public institutions, kindergartens, etc. are not connected to the district heating
system and needs to be heated from the autonomous thermal energy sources during cold period of
the year. Thus, there is need for the given investment project implementation at the premise of
regional sustainable development.

Total number of households registered by 2004 census was about 17 543. Over 70% of these are
located in the rural area that would form an estimated 12 932 of rural households. Calculations
show that potential users of biomass-based fuel in the form of briquettes and pellets would be the
same 17543 households who obtain the thermal agent from own sources due to lack of central
heating system in Leova district.
According to statistics in winter on average one household for heating uses the fuel approximately
equivalent to 1.5 tons of coal. If we consider that there are 17 543 households in Leova district,
then the average volume of the coal used is approximately 26.3 thousand tons. The ratio of
heating capacity of the pellets as compared to the coal is about 0.9. The replacement of coal for the
briquettes and pellets gives 29 thousand tons of briquettes and pellets. Given amount of biofuel can
not be provided by the regional producers. Hence, there is an apparent need to diversify the local
biomass-based fuel market.
Biomass-based Boiler plants (TS) installed in the localities of Leova District are 5 in number for 3
village municipalities: Tomaiul Nou, Cazangic and Sarata Noua (see table 2.3). That makes circa
11% of the total number of the Boiler plants (TS) installed in the South Region- 19 briquettes-based
Boiler plants, 8 pellets-based Boiler plants, 18 straw-based Boiler plants, (see table 2.4). Based on
this information the calculations given in the afore tables show the fuel demand for existing Boiler
plants to be provided by local producers of biomass-based fuel. However, the information provided

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 Studiul de Fezabilitate

by Leova Council and representatives of beneficiary municipalities shows that they still face
difficulties in providing fuel, as well as quality fuel. Hence the need for the investment in the field
through the diversification of biomass-based local fuel market.
Table 2.3. Boiler plants in Leova District
Village Capacity Demand Type of
municipality Boiler plant for fuel, fuel
kW t/year
v. Tomaiul 81,0 65,51 briquettes
Nou

v. Seliste 25,0 19,52 pellets

v. Cazangic 190,0 153,67 Packs of

straw
(school) 275,00
v. Sarata 340,0 Packs of
Noua (kindergarten) 121,32 straw
150,0
[5]

The above table shows that that the Boiler plants (TS) installed in Leova district need an annual
amount of approximately 20 tons of pellets, about 65 tons of briquettes, and packs of straw 550
tons per year. According to the information provided by Leova District Council representatives, the
Boiler plants on straw packs have a very low yield (lower heat of combustion of fuel ). In the near
future they will be replaced by pellet-based fuel.
Table 2.4. Boiler plants (TS) installed in the South Region of RM
Locality Capacity Required Type of fuel The map of Boiler plants installed in the
Boiler fuel, t/year district [5]
plant kW
District Cimislia
Mihailovca 465,00 376,10 briquettes
Porumbrei 208,00 168,23 briquettes

Costangalia 174,00 140,73 briquettes

Javgur 349,00 282,28 briquettes

District Causeni
Tataranii Noi 240,00 194,11 briquettes/pell
(contracting) ets

Cirnatenii Noi 120,00 97,06 briquettes/pell

(contracting) ets

Ciuflesti 180,00 145,59 briquettes/pell

(contracting) ets

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 Studiul de Fezabilitate

District Stefan Voda

Copceac 340,00 275,00 Packs of straw

Ermoclia 150,00 121,32 Packs of straw
Popeasca 300,00 242,64 Packs of straw
150,00 121,32 Packs of straw
Talmaza 300,00 242,64 Packs of straw
150,00 121,32 Packs of straw
Rascaieti 140,00 113,23 Packs of straw
Purcari (Viisoara) 250,00 202,20 Packs of straw
Olanesti 400,00 323,52 Packs of straw
Crocmaz 190,00 153,67 Packs of straw
Palanca 300,00 242,64 Packs of straw
District Basarabeasca
Iordanovca 212,00 171,47 Briquettes
(contracting)

District Comrat (UTA Gagauzia)

Tomai 94,00 76,03 Briquettes
(contracting)
349,00 282,28 Briquettes

Gaidar 522,00 422,20 Briquettes

(contracting)

Carbalia 80,00 64,70 Briquettes

Copceac 600,00 485,29 Packs of straw

District Cantemir
Antonesti 250,00 202,20 Packs of straw

Larguta 150,00 121,32 Packs of straw

Tiganca 340,00 275,00 Packs of straw

Costangalia 290,00 234,56 Briquettes

District Cahul
Doina 174,00 140,73 Briquettes
(contracting)
Chircani 232,00 187,64 Briquettes
(contracting)
Andrusul de Sus 174,00 140,73 Briquettes
(contracting)

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 Studiul de Fezabilitate

Andrusul de Jos 174,00 140,73 Briquettes

(contracting)
Vadul lui Isac 174,00 140,73 Briquettes
(contracting)
Valeni 349,00 282,28 Briquettes
(contracting)
Cislita Prut 58,00 46,91 Briquettes
(contracting)
Giurgiulesti 406,00 328,38 Briquettes
(contractare)

District Taraclia
Cealîc 35,00 28,31 briquettes/pell
(contracting) ets
Novoseolovca 100,00 80,88 briquettes/pell
(contracting) ets
Cairaclia 100,00 80,88 briquettes/pell
(contracting) ets
Ciumai 170,00 137,50 briquettes/pell
(contracting) ets

We can see from the table, that in the South Region of the Republic of Moldova approximately 26
% od the Boiler plants ara installed in Stefan Voda district, which represents 11 Boiler plants
installed in 9 rural localities. Accordingly, the most precarious situation is in Basarabeasca district,
where 1 Boiler plant installation project for Iordanovca locality is at the contracting phase.
The fuel demand for the Thermal Stations installed in the South Region of the Republic of
Moldova in conformity with the calculations (the results shown in Annex and tables 2.3 and 2.4) is
about 800 t/year of pellets-based fuel, approximately 3600 t/year of briquettes-based fuel,
respectively nearly 3 900 t/year of straw packs –based fuel.

Providing the fuel required for Leova district can be performed locally from own forces. Raw
material (agro waste) required to produce the fuel is sufficient in the district, according to the
analysis performed on the data from different sources.
Thus, approximately 1500 t/year[ 7] can be obtained-data categorised in the table 2.5-raw material
from vineyeards, orchards, and forest areas from the district.

Table 2.5. Potential for biomass in the South Region [5]

Type of
plantatio Total plantations area, Potential for biomass available , t/ha
Locality ns ha min max
2009 2010 2009 2010 2009 2010
Leova vines 959,00 1 138,00 767,20 910,40 1 054,90 1 251,80

7
sursa: "Estimarea potenţialului energetic al biomasei din culturile agricole pentru brichetare, la nivel de regiuni şi
raioane, pentru anii 2009-2010", Chișinău 2012
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 Studiul de Fezabilitate

South
Region 16 202,00 15 804,00 12 961,60 12 643,20 17 822,20 17 384,40
Leova 211,00 181,00 240,54 206,34 300,68 257,93
South
Region orchards 5 642,00 4 360,00 6 431,88 4 970,40 8 039,85 6 213,00
Leova 11 539,35 615,98 0,00 0,00 625,55 38,14
South
Region forests 88 948,75 78 041,89 0,00 0,00 4 832,39 4 832,35
Leova 3 799,00 4 027,00 9 792,00 9 196,00 17 625,00 16 552,00
South
Region cereals 70 417,00 66 139,00 134 938,00 142 319,00 242 889,00 256 175,00
Total
Leova 10 799,74 10 312,74 19 606,13 18 099,87
Total
South
Region 154 331,48 159 932,60 273 583,44 284 604,75

Total of biomass identified and presented in the above table currently is not utilised, leading to the
emergence of numeroius heaps of sawdust and other wood waste that pollute soil and water ways.
So, this problem fits into the context of need to elaborate and implement such kind of initiated
project.

In conclusion:
The need for the investment resulted from:
no durability is ensured in the biomass utilisation development;
lack of the economic entities to operate the pellets production;
lack of uniformity of the technologies used by the manufacturers, geographical
distribution and biomass used in the production process;
impartial exploited biomass from the South Region of the Republic of Moldova;
lack of clear information on biofuel quality, purchased for the Boiler plants installed
both in the district and the Region;
providing potential beneficiaries with 29,0 thousand tons of biofuel;
biofuel sales market is underdeveloped in the region.

3) Opportunity for Public-Private Partnership Project promotion with technical

and economic substantiation that demonstrates the need and opportunity for
Public-Private Partnership Project
Assuming that the own renewable energy sources -reduce the dependance over the import,-
increase the energetic security of the country, -have lower costs,- permit the development of new
businesses and creation of new jobs,- reduce greenhouse gas emissions and environment pollution,
the investments in collection of raw material-production-distribution of final product among

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 Studiul de Fezabilitate

existing Boiler plants for the production of thermal agent, as well as the operation and
maintenance of Boiler plants (TS) will create secure steps to sustainable development.
Moreover, the investments of such kind assume major problems due to the fact that the sector is in
the incipient phase of the development.
Thus, the initiation of the project started on the above premise and the landmarks that :
Existence in the ditrict briquette-based Boiler plant (TS)-1 unit, pellet-based Boiler
plant (TS) -1 unit and 3 straw packs-based Boiler plants, - the situation is presented in the
previous chapter with the need for fuel from : the pellets about 20 t/year, briquettes -
65.51 t/year;
lack of control on fuel quality provided at the existing 5 Boiler plants (TS) causing poor
quality of biofuel;
trouble operation of those 5 Boiler plants (TS) caused by lack of skilled specialists;
dependence on fossil fuel resulting from gas-assisted and and coal-assisted Boiler plants
(TS) existing in the district.
According to Annex 2 „List of localities and institutions from Leova district proposed
for installation of biomass-based Boiler plants (TS)” , currently there are 5 coal-based
Boiler plants (TS) with the operation life up to 2014, 3 coal-based Boiler plants (TS) and
1 natural gas-based Boiler plant (TS) with operation life up to 2015, 3 coal-based Boiler
plants (TS) and 2 gas-based Boiler plants (TS) with operation life up to 2016, and 4 gas-
based Boiler plants (TS) with operation life up to 2017 respectively.
Out of all Boiler plants (TS) presented with operation life up to 2017, the following are
managed by:
- City’s education department -5 coal-based Boiler plants (TS) and 2 gas-based
Boiler plants (TS)
- Local Public Administration-4 coal-based Boiler plants (TS).
- Leova District Council -2 gas-based Boiler plants (TS)
- Education Department Administration-1 coal-based Boiler plant (TS) and 1 gas-
based Boiler plant (TS)
After expiration of operation life period it will be neccesary to execute current or major
repairs. Thus, in order to limit the dependance on fossil fuel and, therefore, to achieve
the major objectives of the 2010-2020 Energy Efficiency National Program, it is
neccesary to take concrete actions, and the replacement of the fossil fuel-based Boiler
plants (TS) up to 2017 presented above for biomass-based Boiler plants (TS) will be a
step towards the achieving these objectives.

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 Studiul de Fezabilitate

Providing required temperature to the public institution heated by fossil fuel-based

Boiler plants (TS) during the cold period of the year is not performed according to the
sanitary code. It is caused by outdated Boiler plants which have very low yield compared
to the initial one;

Starting the project proposed for the public institution assumes difficulties due to lack of sufficient
experience at the public institutions in the field of collecting of raw material- production-
distribution of final product (biofuel) to the Boiler plants to produce thermal agent, as well as in
operation and maintenance of the Boiler plants (TS). Meanwhile, manifestation of interets by a
private company neccesitates the support at the District Council level. Thus, in order to achieve the
expected outcomes it is necessary to opt for collaboration among the institutions concerned.

As possible forms of involvement that require the cooperation among the interested parties,
hereinafter referred to as the public partner presented by Leova District Council, and the private
partner to be selected through a competition procedure by Leova District Council-are stipulated by
the Law nr. 179 on Public-Private Partnership dated 10.07.2008 and they include:
Entrepreneurial contract/services contract;
Fiduciary management contract;
Tenancy/lease contract;
Concession contract;
Contract of the commercial or civil society.
The application of one of the forms presented will result in Public-Private Partnership establishment
for both partners.

So, the newly established Public-Private Partnership based on the benchmarks aims to address the
problems identified at both partners involves the activities related to :
▪ Construction of the pellet factory to the standards of the private partner where Leova
District Council needs to be involved that has an interest in improving the public services
related to the management of the production of the thermal heat at the existing Boiler
plants. The improvement resulting from the purchase of the required fuel from the private
agent will ensure the fuel quality. Moreover, in order to keep an eye on the entire process
and to prevent any deviations leading to safety thermal confort at the institutions connected
to the Boiler plants –both stakeholders should be involved –the fuel producer and the fuel
supplier, as well as the fuel purchaser and the fuel consumer.
▪ Installation of new biomass-based Boiler plants (pellet-based) that will lead to the market
development in the field,
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 Studiul de Fezabilitate

Therefore, the following benefits will be obtained via implementing the pellet factory project:
The public partner:
reduction of the burden of the public institution in the management/technical maintenance of
the Boiler plants (TS) (problems related to large storage capacities, repair, inspections,
testing)
possibility to control the entire process of production of the thermal agent;

The private partner:

possibility to control the fuel production process and the thermal agent, therefore having
greater positive impact to adjust the fuel quality to the technical requirements of the Boiler
plants (TS);
possibility to create new Boiler plants (TS) to deliver the thermal agent to household
consumers and other public institutions;
offering incentives and encouragement of the thermal efficiency of the production process
and respectively decreasing the consumption of biofuel.

Public-Private Partnership (PPP) was defined according to the Law nr.179 on Public –Private
Partnership of 10.07.2008 as „ a long-term contract between a public partner and a private
partner to carry out activities of public interest, based on the capabilities of each partner to
accordingly share the resources, the risks and the benefits ”.Nowadays it is a key tool in achieveing
public policies for the Republic of Moldova. Thus, the development and use of a Public-Private
Partnership tool is one of the objectives of the Program of the Government of the Republic of
Moldova: European integration, Freedom, Democracy, Wellfare. Therefore, the implementing
of the proposed project will be an important step in achieving the objective. Once implemented the
project will present the pilot model for other projects in the field.

4) Framing the objective in the medium- and short-term general, sectoral or

regional policies.
To improve safety in supplying the required fuel for energy production and concurrently to meet the
environment requirements (in particular, climate changes and global warming), in the envestment
policies at the overall, sectoral and regional level for both short- and long-term duration, the
objectives were drawn to highlight the need for the renewable energy sources to become an
increasing important part in the energy production structure.

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 Studiul de Fezabilitate

Extending the energy consumption originating from renewable resources must go hand in hand with
greenhouse gas emissions. This being the reason for the Republic of Moldova to apply it in every
situation and scenario.

The first step was made in this field: the Law on Renewable Energy was adopted which
established the state principles and the objectives in the field of utilisation of the renewable energy
resources 8.

In this context, the proposed project will contribute to the reliability in renewable energy sources
supply. Hence it will reduce the dependance on the fossil fuel, concurrently generating the reduction
of emissions of greenhouse gases.

The Project implemented is relevant:

 For the overall and general objective of the 2010-2010 Energy Efficiency National
Program (draft project) which sets the priority policies and actions to be implemented within
2010-2020 to meet the challenges of energy price growth, dependance on energy resources
import and energy sector impact on the climate changes.
To overcome the aforestated challenges, the Program foresees the following major objectives
for the Republic of Moldova:
a. Reduction of primary energy global consumption by 20% by 2020;
b. Reduction of greenhouse gases emissions by 20% by 2020;
c. Increase of proportion of renewable energy in total energy mix from 6% in 2010 to 20% in
2020;
d. Increase of the share of biofuel to at least 10% out of all fuel used by 2020.
 2011-2014 Government Acivity Program of the Republic of Moldova „European integrity:
Freedom, Democracy, Welfare” approved by the Parliament of the Republic of Moldova”
nr. 6-XIX of 14.01.2011 in the chapter „Economic and financial policies”, section
„Competitiveness policies and small and medium enterprises (SME) development ”stipulated
the government grants for the research and innovations via practical application to increase the
efficiency in energy and natural resources utilisation. In the paragraph „Infrastructure and
Transport” one of the governing objectives is to ensure the energy security and to promote
energy efficiency in all the sectors of the economy.

8
Sursa: Buletin informativ-ANALITIC “Agenţia pentru Inovare şi Transfer Tehnologic a Academiei de Ştiinţe
a Moldovei”, MARTIE 2009
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 Studiul de Fezabilitate

Concurrently, the project is relevant to the development policy of the energy sector of the Republic
of Moldova meeting the objectives included in the following legislative provisions in force of the
Republic of Moldova:

 2005-2015 National Program „Moldovan Village”,

 2007-2015 Environment Safety National Program,
 Sustainable Development Concept of the localities of the Republic of Moldova,
 Energy Strategy of the Republic of Moldova by 2030,

The Project is framed within the national strategy and policy of security of alternative and
renewable fuel supply in the Republic of Moldova which has a huge biomass base and domestic
consumers (households, budgetary institutions, etc) based on:
- Increase of competitiveness of energy efficiency;
- Development of producer-consumer direct relations without intermediary;
- Growth of production capacities and permanent stability.

Sectoral and regional investment policies

The proposed investment project in framework within the general objectives of „2011-2020 Energy
Efficiency District Program” approved by the Decision of Leova District Council nr.9.2 of
09.12.2011, Chapter IV paragraph (c) which states „increase of bioduel share to at least 10%
out of total fuel used in 2020 ”

5) Public-Private Partnership (PPP) Project beneficiaries

Through the implementation of the given project and Public-Private Partneship (PPP) model
application the beneficiaries are:
 Leova District Council;
 3 village municipalities: Tomaiul Nou, Cazangric and Sarata Noua which possess 5
biofuel-based Boiler plants (TS);
 16 educational institutions identified with fossil fuel–based Boiler plants with operation
life up to 2017.
 17 543 households.

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 Studiul de Fezabilitate

6) The normative framework which regulates the field

The compliance with relevant legislation is tracked through the Public-Private Partnership Project
implementation in terms of provision of thermal agent and biomass processing, and namely:

Normative framework which regulate the Energy Efficiency Sector.

LAW Nr. 142 of 02.07.2010 on Energy E\fficiency

LAW Nr. 160 of 12.07.2007 on Renewable Energy

GOVERNMENT ORDINANCE Nr. 833 OF 10.11.2011 on Energy Efficiency National

Program for 2011-2020

Normative Frames which regulates the Public-Private Partnership (PPP)

Law nr. 179-XVI of 10.07.2008 on Public-Private Partnership

Government Ordinance nr. 476 of 04.07.2012 on approval the Regulations regarding standard
procedures and general conditions for selection of a private partner

Others

LAW Nr. 436 of 28.12.2006 on Local Public Administration

LAW Nr. 91 of 05.04.2007 on Public Property Land and its delimitation

Law of RM nr.721-XIII „On quality in construction”

Engineering research for construction (Rules and Sanitary code1.02.07-87)

NCM F. 03.02-2005 Standards in construction.”Designing of buildings with masonry walls”.

Standards and rules in construction Nr. 3.02.01.83 „Guidelines on the production and reception
of the basis and foundation”

SNiP2.01.07-85 „Assignments and actions”

Law on Environment Protection nr.1515-XII of 16.06.93

Standards on the impact over atmosphere air in accordance with the requirements STAS
2.04.05-91, ВСН «Enterprises».

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 Studiul de Fezabilitate

III The main features of the Public-Private Partnership (PPP) Project:

1) Public-Private Partnership (PPP) objectives

Overall Goal of the Project :
Providing efficient and quality thermal agent with optimal costs for the state budget of the
public institution from Leova district, including other district from the South Region that
have biomass-based Boiler plants.

Specific Project Objectives:

Enhancement of public service of local and regional interest via creation of Public-Private
Partnership
Utilisation of the potential of renewable sources which will contribute to the growth of
security and energy supply;
Technical barriers elimination at the autonomous Boiler plants (TS) through transmission of
the management right and maintenance of biomass-based Boiler plants (TS).

2) Outcomes achieved through Public-Private Partnership (PPP) Project

implementation.
By applying the functional model-the pilot model-of processing the agricultural and forest solid
biomass for obtaining the pellets-the utilisation of biomass potentail can be launched to a larger
scale.
Concrete outcomes refer to the following pilot units or systems:
1. initiating the implemenattion activities and the biomass-based pellets and briquettes
production originated from agrarian sector;
2. obtaining management and maintetance services of 5 existing biomass-based Boiler plants
(TS) aimed to provide thermal agent for public institutions via autonomous biomass-based
Boiler plants (TS).
3. providing of required fuel-approximately 20t/year of pellets, about 65t/year of briquettes
(as per Annex 1)- for existing Boiler plants (TS) (5 Boiler plants) in the district.
4. possibility of extension of the network in providing the thermal agent for 16 public
institutions.
5. substitution of fossil fuel from 16 Boiler plants (TS) with the operation life up to 2017 for
agro-biomass-based fuel.

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 Studiul de Fezabilitate

6. creation of quality check, maintenance and repair system of 5 Boiler plants (TS).
7. taking over the management of 21 Boiler plants (TS) for providing pellet-based thermal
agent;
8. annual production of approximately 2000 t of pellet-based biofuel .

The achieved outcomes within the project implementation will be widely disseminated in scientific
communications, national and international publications, through national seminars. It will raise the
awareness of the local Public Administrations and economic entities for the involvement of the
Public-Private Partnership for the construction of the pellets factories including the transmission of
management right for the biomass-based Boiler plants (TS).
Agricultural solid biomass resources and energy crops can contribute to satisfying the current need
for the thermal energy in rural areas, bringing minimum impact on the environment.

3) Technical and economic scenarios for achieving Public-Private Partnership

(PPP) Project objectives (variants)

3.1. Formulation and description of 3 scenarios of the investment implementation

In order to achieve the comprehensive analysis it is necessaty to review as many possible options
as possible for the implementation of Public-Private Partnership that will result in achieveing the
most viable/reliable investments. Further, three possible variants of Public-Private Partnership
application will be analysed for the selection of the most viable option of the investment
implementation proposed. It will result in the most reliable scenario from both economic, social and
environment point of view.

Further analysed variants involve minimum investments, medium invetments, maximum investments-
providing public services in biomass-based thermal agent for public institutions via providing
biofuel for the public institutions involved.

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 Studiul de Fezabilitate

Table 3.1. The analysis of solutions of investment implementation (formation of Public-Private Partnership (PPP) to produce the pellets) –
partnership aspect

Nr. Description Specific Forms of would Advantages Disadvantages

scen Scenario Subject PPP objectives Activities be contracts
ario
Centralised Public Procurement Provision of Annual No need for Do not provide
Acquisitions (at a services of pellets/briquett procurement investments durability in the
district level) of the biomass-based es for 4 Boiler contracts development of biomass
pellets/briquettes with fuel: the private plants from according to utilisation system, do
with further distribution to partner delivers Leova District 1. centralised the Law of the not ensure of control
minimum the beneficiary pellets/briquettes organisation of Republic of over the pellets quality,
I
investmen institutions to the public annual auctions. Moldova on trouble operation of the
ts partner Public Boiler plants (TS),
according to Acquisions. dependance on pellets
fixed schedule underdeveloped market
and set quality from Moldova
conditions
Creation of the Delivery 1. centralised 1. the 1. medium investments 1. problems on the
biomass-based services of provision with 1. construction Contract of delimitation of the
pellets/briquettes biomass-based biomass- /creation of commercial 2. possibility to control property interest rights
provision system of the fuel: the private based biomass-based society the pellets :the District Council
Boiler plants (TS) from partner delivers pellets/briquet pellet factory production process (DC) provides neither
Leova District in the tes of the 2. entrepreneu with further a plot of land nor a
partnership with an pellets/briquettes Boiler plants 2. creation of rial adjustment to the construction Property
economic entity (EE) to the public from Leova biomass contract/ser technical parameters contribution can be
With
who will manage the partner with the District collection and vices requirements of the only in the form of
medium
pellets production and prices approved briquettes contract Boiler plants (TS) equipment which has
II investmen
delivery process, by the District 2. monitoring of acquisition installed in the operation life 15-20
ts
acquisition and delivery Council (DC) on biomass- system. public institutions. years maximum and
of briquettes, the annual basis, based pellets then the contract
distribution to the public partner quality 3. creation of looses its legal validity
consumers from the has the right to produced in pellets/briquett in 20 years
district (on the basis of monitor the Leova district es distribution 2. The subject of the
Public-Private pellets at the system to the partnership is not
Partnership (PPP production production Boiler plants clear-neither public
contract) with fixing process process level. (TS).. service nor public
the annual prices via property is transmitted

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 Studiul de Fezabilitate

the District Council to the private partner,

decision) and on the or any exclusive right
basis of economic due to which the
entity (EE) contracts public partner could
with neighboring obtain the public
districts with the benefit or the private
attraction of private partner could obtain
investments and co- profit;
financing by the 3. this partnership can be
District Councils (DC). established based on
the creation of a joint
commectial enterprises
(joint-stock company
or company with
limited liabilities) via
co-financing of both
partners to obtain the
profit. The profit
obtained by the District
Council afterwards
could be reinvested in
the promotion of
biomass utilisation by
the household users
and reductions in the
prices for the delivery
to the own Boiler
plants..

Transmission of the Management of 1. provision of 1. construction/cr 1. contract of 1. permits clear 1. the investments are
right of management the public the thermal eation biomass- fiduciary definition of the comparatively high
and maintenance of the property, supply agent for the based pellet administratio beneficiaries of both than other solutions;
With
Boiler plants from services of public factory n partners; 2. it might be a single
maximum
Leova District in order biomass-based institution 2. entrepreneuri legal person to have
III investmen
to provide with the thermal agent from Leova 2. creation of al contract/ 2. Possibility to control expertise in all
ts
thermal agent, for public District, biomass services both the fuel required fields or it
including to produce institutions. equipped with collection contract production process would be necessary the
the biomass-based fuel. biomass- system and and the thermal create an association of
The essence of the based Boiler briquette agent, thereby having economic entities in

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 Studiul de Fezabilitate

partnership consists in plants (TS). acquisition. higher positive the agricultural

the following: a public impact over the production and
partner transmits the 2. creation of 3. creation of occasion of technical maintenance
right of the centralised pellets and adjustment the fuel of the Boiler plant
management of the system of briquettes quality to the
Boiler plant, of which biomass- distribution technical
the owner it is, to based fuel system to the requirements of the
deliver the thermal ditribution in Boiler plant Boiler plants (TS);
agent and to make the South (TS).
payments based on the Region for all 3. facilitating the
base of meter categories of 4. creation of burden of the Public
registration by jointly the operation and Institutions (PI) in
established tariffs, consumers.. maintenance the
approved By the system of the management/technica
District Council on the 3. check of Boiler plants l maintenance of the
annual base. The biomass- (TS). . Boiler plants (TS)
private partner makes based pellets (problems connected
investments in the quality 5. creation of with large storage
pellets production produced in quality capacities, repair,
infrastructure, Leova district monitoring checks, testings)..
acquisitions/supply of at the system
briquattes, collection of production 4. possibility to create
raw material, process level. new Boiler plants
distribution, installation (TS) to provide the
of the meters on the thermal agent to the
existing Boiler plants, household consumer
extension of biomass- and othe rPublic
based Boiler plant (TS) Institutions (PI).
in the district through
the new pellets-based 5. stimulation and
Boiler plants encouragement the
construction and efficiency of the
management to supply production process of
pellets-based thermal the thermal agent and
agent (TA), creation accordingly the
quality check, reduction of biofuel
maintenance and repair consumption.
system for the Boiler
plants (TS), with

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 Studiul de Fezabilitate

further (in 20 years)

transmission of the
Boiler plants in the
operational state to the
public partner. Many
economic entities (EE)
can participate in the
auction, associating
and creating a new
legal person and
signing the Public-
Private Partnership
contract.

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3.2. Description and argunentation through multi-criteria analysis of the selected

technical solution.

The aforesaid investment implementation variants will be analysed basing on the established
criteria.

a) Establishing the criteriia

Economic parameters:
C1: Econimic parameter 1: investment required costs
C2: Econimic parameter 2: management /technical maintenance of Boiler plant (TS)
C3: Econimic parameter 3: upgrowth of sustainability and encouragement of economy rise in
the region creşterea sustenabilităţii şi stimularea creşterii economice a regiunii
Social parameters:
C4: Social parameter 1: enhancement of public services quality
C5: Social parameter 2: creation of new jobs
C6: Social parameter 3: increase of comfort grade in rural area via satrisfaction for fuel demand
C7: Social parameter 4: decrease of biofuel consumption
Risk parameters:
C8: Risk parameters 1: durability of the model applied/loss of economic interest by private partner
C9: Risk parameters 2: formal involvement of the partners
Environment parameters:
C10: Ecologic parameter 1: pellets quality to reduce concentrations of noxious substances in
chimney smoke calitatea peleţilor ce va duce la micşorarea concentranţiei substanţelor
nocive în fum
C11: Ecologic parameter 2: enhancement of the Boiler plant (TS) operation system to reduce the
pelets/biofuel consumption and its impact .
Technical parameters:
C12: Technical parameter 1: durability in development biomass utilisation system
C13: Technical parameter 2: possibility to control pellet production process aaaand adjustment to
the requirements of the technical parameters of the Boiler plants installed in the public
institutions.
C14: Technical parameter 3: elimination of technical obstacles via operation work and services
provided by skilled specialists.rin.
C15: Technical parameter 4: higher efficiency of the operation of the Boiler plants to optimize
the consumption.
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Legal parameters:
C16: Legal parameters: compliance with the legislation in force in terms of energy sector and
application of Public-Private Partnership (PPP)
b) Establish share of of each criterion relative to other criteria

Table 3.2. Ponderability of the criteria considered for the analysis of optimum alternatives.Ponderea
criteriilor luate în considerare pentru analiza alternativei optime
Crite C C C C C Pond
r C C C C C C C C C 1 1 1 1 C 1 C Scor Leve erabilit
ion 1 2 3 4 5 6 7 8 9 0 1 2 3 14 5 16 e l yY

C1 1 2 2 1 1 0 1 1 1 2 1 2 2 2 1 1 21 3 2,89

C2 0 1 0 0 0 1 1 0 1 1 0 1 1 1 1 0 9 16 0,50

C3 0 1 1 1 1 1 2 1 1 2 1 2 2 1 1 0 18 5 2,10

C4 0 2 1 1 1 1 2 2 1 2 1 2 1 1 1 0 19 4 2,35

C5 1 2 1 1 1 2 1 2 2 2 2 2 1 2 1 1 24 2 3,93

C6 0 2 1 1 1 1 1 0 0 1 2 2 1 2 2 1 18 5 2,10

C7 0 1 0 0 0 0 1 2 1 1 1 1 1 2 2 0 13 12 1,04

C8 1 2 1 0 0 2 0 1 1 1 1 1 1 1 1 0 14 9 1,28

C9 1 1 1 1 0 2 0 1 1 1 1 1 1 1 1 0 14 9 1,28

C10 0 1 0 0 0 1 1 1 1 1 2 1 1 1 0 0 11 13 0,79

C11 1 2 1 1 1 0 1 1 1 0 1 2 1 1 0 0 14 9 1,28

C12 0 1 0 0 0 0 1 1 1 1 0 1 1 1 2 0 10 15 0,62

C13 0 1 2 1 1 1 1 1 1 1 1 1 1 1 1 0 15 7 1,50

C14 0 1 1 1 0 0 0 1 1 1 1 1 1 1 1 0 11 13 0,79

C15 1 1 1 1 1 0 0 1 1 2 2 0 1 1 1 1 15 7 1,50

C16 1 2 2 2 1 1 2 2 2 2 2 2 2 2 1 1 27 1 5,50

c) Evaluation of alternatives (notation) based on criteria

Variant/ Criterion V1 V2 V3
1: Required investment cost 0 1 2
2: Management/technical maintenance of Boiler plant (TS) 0 0 5
3: Upgrowth of sustainability and encouragement of economic growth in
the region 0 2 2
4: Enhancement of public services quality 0 0 2
5: Creation of new jobs 0 2 2

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6: Increase of comfort grade in rural areas via satisfaction of fuel demand 0 1 1

7: Decrease of biofuel consumption 0 1 1
8: Durability of the model applied 0 1 1
9: Non-involvement or formal involvement of the partners 0 1 1
10: Pellets quality to reduce the concentration of noxious substances in the
chimney smoke 0 1 2
11: Improvement of Boiler plant operation system in order to reduce
quantity and impact of biofuel 0 0 2
12: Durability in the development of biomass utilisation system 0 2 2
13: Possibility to control pellets production process and adjustment to the
technical parameters requirements of the Boiler plant (TS) installed in the
public institutions 0 1 2
14: Elimination of technical obstacles via operation and service work
performed by skilled specialists. 0 0 1
15: Higher efficiency of the Boiler plant operation to optimize the
consumption 0 1 2
16: Compliance with the legislation in force in energy sector and
application of Public-Private Partnership (PPP). 1 2 2

 The investment cost is equal in the V2 and V3, but the number of the outcomes achievedin
the V3 predominates over V2.
 good management and maintenance of biomass-based Boiler plant (TS) from Leova district
through creation of the operation and maintenance system of the Boiler plants (TS) will be
implemented only after the application of Variant 3;
 Application of both V2 and V3 will bring economic benefits for the economic growth in the
region;
 biomass-based pellets quality check will be obtained via the application of maximun variant;
 higher positive impact over the possibility to adjust the fuel quality to the technical
requirements will be accentuated through the application of Variant 3;
 application of Variant 3 will offer incentives and encourage the efficasy of the production
process of the thermal agent;
 decrease of biofuel consumption could be implemented through the application of both
medium and maximum variants;
 the number of operational staff predominates in V3;
 numărul de angajaţi în operare prevalează la V3.
 Improvement of quality life will be similar in the last 2 variants;
 application of Variants 2 and 3 will equally increase the confort grade in the rural area via
satisfaction of the fuel demand;

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 application of Variant 3 as the investment implementation solution will contribute to the

sales market development through the extention of biomass-based Boiler plants network in
Leova district;

d) Matrix of outcomes

Table 3.2. Matrix of outcomes

Variant V1 V2 V3
Criterion N1 y N1 * γ N2 y N2 * γ N2 y N2 * γ
C1 0 2,89 0,00 1 2,89 2,89 2 2,89 5,78
C2 0 0,50 0,00 0 0,50 0,00 5 0,50 2,50
C3 0 2,10 0,00 2 2,10 4,19 2 2,10 4,19
C4 0 2,35 0,00 0 2,35 0,00 2 2,35 4,70
C5 0 3,93 0,00 2 3,93 7,87 2 3,93 7,87
C6 0 2,10 0,00 1 2,10 2,10 1 2,10 2,10
C7 0 1,04 0,00 1 1,04 1,04 1 1,04 1,04
C8 0 1,28 0,00 1 1,28 1,28 1 1,28 1,28
C9 0 1,28 0,00 1 1,28 1,28 1 1,28 1,28
C10 0 0,79 0,00 1 0,79 0,79 2 0,79 1,57
C11 0 1,28 0,00 0 1,28 0,00 2 1,28 2,56
C12 0 0,62 0,00 2 0,62 1,24 2 0,62 1,24
C13 0 1,50 0,00 1 1,50 1,50 2 1,50 3,00
C14 0 0,79 0,00 0 0,79 0,00 1 0,79 0,79
C15 0 1,50 0,00 1 1,50 1,50 2 1,50 3,00
C16 1 5,50 5,50 2 5,50 11,00 2 5,50 11,00
TOTAL 5,5 36,67 53,8871

Multicriterial analysis recommends the optimum implementation solution to be Variant V3. It

indicates of
Main advantages to use the proposed scenario are :
 Possibility to select three application solutions of the given variant:
 increase of fossil fuel import via substitution or alternative
 possibility to supervise the pellets production process and adjustment to the requirements of
the technical parameters of the Boiler plants (TS) installed in the public institutions (PI)
 improvement of the public services in terms of Boiler plants management and maintenance.
 the possibility to extend the biomass-based Boiler plants network through the construction
of new pellets-based Boiler plants) TS.

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 facilitating of the burden of the public isntitutions in management/technical maintenance of

the Boiler plants (TS).
 possibilities of the extension of the provision of the thermal agent for other districts from the
South of Moldova, as well as other household consumers from Leova district.
 in addition, 8 new jobs will be created;
 offering an incentive to develop the partnership between Local Public Administration and
local entrepreneurs.
 permits the enhancement and the encouragement of the efficacy of the thermal agent
production processand accordingly decreasing biofuel consumption;
 Reduction of greenhouse gas emissions from higher efficiency of biomass-based Boiler
plant (TS) operation.

4. Data on land on wich will be placed the object, the legal status of the
land, modalitz / contract form to be submitted private partner estimated
area of land
Installation of 16 biomass-based Boiler plants (TS) will be installed in the existing buildings
where currently the fossil fuel-based Boiler plant (TS) operates with the operation life up to 2017.
The buildings are situated on the area within maximum 24 m2 and minimum 12 m2 and needs
current or major repair.

Pellet factory is to be situated on the site with the area of de 2140 m2. Total area of the site has
resulted from the factory dimensions what consists in :
 390 m2 -required for the pellet factory;
 1500 m2 –required for the construction of the raw material storage facilities (straw and wood
waste);
 necesar pentru construcţia depozitului de materie primă (paie şi deşeuri lemnoase);
 250 m2 –required for the construction of the final product warehouse- pellets
 preconizate pentru construcţia depozitului de materie finită – peleţi;

The required invetsment site will be situated according to the standards in force at a distance of
minimum 300 m from the neighboring constructions.

Provision of utilities
Public utilities in the region are provided by several suppliers operating at local and national level.
Utilităţile publice în regiune sunt asigurate de câţiva furnizori ce operează la nivel local şi naţional.

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 Access roads
Creation of the access – at least gravelling –towards the specified site foreseen for the construction
of the pellet factory is the responsibility of the private partner.
 Water supply system and sewerage. Sistemul de alimentare cu apă şi canalizare
The factory of biomass pelleting must be provided with water. ( a well or a centralised system) for
the needs of the staff.
 Electrical system.
The site must ve connected to the electrical network (380 V, 220 V)
The nominal power required for the production line will constitute totally 196.27 kW out of which:
- 190,17 kW for the pellet production line;
- 5,00 kW for the packaging ssystem;
- 1,1 kW – the transport for the drier.transportul pentru uscător.
Preparation for the electricity connecting

5. Dimensioning of the required infrastructure to be constructed via the

Project area infrastructurii necesare a fi construite prin proiect
The most appropriate form of the Public-Private Partnership (PPP) resulting from the multicriterial
analysis from Chapter 3 can be established via 3 would investment solutions which are based on
the potential financing forms, forms of associations, organisational and legal forms:

1. Rendering of public services of the biomass-based thermal agent provision for the public
institutions via:

• taking the economic management of 5 biomass-based Boiler plants (TS) from 3

municipalities from Leova district to provide biomass-based thermal agent;

• extension of biomass-based Boiler plants network from the district via the construction
of 16 new pellet-based Boiler plants with further management to deliver pellet-based
Boiler plants.

• organisation of pellet production to provide the fuel for the Boiler plants through the
analysis of two solutions: solution A –construction of the factory for the production of 2
types of pellets ( straw and sawdustz); solution B-construction of the factory for the
production of 1 type of pellet (straw).

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2. Rendering of public services of the biomass-based thermal agent provision for the public
institutions via:

• Taking the economic management of 5 Boiler plants from 3 municipalities from Leova
district to provide biomass –based thermal agent;

3. Rendering of public services of the biomass-based thermal agent provision for the public
institutions via:

• Taking of economic management of 5 biomass –based Boiler plants from 3

municipalities from Leova district to provide biomass-based thermal agent;

6.1. Proposed technological flow

Comparative analysis of the proposed variants:

Variant I Variant II
Advantages Disadvantages Advantages Disadvantages
- less cost of investment -the tempo of work of the -provides nonstop
(descifrare cost prezentat country depends on the operation of the factory
în Devizul general Anexa operating regime of the - the tempo of the factory
4 – Solution I, Variant B) press. operation does not depend
on the operating of the
equipment. Thus,
breakdown of one press
wil be replaced by the
other press.
- production of pellets
from different types of
biomass provides
obtaining the profit from
the commercialisation for
the customers with
different demands.

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Description of the work flow for the proposed variant

Preparation of material

Separation and chopping

Addition of supplemental material

Transportation of material to the silo:

Granulation /pelleting

Transport of pellets to packaging and packing pellets

Table 6.1. Nominal power of the machinery of the line

Equipment Nominal power, Kw
Feeding conveyor and separator 44,5
Chopper 55,0
Ventilator transport pneumatic 7,5
Filtration 0,75
Intermediary silo Siloz intermediar 1,1

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Dosing conveyor on the press 2x 2,2

Conveior de dozare în presă
Press 2x 37,0
Aspirator of the steam and the dust 2x 0,37
Conveyor ior de curăţare cu vibraţii 2x 0,18
Cooling conveyor 2 x 0,36
TOTAL 189,07

Maintenance requirements

6.2. Development of technical specifications of the equipment and machinery to be

procured

Equipment of the pellets production line

Lifting and handling equipment

6.3. Elaboration of the organigram and project operation plan

Table 6.2. Staff demand for the operation

Staff demand Manning Description
level
Director 1 - Management, monitoring the operation
of the factory- transportation of raw
material, production of the final product,
delivery of the fuel required to the Boiler
plants (TS), delivery to the interested
consumers
An accountant 1 -

- Manipulates the whole line

(qualification-operator) with the
following operations:
• feeding the packs of straw;
• removal of protection shipping materials from
the straw packs;
Operational personnel 6 • supervision of preparation of line;

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• supervision of the production part and

packaging operations;
• packaging of the pellets;
• supervision of the burning process at the
Boiler plants (TS)
A watchman 1

6. Technical description of the selected solution

7. Cost estimate of each item and component from Public-Private

Partnership Project frame Estimarea de costuri pentru fiecare
element şi componentă din cadrul proiectului de PPP
Three invetsment implementation solutions had been identified in the Public–Private Partnership
(PPP) Project frame ;

- Variant A – installation of 2 presses in the pellets production line for production of pellets
from straw and sawdust

Table 8.1. The investment value for the proposed solution.

Investment value, MDL for solution I Invetsment value

Nr. An item of cost Articolul de MDL for solution
Crt. cost Variant A Variant B II
1 Purchase of land 36 000,00 36 000,00 0,00
Connection to the requied
3 infrastructure 20 000,00 20 000,00 0,00
5 Designing the buildings 75 000,00 75 000,00 0,00
8 Constructions 9 561 603,00 9 415 671,00 7 946 000,00
Independent equipment
9 included in the final works 7 036 397,00 4 271 397,00 0,00
Independent equipment and
10 transport means 1 281 000,00 291 000,00 0,00
11 Other costs 10 000,00 10 000,00 0,00
TOTAL INVESTMENT 18 020 000,00 14 119 068,00 7 946 000,00

8. Public-Private Partnership (PPP) Project implementation plan

(Activities to be implemented with time frame)
9. The schedule of investment corroboration in time

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10. Form and manner of the Public-Private Partnership implementation

10.1. Description of the contract performance form, including justification of the

Public-Private Partnership term and the conditions of the conclusion of the
contract.

Three alternatives (as possible from economic and technical point of view ) of the Public-Private
Partnership implementation have been analysed. Each form will be analysed in terms of :
1. The manner of the contract performance;

2. The manner of the involvement of the partners, benefits and risk sharing ;

3. Possible organisational and legal form and steps to be taken;

4. Possible forms of funding and Public-Private Partnership contract duration.

The forms of Public-private Partnership implementation in terms of providing public services in

biomass-based thermal agent supply for the public institution in the municipalities participating in
Public-Private Partnership.

In all the alternatives presented, the Public Partner is Leova District Council acting as
the representative of the municipalities participating in the Public-private Partnership

Alternative I
Alternative I involves providing public services in biomass-based thermal agent supply for the
municipalities participating in the Public-private Partnership with the following basic characteristics
: 5 Boiler plants on different types of biomass-based fuel, construction of 16 new pellet-based
Boiler plants and the construction of biomass-based pellet factory.

For this alternative the contribution of the Public Partner will consist of:
• Transmission to the private partner the economic management title for 5 biomass-based Boiler
plants located and owned by 3 municipalities of Leova district.

• Transmission to the private partner management the utilisation of the public service consisting
in supply the tbiomass hermal agent to the public institutions of the municipalities participating
in the Public-Private Partnership.

• Financial contribution in the amount of 100 000 Euro ( one hundred thousand Euro) for the
construction of the pellet factory.

On the other hand, the Private partner will provide:

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• Delivery the thermal agent to the public institutions of the municipalities participating in the
Public-Private Partnership.

• Maintenance and operation of 5 biomass-based Boiler plants under economic management;

• Extension of the network of biomass-based Boiler plants in the district via construction of 16
new pellet-based Boiler plants and taking the management for providing the thermal agent from
pellets.

• Production of the pellets to provide the fuel for the Boiler plants.

Alternative II
• Alternative II includes providing public services in terms of biomass-based thermal agent for
the public institutions only for the municipalities participating in the Public-Private Partnership
through the extension of the number of biomass-based Boiler plants from the district by 16
pellet-based Boiler plants.

So, the contribution of the Public Partner will consists of:

• transmission of 5 biomass-based Boiler plants to the private partner’s management within the
Public-Private Partnership duration. The Boiler plants are located on the area and are owned by
the 3 municipalities of Leova district.

• transmission to the private partner’ s economic management the public service consisting in
biomass-based thermal agent for the public institutions from only the municipalities
participating in the Public-Private Partnership (3 municipalities including the municipalities for
16 Boiler plants to be constructed).

On the other hand, the private partner will provide:

• supply of the thermal agent for the public institutions from the municipalities participating in
the Public-Private Partnership (4 municipalities, with further potential extension);

• maintenance and operation of 5 biomass-based Boiler plants received under economic

management;

• extension of the Boiler plants network from the district through the construction of 16 new
pellet-based Boiler plants taking them under management for producing pellet-based thermal
agent;

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This alternative involves the condition for the private partner to arrange and construct
concurrently with the project a biomass-based pellet factory to provide the required amount
of pellets for the Boiler plants to be constructed within the first 4 years of the project.

Alternative III
Alternative III includes providing public services in thermal agent production for the public
institutions only from 3 the municipalities participating in the Public-Private Partnership owning

5 Boiler plants; .
The alternative foresees no extension. Such Public partner’s contribution will consists of:
• transmission to the private management 5 biomass-based Boiler plants within the Public-Private
partnership duration;

• transmission under private partner’ management the public service involving the biomass-based
thermal agent for the public instituions only from the municipalities participating in the Public-
Private Partnership

On the other hand, the private partner will provide;

• supply of the thermal agent for the public institutions from the municipalities participating in
the Public-Private Partnership (3 municipalities);

• maintenance and operation of 5 biomass-based Boiler plants received under economic

management.

1. Contractual forms of the Public-Private Partnership implementation

The legislation of the Republic of Moldova provides the contractual forms of the Public-Private
Partnership implementation, where:

The service contract aims at the provision of the public services by the private partner, execution of
major repair works against payment, maintenance of both the infrastructure components and other
property as an object of Public-Private partnership, keeping records of resources consumption,
issuing the bills for the consumers.

The Contract of fiduciary management aims at ensuring the proper management of the public
property based on performance criteria stipulated in the contract. In this case, the public partner
transmits the private partner the management risk control and the risks control related to the
Public-Private Partnerhsip object operation, unless the contract stipulates otherwise.

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The contract of a concession is the contract whereby the state or the administrative-territorial unit
transmits to an investor (a natural or a legal person, including foreign citizens) in exchange for a
fee, the right[...] to provide public services in exploiting the movable and immovable public
property [...]of the administrative-territorial units which under the law in force are fully or partially
removed from the civil circulation, as well as the right to carry out the certain types of activities,
including those the state has the monopoly of , taking the management of the concession object,
presumptive risks and financial liability.

In the analysed case, the concession object can be movable and immovable property of public
nature or private nature of the administrative-territorial units, including local public works and
services.

The contract of the commercial society involves the association of a public and a private partners
either under the contract of the commecial society, without creating any legal person, or through the
establishing the commercial society (a limited liability company or a joint-stock company) based on
the mixed capital (public-private).

Alternative I
Considering the objective of the Public-Private Partnership partners extension and contribution, we
recommend 2 alternatives: (i) concession contract, or (ii) creation of a commecial society with the
public-private capital.
The object of the concession in this case will be the public services (supply of the thermal agent
from biomass) for the public institutions from the municipality involved. The aboe option also
involves the concession of the existing Boiler plants after the Public –Private Partnership launching.
The public services concession does not exclude the further extension of biomass-based Boiler
plants.
The object of the creating of the public-private capital means that the new society will have the
private partner shareholders and each of the municipalities participating in the Public-Private
Partnership where the social part/number of shares will be proportional to the contribution in the
social capital of the entity. The above alternative allows the further entry of other municipalities in
the structure of associations/shareholders of new societies.
In this case, it means that the public partner will contribute to the social capital with the right to use
property, the right to provide the public services and financial resources, while the private aprtner –
with finance, other investment investment liabilities.

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Creating the new society will assume administration costs, personnel and operational costs. Also, it
will benecessary to establish the exact scope goal and obligations of the society, including
obligations of the partners involved.

Alternative II
Structuring the alternative II, including the intention to expand, foresees the joining to the Public-
Private Partnerhip of the municipalities that have Boiler plants and for which 16 pellet-based Boiler
plants will be built within the project implementation. Considering this, it would be feasible to
implement the Public-Private Partnership via concession, or through creating a commercial society
with public-private capital similar to alternative 1.

Alternative III
Alternative III involves a combination of the services provided and fiduciary management so that
the private partner will receive the Boiler plants management and will delivery the services in
providing the biomass-based thermal energy.

Considering that the law stipulates that the Public-Private Partneship can be implemented through
the contractual forms not prohibited by law, the Public-Private Partneship contract will be untitled
including the elements of both the service contract and the contract of fiduciary management.

2. The implementation manner of the Public-Private Partnership contract.

The current legislation of the Republic of Moldova defines the implementation manner of the the
Public-Private Partneship contracts depending on the level of involvement of the private partner.
Among these, the most relevant in our case:
Construction-operation-transfer, when the private partner undertakes the construction, financing,
operation and maintenance of the public property. The investor has the right to charge the fees for
tariffs to return on the investmen and maintenance costs, as well as to obtain the reasonable profit.
Upon the completion of the contract, the public property is transmitted to the public authorities on a
free basis in a good state and free of any charges and obligations.
The construction–operation-transfer method applies to all three alternatives related to the
administration of 5 Boiler plants transferred to the fiduciary management and providing the services
of the biomass-based thermal agent supply.

Design-construction-operation through the construction and operation of the public-private

partnership object and transfer to the private partner for up to 50 years. The public-private
partnership project can be financed entirely by the private partner. Upon the expiry of the public

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partner contract, the public-private partnership object is freely transferred to the public partner in a
good stat, operational and free of any charges and obligations.
This method is applicable for the alternatives involving the design and construction of the pellet
factory.

Construction-transfer-operation when the private partner assumes the construction of a property

with further transmission to the public partner ownership immediately after the completion of the
construction, and the public partner in turn passes to the private partner utilisation.
The construction-transfer-operation method is perfectly applicable for the expansion of the network
of biomass-based Boiler plants when it is planned for the private partner to construct 16 new pellet-
based Boiler plants (Alternative I and Alternative II).
Concurrently, it should be noted, that the law stipulates that Public-private partnership can be
created via other methods not prohibited by the law.
Considering the above, the methods proposed are presented for each alternative.

Alternative I
Design-construction-transfer-operation-transfer
The private partner manages 5 existing Boiler plants and in parallel designs and constructs biomass-
based pellet factory and 16 Boiler plants with further transmision in public partner ownership.
Then he receives them under economic management. And upon the completion of the contract it
returns them to the owners.

Alternative II
Design→construction→transfer →–operation→transfer.
The private partner manages 5 existing Boiler plants and designs and constructs 16 Boiler plants
with further transmision in public partner ownership, then receives under economic management.
And upon the completion of the contract it returns them to the owners.

Alternative III
transfer→operation→ transfer
The private partner receives the management of 5 existing Boiler plants, provides the thermal agent
and upon the expiry of the contract returns back.

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3. Partners involvement manner, benefits and risks sharing

Alternative I Alternative II Alternative III

Involvement of 1. Transmission in 1. Transmission in 1. Transmission in

public partners fiduciary management: fiducary fiduciary management :
5 existing Boiler plant, management: 5 5 existing Boiler plants
16 new Boiler plants; existing Boiler ), 16 new Boiler plants
2. Transmission of the plants ), 16 new ,
right to provide the Boiler plants , 2. Transmission of the
public service of 2. Transmission of the right to provide the
biomass-based thermal right to provide the public service of
agent supply. public service of biomass-based thermal
3. Provision of co- biomass-based agent supply
financing in the form of thermal agent 3. Provision of co-
a grant for the pellet supply. financing in the form
factory 3. Provision of co- of a grant for the
4. Allocation of land financing in the form of private partner to bring
(including premise) for a grant for the private down prices for the
the construction of the partner for the supply of the thermal
factory construction and agent;
installation of pellet-
based Boiler plant
Involvement of Financing the Financing of the Technical maintenance
the private construction of the construction of 16 new of 5 existing Boiler
partner factory, construction of 16 Boiler plants, technical plants and supply of the
new Boiler plants, maintenance, supply of thermal agent;
technical maintenance, the thermal agent.
supply of thermal agent, ,
pellets distribution.
Benefits of • Performing the tasks • Performing the • Performing the
public partners in providing the thermal tasks in providing the tasks in providing the
agent for 21 public thermal agent for 21 thermal agent for 5
institutions from the public institutions from public institutions from
district, the district , the district
• Providing the • Reduction the • Providing the
sustainable and efficient dependence on the sustainability and
operationof the biomass- fossil energy resources, efficiency of biomass-
based Boiler plants, • Reduction of the based Boiler plants,
• Reduction of the need to extend the
dependance on the fossil natural gas pipeline in
energy resources, the district villages.
• Creation the
opportunity for the
development of biomass

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utilisationin thermal
energy field, and
providing the quality
biofuel in the residential
sector.
• Reduction of the need
to expand the natural gas
pipeline in the district
villages
Benefits of the experience in biofuel obtaining the profit from obtaining the profit from
private partner production, obtaining the providing the thermal providing the thermal
profit from providing the agent within 11 years agent within 10 years
thermal agent within 20 period period
years period
Major risks, Political: change in local Political: the change in Political: change in
bottleneck Councils and local local Councils and local local Councils and local
issues rhat policies can lead to the policies can lead to the policies can lead to the
may arise termination of the Public- termination of the termination of the
within the private Partnership Public-private Public-private
implementation contract or withdrawal Partnership contract or Partnership contract or
period from the Association of withdrawal from the withdrawal from the
certain Local Public Association of certain Association of certain
Associations Local Public Local Public
Economic: Associations Associations
1. Dependence on the Economic: Economic:
tariff calculation 1.dependence on the 1. Dependence on the
methodology of the tariff calculation tariff calculation
thermal agent –can methodology of the methodology of the
considerably increase the thermal agent-can thermal agent –can
costs of public institutions considerably increase the considerably increase the
heating, covered by the costs of the public costs of public
state budget. institutiosn heating, institutions heating,
2. Dependence on the covered by the state covered by the state
raw material costs in the budget. budget.
fuel production-can
increase the thermal agent
prime-cost.
Environment: the
occurence of natural
calamities can reduce the
biomass qiantity for the
fuel production.

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 Studiul de Fezabilitate

4. Possible organisational and legal forms and steps to be taken

Alternative I Alternative II Alternative III

Form of  Public partner: the  Public partner: the  Public partner: the
registration Association Association Agreement Association Agreement
Agreement between between the Public- among 3 municipalities
the Public-Partner Partner Partnership and participating in the
Partnership and the the District Council, Public-private
District Council, that that would include the Partnership and the
would include the empowerment of the District Council that
empowerment of the District Council to would include the
District Council to represent all the empowerment of
represent all the municipalities District Council to
municipalities participating in the represent the the
participating in the Ptblic-private municipalities
Ptblic-private Partnership and sign participating in the
Partnership and sign the Public-private Ptblic-private
the Public-Orivate Partnership contract Partnership and sign the
Partnership contract  the Public-private Public-private
 the Public-Private Partnership contract Partnership contract
Partnership contract (concession or creation
(concession or of public-private  The Public-Private
creation of public- capital-based entity) Partnership contract (
private capital-based the untitled contract
entity)  When public-private including the service
capital –based society is contract and fiduciary
 When public-private created (joint-stock management contract)
capital society is company/limited
created Ijoint-stock liabilities company), the
company/limited association agreement
liabilities company), and approval of the
the association statute of a new society.
agreement and Then the registration of
approval of the new legal person will
statute of a new be necessary.  For more details see
society. Then the  For more details see paragraph 1 :
registration of new paragraph 1 : Contractual forms of
legal person will be Contractual forms of Public-Private
necessary. Public-Private Partnership
For more details see Partnership implementation
paragraph 1 : implementation
Contractual forms of
Public-Private
Partnership

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 Studiul de Fezabilitate

implementation
Drafting - Decision of the - Decision of the District - Decision of the District
documents District Council on Council on Public- Council on Public-
Public-Private Private Partnership Private Partnership
Partnership (PPP) (PPP) (including (PPP) (including
(including approval approval the list of approval the list of
the list of property property and services of property and services of
and services of public public interest for public interest for
interest for Public- Public-Private Public-Private
Private Partnership) Partnership) Partnership)
- Decisions of local - Decisions of local - Decisions of local
Councils of the Councils of the Councils of the
municipalities-Public- municipalities-Public- municipalities-Public-
Private Partnership Private Partnership Private Partnership
Participants Participants Participants
- Association - Association Agreement - Association Agreement
Agreement between between the Public- between the Public-
the Public-Private Private Partneship Private Partneship
Partneship municipalities and the municipalities and the
municipalities and the District Council District Council
District Council - The Contract of Public- - The Contract of Public-
- The Contract of Private Partnership Private Partnership
Public-Private - Acceptance statement of - Acceptance statement of
Partnership property transmitted to property transmitted to
- Acceptance statement the private partner the private partner
of property within the Public- within the Public-Private
transmitted to the Private Partneship Partneship
private partner within - Draft standard services - Draft standard services
the Public-Private contract to be used for contract to be used for
Partneship the supply of the the supply of the thermal
- Draft standard thermal agent to the agent to the public
services contract to be public institutions institutions against
used for the supply of against payment. payment.
the thermal agent to
the public institutions
against payment.

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 Studiul de Fezabilitate

5. Possible financing forms and Public-Private Partnership (PPP) contract duration

PPP implementation form PPP implementation PPP implementation

1. form 2. form
Duration of 20 years 11 years 10 years
PPP contract

Alternative 1 a
Planned financial sources total financing, lei

Contribution of the private partner 4 986 000,00

Grant 1 700 000,00
Financing of the public partners from the state budget 554 000,00
Investment credit 10 780 000,00
Profit invested 400 000,00
Total 18 420 000,00

Alternative 1 b
Planned financial sources total financing, lei

Contribution of the private partner 4 986 000,00

Grant 1 700 000,00
Financing of the public partners from the state budget 554 000,00
Investment credit 6 879 068,00
Profit invested 400 000,00
Total 14 519 068,00

Alternative 2
Planned financial sources total financing, lei

Contribution of the private partner 1 246 000,00

Grant 1 700 000,00
Financing of the public partners from the state budget 554 000,00
Investment credit 4 600 000,00
Profit invested 400 000,00
Total 8 500 000,00

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 Studiul de Fezabilitate

10.2. Description of the performance of the contract, including justification of the

Public-Private Partnership Project term and conditions of the conclusion of the
contract.
The final form of the performance of the contract is proposed to be under the following
scheme:
Design → construction→ transfer→operation → transfer
The private partner takes over the management of 5 existing Boiler plants, designs and constructs
16 Boiler plants with further transmission under the public partner ownership. Then, the private
partner takes over the economic management of them and upon completion of thecontract returns
back to the owners.

In order to sign the Public-private Partnership contract it is necessary for the Leova District Council
and all the municipalities –owners of the existing Boiler plants and 16 Boiler plants to be
built/modernised in the project to :
• Approve in the local Councils the objective and public services list proposed to be
included in the Public-Private Partnership
• Sign an association agreement to delegate the signing the Public-private partnership
contract to Leova District Council;
• Accept the ownership of the Boiler plants built within the Energy and Biomass Project and
transmit the economic management to the private partner;
• Owners/managers of the public institutions included in the Public-private Partnership will
sign the service contract with the private partner in terms of supplying the biomass-based
thermal agent
• Own the new pellet-based Boiler plants built by the private partner and transmit them in
the economic management;

The Contract will be signed for a period of 11 years as the depriciation term of the solid fuel is
of 10 tears, the Boiler plants construction is planned within the first 4 years of the project.
According to the economic indicators calculations ( finacial IRR) the most optimal IRR rate, 8.3%,
is obtained after 11 years of operation. Longer period needs additional investments for updating the
equipment and the Boiler plants. Taking into account the underdeveloped market of biomass
thermal agent production in Moldova, it is risky to plan the activites for longer period of the
investment exploitation.

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 Studiul de Fezabilitate

The conclusion of the contract requires the following major conditions:

For the public partner –owning the property of the Public-Private Partnership-related Boiler plants,
to assume the Boiler plants repair costs (in the amount of 545 000 lei), to provide cofinancing in
the form of the grant of 1 700 000 lei for the construction of new Boiler plants.

For the private partner- to build /to upgrade 16 pellet-based Boiler plants, to provide own
cofinancing in the amount of at least 1 246 000 lei, to own or to build, outside the Public-private
partnership contract, the pellet factory for the production of the pellets from the straw or sawdust
with the capacity of 1500-1600 tons per year , to provide the qualified staff certified in the field of
the Boiler plants maintenance.

11. Description of the services/products provided under partnership framework

(quantification, pricing)

The following types of services will result from the Public-private partnership applied:

Providing the thermal agent from straw, pellets and briquettes for 21 Boiler plants;
Production and trading the pellets
Within the Public-Private Partnership framework it is planned to produce and provide of
maximum 8245 Gcal per year for the public institutions included in the Public-Private
Partnership contract.

Prividing the thermal agent, in Gcal, (total amount of Gcal required for the institutions concerned
from Leova district is given in the table 12.1- the data selected from Annex 1) from biomass will be
provided for the public institutions: Tomaiul Nou, Cazangic (Seliste) and Sarata Noua- Leova
district that currently have Boiler plants.

Table 12.1. Determination of the thermal energy demand for the analysed public institutions
Locality Capacity of Type of Annual Demand for Demand for
Boiler fuel consumption of thermal fuel, kg/h
plant, kW thermal agent agent,
at Boiler plant, Gcal/year
kWh/year
Tomaiul Nou 81,00 briquettes 183 805,20 158,04 24,50
Seliste 25,00 briquettes 56 730,00 48,78 6,47
Cazangic 190,00 Packs of 431 148,00 370,72 56,16
straw
Sarata Noua - 340,00 Packs of 771 528,00 663,39 104,08
(school) straw
(kindergarten) 150,00 Packs of 340 380,00 292,67 45,92
straw
Total 1 783 591,20 1533,6

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 Studiul de Fezabilitate

IV. Identifying and analyzing risk-sharing options for their

management capacity (matrix)
extremely small medium large extremely
small large
Very small 1-4 3-8 5-12 7-16 9-20
small 3-8 9-16 15-24 21-32 27-40
medium 5-12 15-24 25-36 35-48 45-60
large 7-16 21-32 35-48 49-64 63-80
Very large 9-20 27-40 45-60 63-80 81-100
Category of a I II III IV V
risk

a. Political risk

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 Studiul de Fezabilitate

1. Political risk

Category of risk Description outcomes Attenuatio Solution I

n Variant A
Impact Probab
Political risk at the Risk of financial, strategic or Diminuation of Assets Medium Medium
microeconomic level staff loss of the company, the revenues of backing of 15% 15%
caused by the factors not related the company the
to the market, but social policies company
(fiscal, monetary, commecial,
Asigurarea
industrial, income, labourm
development)
activelor
Riscul unei pierderi financiare, companiei
strategice sau de personal a unei
companii, cauzate de factori care
nu ţin de piaţă, precum politici
sociale
(fiscale, monetare, comerciale,
industriale, de venit, de muncă,
de dezvoltare)
Political instability Risk of change of the Possibility of Provision Large Large
adminstration in the framework modification of for a clause 49% 49%
of the public partner, frequent the management in the
changes of the political regime direction of the contract
Riscul schimbării administraţiei policy of the regulating
în cadrul partenerului public, public partner, n the
schimbări frecvente ale egatively emergence
regimului politic effecting the of would be
partnership risks.
relations.

b. Legislative risk

2. Legislative risk

Category of a Description Outcomes Atttenuation Solution I

risk Variant A
Impact Probability
Risk of Riscului introducerii Decrease of Mărimea tarifelor la Medium Medium
legislative unor dispoziţii legale revenues and/or obiectele construite din 15% 15%
changes care vor împiedica sau increase of resursele APL şi
vor face neatractivă o costs externe la solicitarea
afacere sau o APL se vor afla sub
controlul APL raionale
tranzacţie, precum şi şi locale. Se va solicita
cu lipsa de certitudine ajustarea tarifului cu
privind prevederile argumente (suficient de
legale în viitorul semnificative) şi
previzibil, modificare cuantificabile.
şi completarea

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 Studiul de Fezabilitate

legislaţiei

Legal risk Riscul înregistrării Posibilitatea Stabilirea clară a Medium Medium

unei pierderi din cauza pierderii unei clauzelor contractuale, 15% 15%
neaplicării sau aplicării părţi din profit,
defectuoase a deteriorarea
relaţiilor dintre
prevederilor legale
parteneri
şi/sau contractuale
şi/sau din cauza
cadrului contractual
necorespunzător sau
insuficienta
reglementare.

c. Financial and economic risk

3. Financial and economic risk

Category of a Description Outcomes Attenuation Solution I

risk Variant A
Impact Proba
Commercial Insufiecienţa pieţei de Diminuarea Partenerul privat cu Large Large
risk desfacere, iar aceasta veniturilor, experienţă selectat prin 64% 49%
va duce la stoparea creşterea concurs, care aplică:
comercializării stocurilor de publicitatea, metode de
produsului finit -
produse finite, atragere a clienţilor şi de
pelete prin
supradimensioarea
sistarea procesului micşorare a costurilor,
fabricii de peltizare de lucru la fabrică planificarea şi controlul.
Risk of price Expunerea la pierderi Crearea Stabilirea clauzei Large Large
control a întreprinderii al incertitudinii contractuale prin care tariful 69% 69%
cărei preţ la produsele privind cash-flow- delivrare a agentului termic
realizate şi serviciile urile viitoare se va aproba anual
prestate este
reglementat total sau
parţial de către
autorităţile publice
Investment Asumarea unor riscuri Pierderea sumei de Respectarea metodologiei de Small Large
risk în speranţa obţinerii bani investite calcul a tarifului o data la 5 30% 30%
unui cîştig viitor ani, in care se include costul
suficient pentru a investiţiei

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 Studiul de Fezabilitate

compensa riscurile
anticipate.
Riscul of Riscul că, Falimenarea Partenerul privat va furniza Large Very s
insolvency întreprinderea companiei. garanţie bancară de bună 30% 30%
administratoare execuţie, care se transferă
devine insolvabila sau automat APL şi pierde
mai târziu se sumele deja investite, în caz
dovedeşte a fi de neterminare. APL va
nepotrivită pentru lansa o nouă procedură de
administrarea selectare a PP.
investiţiei.
Risk of Riscul că finanţarea Nerespectarea Ajustarea planului de Small Very s
obtaining the externă va întârzia. termenelor de acţiuni. 15% 15%
credit punere în funcţiune
a utilităţilor,
creşterea mărimii
capitalului de lucru.

d. Risk of execution Riscul de executare

4. Risk of execution cul de executare

Category of Description Outcomes Attenuation Solution

risk Variant
Impact Prob
Risk of Riscul unor condiţii Costuri suplimentare Instituţiile APL şi raionale Small Medi
placement neprevăzute de de autorizare sau verifică corespunderea 30% 30%
amplasare a fabricii. întârzierea parţială a amplasării fabricii cu normele
Amplasarea fabricii în unor activităţi, care în vigoare.
vecinătatea imediată a conduc la diminuarea
localităţii. parţială a veniturilor.
Risk of Riscul de proiectare Creşterea costurilor şi Calitatea proiectării poate fi Small Smal
design constă în nerespectarea întârzierea proiectării asigurată prin experienţa unei 9% 9%
unor norme tehnice, şi/sau creşterea instituţii de proiectări. Dacă
întârzierea proiectării suplimentară a proiectul respectă TOR, aceste
costurilor capitale consecinţe sunt minore.
Risk of Riscul de evenimente Creşterea costurilor Acest risc poate fi evitat Small Smal
growth of care au loc pe durata investiţionale, printr-o planificare coerentă a 9% 9%
investment construcţiei, conduc la diminuarea resurselor pentru executarea
costs imposibilitatea veniturilor lucrărilor, prin implementarea
respectării graficului unui sistem de prognoză şi
de dare în exploatare a verificare a costurilor efectuate
obiectelor şi sau la şi necesare de realizat în
mărirea costurilor perioada următoare.
Responsabil este
Întreprinderea administratoare
a lucrărilor de construcţie
Risk of Riscul ca intrările Creşterea costului de Partenerul privat poate aplica Mediu Medi
operation necesare costă mai administrare în relaţiile sale contractuale m 25%
costs mult decât se cu furnizorii angajamente 25%
anticipase pe termen lung.

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 Studiul de Fezabilitate

Maintenan Maintenance costs Growth of Partenerul privat va aplica Mediu Medi

ce risk will increase in maintenance costs contracte pe termen lung cu m 25%
relation of Creşterea costului furnizorii de materiale şi 25%
anticipated costs de întreţinere servicii.
Riscul ca costurile de
întreţinere se vor
majora în raport cu
ce se anticipase

e. Environment risk etc.

5. Environment risk
Category Descriptio Outcomes Attenuatio Solution I Solution I Allocati
of a risk n n Variant A Variant B on of a
risk
Impa Probabili Impa Probabili
ct ty ct ty
Environm Probabilita Insuficienţ Ajustarea Large Medium Large Medium Public
ent risk tea a sau lipsa planului 35% 35% 35% 35% and
producerii materiei de private
unor prime, acţiune, partner
situaţii deteriorare
prelungire
excepţional a
e creşterea
a
(incendiu, costurilor perioadei
inundaţii, la aceasta de punere
secetă) în
aplicare a
contractul
ui prin act
adiţional,
fără a
schimba
obiectivel
e,
bugetul,
activităţi
şi
rezultate.
Risk of Probabilita Poluarea Determina Large Small Large Small Private
excessive tea excesivă a rea tipului 21% 21% 21% 21% partner
pollution apariţiei mediului de
unor ambiant, activităţi si
cantităţi îmbolnăvir organizare
mari de ea a ciclului
praf în populaţiei tehnologic
procesul de astfel ca să
producere nu fie
poluat
mediul şi
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 Studiul de Fezabilitate

să nu se
producă
zgomot

Allocation of risks

Table 4.1. Risks transferred, retained

Risk Solution I - Variant A Solution I - Variant B
Retained Transferred Retained Transferred
Commercial risk 50 50 0 0
Price control risk 0 0 50 50
Insolvency risk 7 7 40 40
Placement risk 20 20 20 20

Risks values

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 Studiul de Fezabilitate

V. Factors that ensures sustainability of PPP project:

1. The main technical and economic indicators of investment (total
investment value, investment scheduling, and investment identification
and objectives definition, including specification of the reference period);

General working hypothesis

The essence of financial analysis is to determine if or how much a project is valuable from a
financial perspective, public or social. This can be expressed in several ways; the most
meaningful and exactly way being use of investment projects performance indicators, namely:
▪ Internal rate of return (IRR);
▪ Net present value of the project (NPV);
▪ Benefits / Costs rate (R B / C ).
IRR is defined as the interest rate that leads to zero the net present value of the investment.
VAN calculates the net present value of investment or of the capital by using a present rate
(discount rate) and a series of payments (positive values) and income (negative values).
Benefits / costs report is the ratio of the discounted flow of benefits and costs discounted flow.

The results of the financial analysis are interpreted with the following reference values:
IRR > r (5%)
NPV> 0
Coefficient B /C >1

Determining project costs were made based on the following assumptions:

1. Inflation rates for future periods can be estimated based on developments of the previous periods
or can be used from official sources of the forecast. Below can be used two approaches for inflation.
The first is the separate application of inflation rate for all items of costs and revenues. A second
approach consists in projecting costs and revenues in constant prices. The assumption is that
indifferent the future rate of inflation, the influence will be proportional on both the costs and the
revenues. In constructing models we apply the first variant of prices and tariffs determination.
2. Discount rate. The standard discount rate considered in the financial analysis is r = 5% (according
to the European Commission recommendations), when calculating the discount rate (based on the
inflation rate of 3,5% (according to the National Bank of Moldova[ 9]), Interest rate = 3,5%
(according to the National Bank of Moldova [ 10]) and of the capital risk rate for 2013, according to
Damodaran A. is 5.62% [ 11]), it will be equal to 12.62%. Using calculated rate will help to increase
the NPV, but will not significantly influence the IRR.

3. Project currency. All project forecasts are calculated in MDL.

9
http://www.bnm.md/md/current_inflation?redirect=1
10
http://www.bnm.org/
11
http://pages.stern.nyu.edu/~adamodar/
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Hypothesis in economic and financial analysis (project scenario)

OPTION 1

4. Provision of public services of insurance with thermal agent from biomass of public
institutions throw:

• Taking in economic management of 5 biomass boiler stations for provision of thermal

agent from biomass, construction of 16 new boiler stations on pellets and taking them
into management for provision of thermal agent from pellets, organization of pellet
production to ensure with fuel the boiler stations .

• This solution was analyzed by 2 possible options for realization applied to pellet
production plant construction:
- Option A- installation of 2 presses in the pellet production line for producing pellets from
straw and sawdust pellets;
- Option B install 1 press of straw pellet production line.

OPTION 2

5. Provision of public services of insurance with thermal agent from biomass of public
institutions throw:

• Taking in economic management of 5 biomass boiler stations for provision of thermal

agent from biomass, construction of 16 new boiler stations on pellets and taking them
into management for provision of thermal agent from pellets

OPTION 3

6. Provision of public services of insurance with thermal agent from biomass of public
institutions throw:

• Taking in economic management of 5 biomass boiler stations from 4 town halls from
Leova district for provision of thermal agent from biomass

Respective option does not require investment and has not been analyzed.

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Presumed income evolution

OPTION 1
Analysis Option 1 permits identification of the following categories of income from:

• providing thermal agent to 5 boiler stations from 3 Leova town halls;

• selling pellets for ensuring boiler stations with fuel;

• extension of boiler stations network in the district by building 16 new boiler stations and taking them into management for provision of
thermal agent from pellets.

In order to achieve projected revenues were taken as reference the following:

 market trading price of agricultural biomass pellet-1800 MDL / t;

 market trading price of woody biomass pellets-2000 MDL / t;

 Tariff for 1 Gcal-881, 77 MDL for existing and planned boiler station on different types of fuel will be recalculated and approved annually.

 Cost of a ton of agricultural biomass straw-500 MDL

 Cost of tons of woody biomass branches and sawdust-700 MDL

 The factory pellet production capacity –

▪ 2500 tons / year of which 1500 tons of straw and 1000 of sawdust, the option with oversized factory

▪ 1600 tons / year of straw, the option of sizing factory for necessary fuel calculated on the capacity of boiler stations included in the project

Estimated income for the first solution consists of:

• Revenue from selling pellets made at own factory for their own boiler stations and on market of excess

• Revenues from provision of thermal agent to existing boiler stations

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• Revenues from provision of thermal agent to new boiler stations (in Table 5. 8.)

Option 1 a

Table 5.1: Estimated income of pellets production

Quantity produced Quantity produced

monthly monthly (testing)
Categories of revenue Quantity Price Total revenues (maximum capacity)

Income from the sale of agricultural biomass

pellets 1500 1700 2 700 000,00 166,67 100

Income from the sale of woody biomass pellets 988,29 2000 1 976 576,00 109,81 80,00

Table 5.2: Estimated income from provision of thermal agent of existing boiler station

Total revenues per Total monthly

Income from ensuring of thermal agent Necessary Gcal Gcal price season (7 months) revenues
Kindergarten from Cazangic 370,72
Kindergarten from Seliste 48,78
Gymnasium from Sarata Noua 663,39
Kindergarten from Sarata Noua 292,67
Gymnasium -Kindergarten from Tomaiul- 158,04
Nou
Total 1.533,60 881,77 1 352 286,55 193 183,79

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Table 5.3: Projection of revenue for a period of 20 years -option1a

Categories of
revenues 1 2 3 4 5 6 7 8 9 10
Revenues from
providing
thermal agent
to existing 1.421.266,7 1.435.479,4 1.449.834,2 1.464.332
boiler station 12 676.143,28 1.352.286,55 1.365.809,42 1.379.467,51 1.393.262,19 1.407.194,81 6 3 2 ,56
Income from
the sale of fuel
(agricultural
biomass 2.460.000,0 5.675.454,2 5.732.208,8 5.789.530,9 5.847.426
pellets) 0 2.700.000,00 2.727.000,00 5.508.540,00 5.563.625,40 5.619.261,65 7 1 0 ,21
Income from
the sale of fuel
(woody
biomass 1.418.097,7 4.154.802,4 4.196.350,5 4.238.314,0 4.280.697
pellets) 8 1.976.576,00 1.996.341,76 4.032.610,36 4.072.936,46 4.113.665,82 8 1 1 ,15
Revenues from
new boiler 6.037.412,9 6.097.787,0 6.158.764,9 6.220.352
station 13 455.927,26 1.101.107,36 1.686.070,64 4.000.116,57 5.918.452,04 5.977.636,56 3 6 3 ,58
1.421.266,7 1.435.479,4 1.449.834,2 1.464.332
Total 676.143,28 1.352.286,55 1.365.809,42 1.379.467,51 1.393.262,19 1.407.194,81 6 3 2 ,56

Categories of
revenues 11 12 13 14 15 16 17 18 19 20
Revenues from
providing
thermal agent to
existing boiler 1.478.975, 1.554.418,5 1.569.962, 1.617.5
station 14 89 1.493.765,65 1.508.703,30 1.523.790,34 1.539.028,24 2 71 1.585.662,34 1.601.518,96 34,15

12
According table 5.8
13
According table 5.8
14
According table 5.8
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Income from the

sale of fuel
(agricultural 5.905.900, 6.207.160,7 6.269.232, 6.459.1
biomas pellets) 47 5.964.959,48 6.024.609,07 6.084.855,16 6.145.703,71 5 36 6.331.924,68 6.395.243,93 96,37
Income from the
sale of fuel
(woody biomass 4.323.504, 4.544.046,2 4.589.486, 4.728.5
pellets) 12 4.366.739,16 4.410.406,56 4.454.510,62 4.499.055,73 9 75 4.635.381,62 4.681.735,43 52,79
Revenues from
new boiler 6.282.556, 6.603.029,6 6.669.059, 6.871.1
station 15 10 6.345.381,66 6.408.835,48 6.472.923,83 6.537.653,07 0 90 6.735.750,50 6.803.108,00 39,08
17.990.93 18.352.554,4 18.908.655, 19.097.741 19.288.719,1 19.481.606,3 19.676.
Total 6,59 18.170.845,95 1 18.536.079,96 18.721.440,76 16 ,72 3 2 422,39

Figure 5.1: Evolution of total income presumed-option 1a

15
According table 5.8
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Option 1 b

Table 5.4: Estimated income of pellets production, option1b

Categories of Quantity Price Total revenues Quantity produced monthly Quantity produced
revenues (maximum capacity) monthly
(testing)
Income from the sale 1600 1700 2 720 000,00 177,78 100
of agricultural
biomass pellets

Table 5.5 Projection of revenue for a period of 20 years -option1b

Categories of
revenue 1 2 3 4 5 6 7 8 9 10
Income from
the sale of 1.352.286,5 1.407.194 1.421.266,7 1.435.479,4 1.464.
thermal agent 676.143,28 5 1.365.809,42 1.379.467,51 1.393.262,19 ,81 6 3 1.449.834,22 332,56

Income from
the sale of fuel 2.774.672 2.802.418,7 2.830.442,9 2.887.
(straw pellets) 818.518,52 906.666,67 457.866,67 2.720.000,00 2.747.200,00 ,00 2 1 2.858.747,34 334,81
Revenues from
new boiler 1.101.107,3 5.977.636 6.037.412,9 6.097.787,0 6.220.
station 16 455.927,26 6 1.686.070,64 4.000.116,57 5.918.452,04 ,56 3 6 6.158.764,93 352,58
10.572
3.360.060,5 10.159.50 10.261.098, 10.363.709, 10.467.346,4 .019,9
Total 1.950.589,06 8 3.509.746,73 8.099.584,08 10.058.914,23 3,37 41 39 8 5

Categories of
revenue 11 12 13 14 15 16 17 18 19 20

16
According table 5.8
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Income from
the sale of 1.493.765,6 1.539.028,2 1.554.41 1.601.518,9
thermal agent 1.478.975,89 5 1.508.703,30 1.523.790,34 4 8,52 1.569.962,71 1.585.662,34 6 1.617.534,15
Income from
the sale of fuel 2.945.370,2 3.034.617,9 3.064.96 3.157.835,5
(straw pellets) 2.916.208,16 4 2.974.823,94 3.004.572,18 0 4,08 3.095.613,72 3.126.569,86 6 3.189.413,91
Revenues from
new boiler 6.345.381,6 6.537.653,0 6.603.02 6.803.108,0
station 17 6.282.556,10 6 6.408.835,48 6.472.923,83 7 9,60 6.669.059,90 6.735.750,50 0 6.871.139,08
10.784.517, 11.111.299, 11.222.4 11.334.636,3 11.562.462,
Total 10.677.740,15 55 10.892.362,73 11.001.286,35 22 12,21 3 11.447.982,69 52 11.678.087,15

Figure 5.2: Evolution of total income presumed-option 1b

17
According table 5.8
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OPTION 2

In order to achieve option 2 was selected regions in which will be made the economic operator extension, and for the calculations were used estimates
of the option 1.

Table 5.6: Estimation of the necessary investment, revenue forecasting for 16 new and 5 existing boiler station
Repair cost / Total cost / Heat
Boiler boiler station per boiler demand
station room (including Total per /Expenses Total
n capacity, construction, installation investment, season, for pelets, revenues
o location kW lei / costs),lei lei Gcal lei per year, lei
2014

1 Orac 100 40000 261000 301000 195,12 80901,7889 172.048,02

2 Colibabovca 60 48000 174000 222000 117,07 48541,07334 103.228,81

3 Vozniseni 120 24000 348000 372000 234,14 97082,14668 206.457,63

4 Ceadir 100 28000 261000 289000 195,12 80901,7889 172.048,02

5 Tochile Raducani 150 64000 464000 528000 292,67 121352,6833 258.072,04

total per year 530,00 204.000,00 1.508.000,00 1.712.000,00 1.034,12 428.779,48 911.854,53
2015
6 Ceadir 100 28000 261000 289000 195,12 80901,7889 172.048,02
7 Sarata Rezesti 60 28000 130500 158500 117,07 48541,07334 103.228,81
8 Covurlui 60 48000 130500 178500 117,07 48541,07334 103.228,81
total per year 220,00 104.000,00 522.000,00 626.000,00 429,26 177.983,94 378.505,65
2016
9 Orac 100 24000 261000 285000 195,12 80901,7889 172.048,02
10 Cneazevca 100 30000 261000 291000 195,12 80901,7889 172.048,02
11 Colibabovca 100 24000 261000 285000 195,12 80901,7889 172.048,02
12 Leova town 160 28000 493000 521000 312,19 129442,8622 275.276,84

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total per year 460,00 106.000,00 1.276.000,00 1.382.000,00 897,53 372.148,23 791.420,91
2017

13 Leova town 1500 48000 2610000 2658000 2.926,74 1213526,833 2.580.720,37

14 Leova town 330 28000 986000 1014000 643,88 266975,9034 567.758,48
Leova town,
15 Independentiei, 3 200 32000 522000 554000 390,23 161803,5778 344.096,05
Leova town,
16 Independentiei, 5 200 32000 522000 554000 390,23 161803,5778 344.096,05
total per year 2.230,00 140.000,00 4.640.000,00 4.780.000,00 4.351,09 1.804.109,89 3.836.670,95

total investment 3.440,00 554.000,00 7.946.000,00 8.500.000,00 6.711,99 2.783.021,54 5.918.452,04

Wear new assets,
equipment /
boilers 754870,00
rooms wear /
construction
related to
investment 55400
Kindergarten
from Cazangic 14.383.820,00 370,72 326.890,76
Kindergarten
from Seliste 48,78 19910,4 43.012,87
Gymnasium from
Sarata Noua 663,39 584.959,17
Kindergarten
from Sarata
Noua 292,67 258.068,40
Gymnasium -
Kindergarten
from Tomaiul-
Nou 158,04 66820,2 139.355,35
total existent
boiler station,
MDL per year 1.533,60 86.730,60 1.352.286,55

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Table 5.7: Tariff calculation for 1 Gcal-option 2

New Existent
boilers boilers % Existent
total station stations % New BS BS
Costs 4973018,17 3637175,26 1335842,91
profit 5% 248650,91 181858,76 66792,15

Total wear per year 1122112,00 810270,00 311842,00

The rate of assets profitability 9% 926957,52 715140,00 211817,52

Total costs 7270738,60 5344444,02 1926294,58
Total Gcal 8245,59 6711,99 1533,60 81,40 18,60

Price 1 Gcal without VAT 881,77 796,25 1256,06

Proportional to the Gcal quantity

in total amount ,lei 648,16 233,62
total lei 1 Gcal 881,77

Table 5.8: Projection of revenue for a period of 20 years –option2

Year Existent boiler stations New boiler stations Total
0
1 676.143 455.927 1.132.070,54
2 1.352.287 1.101.107 2.453.393,91
3 1.365.809 1.686.071 3.051.880,06
4 1.379.468 4.000.117 5.379.584,08
5 1.393.262 5.918.452 7.311.714,23
6 1.407.194,81 5.977.636,56 7.384.831,37
7 1.421.266,76 6.037.412,93 7.458.679,69
8 1.435.479,43 6.097.787,06 7.533.266,48

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9 1.449.834,22 6.158.764,93 7.608.599,15

10 1.464.332,56 6.220.352,58 7.684.685,14
11 1.478.975,89 6.282.556,10 7.761.531,99

Presumed evolution of expenses

OPTION 1

Assumptions of cost estimates. In order to achieve cost estimates we assume the following hypotheses on the determination of costs for option 1:

1. Objects constructed or acquired are valued based on the latest cost or based of recent offers from construction companies.
2. Operational costs include costs for producing pellets and thermal agent production expenses for existing and new boiler stations.

Expenses for pellets production

a) Electric energy expenses;

b) Expenses for raw material;
c) Expenses for raw material transport;
d) MK expenses;
e) Consumption expenses;
f) Wear expenses;
g) Current reparations expenses;
h) Staff expenses;
i) Communications expenses;
j) Payment of Interest;

Expenses for thermal agent production

a) Expenses for transportation to boiler

b) Technical maintenance expenses
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c) Expenses for briquettes procurement

d) Expenses for straw bales procurement
e) Expenses for pellets procurement

Expenses for pellets production

Table 5.9: Projection of expenses for a period of 20 years –option1a

Categories of 1 2 3 4 5 6 7 8 9 10
expenses
Expenses of pellets 1.485.591,67 2.353.186,81 2.364.206,84 4.258.514,33 4.280.087,63 4.301.876,67 4.323.883,59 4.346.110,59 4.368.559,86 4.391.233,61
production from
agricultural
biomass
Expenses of pellets 1.081.767,50 1.947.474,54 1.955.174,73 3.597.797,29 3.599.372,85 3.614.492,02 3.629.762,38 3.645.185,44 3.660.762,74 3.676.495,80
production from
woody biomass
Expenses of 667.921,46 1.335.842,91 1.335.842,91 1.335.842,91 1.349.201,34 1.362.693,35 1.376.320,29 1.390.083,49 1.403.984,32 1.418.024,17
assurance with
thermal agent
Expenses from new 374.923,67 894.444,16 1.305.327,53 2.604.394,67 3.637.175,26 3.673.547,01 3.710.282,48 3.747.385,30 3.784.859,16 3.822.707,75
boiler stations
Total 3.610.204,29 6.530.948,42 6.960.552,01 11.796.549,19 12.865.837,08 12.952.609,05 13.040.248,74 13.128.764,82 13.218.166,07 13.308.461,33

Categories of 11 12 13 14 15 16 17 18 19 20
expenses
Expenses of pellets 4.414.134,11 4.437.263,61 4.460.624,41 4.484.218,81 4.508.049,16 4.532.117,81 4.556.427,15 4.580.979,58 4.605.777,54 4.630.823,47
production from
agricultural
biomass
Expenses of pellets 3.692.386,20 3.708.435,50 3.724.645,30 3.741.017,19 3.757.552,80 3.774.253,77 3.791.121,75 3.808.158,41 3.825.365,43 3.842.744,52
production from
woody biomass
Expenses of 1.432.204,41 1.446.526,45 1.460.991,72 1.475.601,63 1.490.357,65 1.505.261,23 1.520.313,84 1.535.516,98 1.550.872,15 1.566.380,87
assurance with
thermal agent
Expenses from new 3.860.934,83 3.899.544,18 3.938.539,62 3.977.925,01 4.017.704,26 4.057.881,31 4.098.460,12 4.139.444,72 4.180.839,17 4.222.647,56
boiler stations
Total 13.399.659,55 13.491.769,74 13.584.801,04 13.678.762,65 13.773.663,88 13.869.514,12 13.966.322,86 14.064.099,69 14.162.854,28 14.262.596,43

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Figure: Presumed evolution of total expenses -option 1a

Table 5.10: Projection of expenses for a period of 20 years –option1b

Categories of 1 2 3 4 5 6 7 8 9 10
expenses
Expenses of pellets 1.879.489,44 2.811.031,75 2.823.769,67 2.835.069,06 2.848.047,35 2.861.155,42 2.874.394,58 2.887.766,12 2.901.271,39 2.914.911,70
production from
agricultural biomass
Expenses of 670.552,15 1.380.098,11 1.393.899,09 1.407.838,08 1.421.916,46 1.436.135,62 1.450.496,98 1.465.001,95 1.479.651,97 1.494.448,49
assurance with
thermal agent
Expenses from new 374.923,67 894.444,16 1.305.327,53 2.604.394,67 3.637.175,26 3.673.547,01 3.710.282,48 3.747.385,30 3.784.859,16 3.822.707,75
boiler stations
Total 2.924.965,26 5.085.574,02 5.522.996,29 6.847.301,80 7.907.139,07 7.970.838,06 8.035.174,04 8.100.153,38 8.165.782,51 8.232.067,94
Categories of 11 12 13 14 15 16 17 18 19 20
expenses
Expenses of pellets 2.928.688,42 2.942.602,90 2.956.656,53 2.970.850,69 2.985.186,80 2.999.666,27 3.014.290,53 3.029.061,04 3.043.979,25 3.059.046,64
production from
agricultural biomass

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Expenses of 1.509.392,97 1.524.486,90 1.539.731,77 1.555.129,09 1.570.680,38 1.586.387,18 1.602.251,06 1.618.273,57 1.634.456,30 1.650.800,86
assurance with
thermal agent
Expenses from new 3.860.934,83 3.899.544,18 3.938.539,62 3.977.925,01 4.017.704,26 4.057.881,31 4.098.460,12 4.139.444,72 4.180.839,17 4.222.647,56
boiler stations
Total 8.299.016,22 8.366.633,98 8.434.927,92 8.503.904,80 8.573.571,45 8.643.934,76 8.715.001,71 8.786.779,32 8.859.274,72 8.932.495,06

Figure: Presumed evolution of total expenses -option 1b

Table 5.11: Projection of expenses for pellets production from agricultural biomass for a period of 20 years –option1a
Categories of 1 2 3 4 5 6 7 8 9 10
expenses
Electric 382 666,67 424 200,00 428 442,00 865 452,84 874 107,37 882 848,44 891 676,93 900 593,70 909 599,63 918 695,63
energy
expenses
Expenses for 300 600,00 343 400,00 346 834,00 700 604,68 707 610,73 714 686,83 721 833,70 729 052,04 736 342,56 743 705,99
raw material
transport
Expenses for 83 500,00 850 000,00 850 000,00 1 700 000,00 1 700 1 700 000,00 1 700 000,00 1 700 1 700 000,00 1700 000,00
raw material 000,00 000,00

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MK expenses 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00
Consumption 132 430,00 145 350,00 146 803,50 293 607,00 296 543,07 299 508,50 302 503,59 305 528,62 308 583,91 311 669,75
expenses
Wear expenses 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00
Current 15 030,00 17 170,00 17 341,70 35 030,23 35 380,54 35 734,34 36 091,69 36 452,60 36 817,13 37 185,30
reparations
expenses
Staff expenses 168 021,00 169 701,21 171 398,22 259 668,31 262 264,99 264 887,64 267 536,52 270 211,88 272 914,00 275 643,14
Communicatio 720,00 727,20 734,47 1 483,63 1 498,47 1 513,45 1 528,59 1 543,87 1 559,31 1 574,91
ns expenses
Payment of 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00
Interest
Waste disposal 1 440,00 1 454,40 1 468,94 1 483,63 1 498,47 1 513,45 1 528,59 1 543,87 1 559,31 1 574,91
expenses
Total 1 485 591,67 2 353 186,81 2 364 206,84 4 258 514,33 4 280 4 301 876,67 4 323 883,59 4 346 4 368 559,86 4 391
087,63 110,59 233,61

Categories of
expenses 11 12 13 14 15 16 17 18 19 20
Electric
energy
expenses 927 882,59 937 161,41 946 533,03 955 998,36 965 558,34 975 213,92 984 966,06 994 815,72 1 004 763,88 1 014 811,52
Expenses for
raw material
transport
751 143,05 758 654,48 766 241,02 773 903,43 781 642,47 789 458,89 797 353,48 805 327,01 813 380,28 821 514,09
Expenses for 1 700
raw material 1 700 000,00 1 700 000,00 1 700 000,00 1 700 000,00 1 700 000,00 1 700 000,00 1 700 000,00 000,00 1 700 000,00 1 700 000,00
MK expenses
18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00 18 000,00
Consumption
expenses 314 786,44 317 934,31 321 113,65 324 324,79 327 568,04 330 843,72 334 152,15 337 493,68 340 868,61 344 277,30
Wear expenses
383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00 383 184,00
Current
reparations
expenses 37 557,15 37 932,72 38 312,05 38 695,17 39 082,12 39 472,94 39 867,67 40 266,35 40 669,01 41 075,70

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Staff expenses
278 399,57 281 183,57 283 995,40 286 835,36 289 703,71 292 600,75 295 526,75 298 482,02 301 466,84 304 481,51
Communicatio
ns expenses
1 590,66 1 606,56 1 622,63 1 638,85 1 655,24 1 671,80 1 688,51 1 705,40 1 722,45 1 739,68
Payment of
Interest 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00
Waste disposal
expenses 1 590,66 1 606,56 1 622,63 1 638,85 1 655,24 1 671,80 1 688,51 1 705,40 1 722,45 1 739,68
4 580
Total 4 414 134,11 4 437 263,61 4 460 624,41 4 484 218,81 4 508 049,16 4 532 117,81 4 556 427,15 979,58 4 605 777,54 4 630 823,47

Figure: Presumed evolution of expenses for pellets production from agricultural biomass –option1a

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Table 5.12: Projection of expenses for pellets production from woody biomass for a period of 20 years –option1a
Categories of
expenses 1 2 3 4 5 6 7 8 9 10
Electric energy
expenses 245 000,00 282 800,00 285 628,00 576 968,56 582 738,25 588 565,63 594 451,28 600 395,80 606 399,76 612 463,75
Expenses for
raw material
transport 239 400,00 262 600,00 265 226,00 535 756,52 541 114,09 546 525,23 551 990,48 557 510,38 563 085,49 568 716,34
Expenses for
raw material 119 700,00 910 000,00 910 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00

MK expenses 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00
Consumption
expenses 84 787,50 96 900,00 97 869,00 195 738,00 197 695,38 199 672,33 201 669,06 203 685,75 205 722,61 207 779,83

Wear expenses 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00
Current
reparations
expenses 11 970,00 13 130,00 13 261,30 26 787,83 13 527,85 13 663,13 13 799,76 13 937,76 14 077,14 14 217,91

Staff expenses 112 014,00 113 134,14 114 265,48 173 112,20 174 843,33 176 591,76 178 357,68 180 141,25 181 942,67 183 762,09

Communication
s expenses 480,00 484,80 489,65 989,09 998,98 1 008,97 1 019,06 1 029,25 1 039,54 1 049,94
Payment of
Interest 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00
Waste disposal
expenses 960,00 969,60 979,30 989,09 998,98 1 008,97 1 019,06 1 029,25 1 039,54 1 049,94
Total 1 081 767,50 1 947 474,54 1 955 174,73 3 597 797,29 3 599 372,85 3 614 492,02 3 629 762,38 3 645 185,44 3 660 762,74 3 676 495,80

Categories of 11 12 13 14 15 16 17 18 19 20
expenses
Electric energy 618 588,39 624 774,27 631 022,02 637 332,24 643 705,56 650 142,62 656 644,04 663 210,48 669 842,59 676 541,01
expenses

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Expenses for 574 403,51 580 147,54 585 949,02 591 808,51 597 726,59 603 703,86 609 740,90 615 838,30 621 996,69 628 216,65
raw material
transport
Expenses for 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00 1 820 000,00
raw material
MK expenses 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00 12 000,00
Consumption 209 857,63 211 956,21 214 075,77 216 216,53 218 378,69 220 562,48 222 768,10 224 995,78 227 245,74 229 518,20
expenses
Wear expenses 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00 255 456,00
Current 14 360,09 14 503,69 14 648,73 14 795,21 14 943,16 15 092,60 15 243,52 15 395,96 15 549,92 15 705,42
reparations
expenses
Staff expenses 185 599,71 187 455,71 189 330,27 191 223,57 193 135,81 195 067,16 197 017,84 198 988,01 200 977,90 202 987,67
Communication 1 060,44 1 071,04 1 081,75 1 092,57 1 103,50 1 114,53 1 125,68 1 136,93 1 148,30 1 159,78
s expenses
Payment of 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00
Interest
Waste disposal 1 060,44 1 071,04 1 081,75 1 092,57 1 103,50 1 114,53 1 125,68 1 136,93 1 148,30 1 159,78
expenses
Total 3 692 386,20 3 708 435,50 3 724 645,30 3 741 017,19 3 757 552,80 3 774 253,77 3 791 121,75 3 808 158,41 3 825 365,43 3 842 744,52

Figure: Presumed evolution of expenses for pellets production from woody biomass –option1a

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Table 5.13: Projection of expenses for pellets production from straw for a period of 20 years –option1b
Categories of 1 2 3 4 5 6 7 8 9 10
expenses
Electric 404.444,44 452.480,00 457.004,80 461.574,85 466.190,60 470.852,50 475.561,03 480.316,64 485.119,80 489.971,00
energy
expenses
Expenses for 300.600,00 363.600,00 367.236,00 370.908,36 374.617,44 378.363,62 382.147,25 385.968,73 389.828,41 393.726,70
raw material
transport
/ Expenses for 83.500,00 900.000,00 900.000,00 900.000,00 900.000,00 900.000,00 900.000,00 900.000,00 900.000,00 900.000,00
raw material
MK expenses 30.000,00 30.000,00 30.000,00 30.000,00 30.000,00 30.000,00 30.000,00 30.000,00 30.000,00 30.000,00
Consumption 155.040,00 155.040,00 156.590,40 156.590,40 158.156,30 159.737,87 161.335,25 162.948,60 164.578,08 166.223,86
expenses
Wear expenses 607.240,00 607.240,00 607.240,00 607.240,00 607.240,00 607.240,00 607.240,00 607.240,00 607.240,00 607.240,00

Current 15.030,00 17.170,00 17.341,70 17.515,12 17.690,27 17.867,17 18.045,84 18.226,30 18.408,56 18.592,65
reparations
expenses
Staff expenses 280.035,00 282.835,35 285.663,70 288.520,34 291.405,54 294.319,60 297.262,80 300.235,42 303.237,78 306.270,16

Communicatio 1.200,00 1.212,00 1.224,12 1.236,36 1.248,72 1.261,21 1.273,82 1.286,56 1.299,43 1.312,42
ns expenses
Payment of 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00
Interest
Waste disposal 2.400,00 1.454,40 1.468,94 1.483,63 1.498,47 1.513,45 1.528,59 1.543,87 1.559,31 1.574,91
expenses
Total 1.879.489,44 2.811.031,75 2.823.769,67 2.835.069,06 2.848.047,35 2.861.155,42 2.874.394,58 2.887.766,12 2.901.271,39 2.914.911,70

Categories of
expenses 11 12 13 14 15 16 17 18 19 20
Electric
energy
expenses 494 870,71 499 819,42 504 817,61 509 865,79 514 964,45 520 114,09 525 315,23 530 568,39 535 874,07 541 232,81
Expenses for
raw material
transport 397 663,97 401 640,60 405 657,01 409 713,58 413 810,72 417 948,82 422 128,31 426 349,60 430 613,09 434 919,22

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/ Expenses for
raw material 900 000,00 900 000,00 900 000,00 900 000,00 900 000,00 900 000,00 900 000,00 900 000,00 900 000,00 900 000,00
MK expenses 30 000,00 30 000,00 30 000,00 30 000,00 30 000,00 30 000,00 30 000,00 30 000,00 30 000,00 30 000,00
Consumption
expenses 167 886,10 169 564,96 171 260,61 172 973,22 174 702,95 176 449,98 178 214,48 179 996,63 181 796,59 183 614,56
Wear expenses 607 240,00 607 240,00 607 240,00 607 240,00 607 240,00 607 240,00 607 240,00 607 240,00 607 240,00 607 240,00
Current
reparations
expenses 18 778,58 18 966,36 19 156,03 19 347,59 19 541,06 19 736,47 19 933,84 20 133,18 20 334,51 20 537,85
Staff expenses 309 332,86 312 426,19 315 550,45 318 705,95 321 893,01 325 111,94 328 363,06 331 646,69 334 963,16 338 312,79
Communication
s expenses 1 325,55 1 338,80 1 352,19 1 365,71 1 379,37 1 393,16 1 407,09 1 421,17 1 435,38 1 449,73
/ Payment of
Interest 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00 0,00
Waste disposal
expenses 1 590,66 1 606,56 1 622,63 1 638,85 1 655,24 1 671,80 1 688,51 1 705,40 1 722,45 1 739,68
Total 2 928 688,42 2 942 602,90 2 956 656,53 2 970 850,69 2 985 186,80 2 999 666,27 3 014 290,53 3 029 061,04 3 043 979,25 3 059 046,64

Figure: Presumed evolution of expenses for pellets production from straw –option1b

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Deciphering of the pellets producing costs

Detailed calculation of the pellets producing cost is exemplified in the tables of Annexes, and
the graphical representation of these is shown in the figures below:

Electrical energy expenses

Figure: Presumed evolution of energy costs expenses for pellets production- option 1a

Figure: Presumed evolution of energy costs expenses for pellets production - option 1b

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Transport expenses of raw materials

Figure: Presumed evolution of transportation expenses of raw materials for the pellets
production - Option 1a

Figure: Presumed evolution of transportation expenses of raw materials for the pellets
production - Option 1b

Expenses of raw materials procurement

Figure: Presumed evolution of expenses with raw materials procurement for the pellets
production, option 1a

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Figure: Presumed evolution of expenses with raw materials procurement for the pellets
production, option 1b

Marketing expenses

Table for deciphering of marketing expenses is presented in the annexes, their quantum, does not
exceed amount of 30,000 MDL per year.

Consumption expenditure

For producing of 1 tonnes of pellets are used consumables in the amount of MDL 96.9, detailed
calculation is presented in Annexes.

Expenses related to wear

In calculating of wear were took into account the estimated useful life of the investment elements
that constitutes 50, 15 and 10 years.

Repairs expenses

The basis for equipment reparation costs calculation are the quantity and estimate cost of 10
MDL/tonne of processed raw materials.

Personal expenses

For investment realization will be employed a manager, an accountant, 6 persons in the

production department and a guardian, which will work 9 months per year, 6 days per week,
personnel from production in two shifts.

As a result of the performed estimates was calculated the prime cost for a tonne of produced
pellets from agricultural and woody biomass, in the calculation process was determined that the
first year of the factory operation will not produce at full capacity, will have 2 months of testing
and for the option 1a from the year 4 produced capacity will be double.

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Table 5.14: Projection of the prime cost of pellet for a period of 20 years- option1a

1 2 3 4 5 6 7 8 9 10
The quantity of
straw pellets
produced
annually 1.367 1500 1500 3000 3000 3000 3000 3000 3000 3000
The quantity of
wood pellets
produced
annually 875 1000 1000 2000 2000 2000 2000 2000 2000 2000
Expenses for the
production of 4.391.233,6
straw pellets 1.485.591,67 2.353.186,81 2.364.206,84 4.258.514,33 4.280.087,63 4.301.876,67 4.323.883,59 4.346.110,59 4.368.559,86 1
Expenses for the
production of 3.676.495,8
wood pellets 1.081.767,50 1.947.474,54 1.955.174,73 3.597.797,29 3.599.372,85 3.614.492,02 3.629.762,38 3.645.185,44 3.660.762,74 0
Prime cost of a
ton of straw
pellets 1.087,02 1.568,79 1.576,14 1.419,50 1.426,70 1.433,96 1.441,29 1.448,70 1.456,19 1.463,74
Prime cost of a
ton of wood
pellets 1.236,31 1.947,47 1.955,17 1.798,90 1.799,69 1.807,25 1.814,88 1.822,59 1.830,38 1.838,25

11 12 13 14 15 16 17 18 19 20
The quantity of
straw pellets
produced
annually 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
The quantity of
wood pellets
produced
annually 2000 2000 2000 2000 2000 2000 2000 2000 2000 2000
Expenses for the
production of
straw pellets 4.414.134,11 4.437.263,61 4.460.624,41 4.484.218,81 4.508.049,16 4.532.117,81 4.556.427,15 4.580.979,58 4.605.777,54 4.630.823,47

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Expenses for the

production of
wood pellets 3.692.386,20 3.708.435,50 3.724.645,30 3.741.017,19 3.757.552,80 3.774.253,77 3.791.121,75 3.808.158,41 3.825.365,43 3.842.744,52
Prime cost of a
ton of straw
pellets 1.471,38 1.479,09 1.486,87 1.494,74 1.502,68 1.510,71 1.518,81 1.526,99 1.535,26 1.543,61
Prime cost of a
ton of wood
pellets 1.846,19 1.854,22 1.862,32 1.870,51 1.878,78 1.887,13 1.895,56 1.904,08 1.912,68 1.921,37

Table 5.15: Projection of the prime cost of pellet for a period of 20 years-opţiunea1b
1 2 3 4 5 6 7 8 9 10
The quantity of
straw pellets
produced annually 1.444 1500 1500 3000 3000 3000 3000 3000 3000 3000
Expenses for the
production of straw
pellets 1.879.489,44 2.811.031,75 2.823.769,67 2.835.069,06 2.848.047,35 2.861.155,42 2.874.394,58 2.887.766,12 2.901.271,39 2.914.911,70
Prime cost of a ton
of straw pellets 1.301,19 1.874,02 1.882,51 945,02 949,35 953,72 958,13 962,59 967,09 971,64

11 12 13 14 15 16 17 18 19 20
The quantity of straw
pellets produced
annually 3000 3000 3000 3000 3000 3000 3000 3000 3000 3000
Expenses for the
production of straw
pellets 2.928.688,42 2.942.602,90 2.956.656,53 2.970.850,69 2.985.186,80 2.999.666,27 3.014.290,53 3.029.061,04 3.043.979,25 3.059.046,64
Prime cost of a ton of
straw pellets 976,23 980,87 985,55 990,28 995,06 999,89 1.004,76 1.009,69 1.014,66 1.019,68

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Expenses for assurance with thermal agent from existing central and new boiler station

Table 5.16: The expenses projection of assurance with thermal agent from existing and new boiler station -option1

expenses
with
electricit
y energy
Expenses for from
Expenses of Personal procurement Expenses boiler
Placement transport to Technical service expenses, straw bales, for pelets, AdministratiV station, Comunication Total cost,
N. locality boiler, MDL expenses, MDL MDL MDL MDL e costs, MDL MDL costs, MDL MDL/year
2014

1 Orac 3.807,14 2610 30.480,00 80901,7889 2.058,00

2 Colibabovca 2.284,29 1740 30.480,00 48541,07334 2.058,00

3 Vozniseni 4.568,57 3480 30.480,00 97082,14668 2.058,00

4 Ceadir 3.807,14 2610 30.480,00 80901,7889 2.058,00

5 Tochile Raducani 5.710,71 4640 30.480,00 121352,6833 2.058,00

total per year 20.177,86 15.080,00 152.400,00 0,00 428.779,48 121.920,00 10.290,00 1.200,00 749.847,34
2015
6 Ceadir 3.807,14 2610 30.480,00 80901,7889 2.058,00
7 Sarata Rezeati 2.284,29 1305 30.480,00 48541,07334 2.058,00
8 Covurlui 2.284,29 1305 30.480,00 48541,07334 2.058,00
total per year 8.375,71 5.220,00 91.440,00 0,00 177.983,94 0,00 6.174,00 289.193,65
2016
9 Orac 3.807,14 2610 30.480,00 80901,7889 2.058,00
10 Cneazevca 3.807,14 2610 30.480,00 80901,7889 2.058,00
11 Colibabovca 3.807,14 2610 30.480,00 80901,7889 2.058,00
12 Leova town 6.091,43 4930 30.480,00 129442,8622 2.058,00
total per year 17.512,86 12.760,00 121.920,00 0,00 372.148,23 0,00 8.232,00 532.573,09

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2017

13 Leova town 57.107,15 26100 30.480,00 1213526,833 2.058,00

14 Leova town 12.563,57 9860 30.480,00 266975,9034 2.058,00

Leova town,
15 Independentiei, 3 7.614,29 5220 30.480,00 161803,5778 2.058,00
Leova town,
16 Independentiei, 5 7.614,29 5220 30.480,00 161803,5778 2.058,00
total per year 84.899,29 46.400,00 121.920,00 0,00 1.804.109,89 0,00 8.232,00 2.065.561,18

total investment 130.965,72 79.460,00 487.680,00 0,00 2.783.021,54 121.920,00 32.928,00 1.200,00 3.637.175,26

new assets wear,

equipment / boiler

room wear /
construction
related investment
Kindergarten
from Cazangic 30734 13144,79 243840 69151,5
Kindergarten
from Selişte 1536,42 3634,11 30480 19910,4 1.719,90
Gymnasium
from Sarata
Noua 55000 17548,4 243840 123750
Kindergarten
from Sarata
Noua 24264 13741,66 243840 54594
Gymnasium -
Kindergarten
Tomaiul-Nou 5156,29 10119,24 60960 66820,2 2.058,00
Total existing
boiler, MDL year
116.690,71 58.188,20 822.960,00 247.495,50 86.730,60 3.777,90 1.335.842,91

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OPTION 2

Structure and value of operating costs for new and existing boiler stations coincides with the expenses for assurance of thermal agent from option 1.
Table 5.17: Expenses projection during a period of 13 years - option 2
variable costs Costs of Total cost for
Total cost with Revenue tax,
Year Wear Existent New
current Residual value calculation of
tax 12%
repairs taxable base
**

1 510.502 374.924 1.553.347 1.042.845 0

667.921
2 560.092 894.444 2.790.379 2.230.287 0
1.335.843
3 681.407 1.305.328 3.322.577 2.641.170 0
1.335.843
4 1.122.207 2.604.395 5.062.445 3.978.294 38056,74073
1.335.843
5 1.122.207 3.637.175 1.000.000 7.108.584 6.010.752 24375,6761
1.349.201
6 1.122.207 3.673.547 6.158.447 5.183.406 147166,0813
1.362.693
7 1.122.207 3.710.282 6.208.810 5.236.587 149984,3905
1.376.320
8 1.122.207 3.747.385 6.259.676 5.290.300 152830,8828
1.390.083
9 1.122.207 3.784.859 6.311.050 5.344.549 155705,84
1.403.984
10 1.122.207 3.822.708 6.362.939 5.399.341 158609,5468
1.418.024
11 1.122.207 1.432.204 3.860.935 -1.298.765 6.415.346 4.155.917 161542,2907

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2. Sources of investment financing (own funds, bank loans, budget funds for state / local budget, foreign loans contracted or
guaranteed by the State; nonreimbursable external funds, other legally constituted sources);

For each from these 3 solutions of project realization of PPP was estimated necessary investments volumes depending on the necessary infrastructure for
their realization.

For each alternative were analyzed the funding opportunities taking into consideration the projected cash flows for the whole period of validity of the PPP
contract.

Option 1a service provision of assurance with thermal agent with 21 boiler stations and producing own pellets

In case of option 1a funding sources of investment a total amount of MDL 18 020 000.00 will constitute:

Table 5.18: Investment rescheduling and funding sources for the option 1a

Option 1
Planned funding sources project year Total
zero year, MDL first year, second and third year 11, funding,
MDL year, MDL MDL MDL
Private partner contribution 3 740 000,00 1 246 000,00 4 986 000,00
Funding of the public partners 1 700 000,00 1 700 000,00
from grant - nonreimbursable
funding from eligible funds
Financing of the public partners 0,00 12 000,00 542 000,00 0,00 554 000,00
from the state budget
Investment credit 0,00 5 780 000,00 5 000 000,00 0,00 10 780 000,00
Reinvested profit 0,00 0,00 400 000,00 0,00 400 000,00
Total 5 440 000,00 5 792 000,00 7 188 000,00 0,00 18 420 000,00

Option 1b service provision of assurance with thermal agent with 21 boiler stations and producing own pellets

In case of option 1b funding sources of investment in total value of 14 119 068.00 MDL will constitute:

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Tabel 5.19: Investment rescheduling and funding sources for the option 1b
Option 1 b
Planned funding sources project year Total
zero year, MDL first year, second and third year 11, funding,
MDL year, MDL MDL MDL
Private partner contribution 3 740 000,00 1 246 000,00 4 986 000,00
Funding of the public partners 1 700 000,00 1 700 000,00
from grant - nonreimbursable
funding from eligible funds
Financing of the public partners 0,00 12 000,00 542 000,00 0,00 554 000,00
from the state budget
Investment credit 0,00 1 879 5 000 000,00 0,00 6 879 068,00
068,00
Reinvested profit 0,00 0,00 400 000,00 0,00 400 000,00
Total 5 440 000,00 1 891 7 188 000,00 0,00 14 519 068,00
068,00

Option 2 service provision of assurance with thermal agent with 21 boiler stations and with purchased fuel

For option 2 were analyzed two variants of investment financing: partial (50%)from grant and total from credit or own financing from private partner.
Analysis of cumulative cash flow confirmed that this option is not economically and financially viable. It can only be achieved with partial funding from
the grant, at least 50%.

Table 5.20: Investment rescheduling and funding sources for option 2

Option 2
Planned funding sources project year Total funding,
zero year, MDL first year, second and third year 11, MDL
MDL year, MDL MDL
Private partner contribution 1 246 000,00 1 246 000,00
Funding of the public partners 1 700 000,00 1 700 000,00
from grant - nonreimbursable
funding from eligible funds
Financing of the public partners 12 000,00 542 000,00 0,00 554 000,00

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from the state budget

Investment credit 0,00 4 600 000,00 0,00 4 600 000,00
Reinvested profit 0,00 0,00 400 000,00 0,00 400 000,00
Total 1 700 000,00 12 000,00 6 788 000,00 0,00 8 500 000,00

Opportunities to attract funding from National Funds in the relevant field of the project:

Energy Efficiency Agency offers in leasing and pellet equipment, along with briquetting lines, previously available
from credit line of EUR 500 thousand.
A decision to this regard was approved on April 18, by Economics Deputy Minister, Octavian Calmac. List of eligible
equipment for funding within this Program has been extended and for primary grinding equipment. [ 18]

Moldova Energy and Biomass Project

In order to promote effective of Republic of Moldova Government efforts to achieve the objectives of Energy
Strategy 2030, through the Moldova Energy and Biomass Project, European Union gives financial assistance in
order to stimulate the fuel consumption from solid biomass at the household level.
The financial means are provided under the project Document signed between the Ministry of Economy and the
United Nations Programme in Moldova on 16 September 2011 and will observe the rules the disbursement of UNDP
according to Harmonized Approach regarding cash transfer (HACT). [ 19]

18
Sursa: http://aee.md/
19
Sursa: http://biomasa.aee.md
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Financing Line for Energy Efficiency in Moldova (MoSEFF)

In September 2009 was launched Financing Line for Energy Efficiency in Moldova (MoSEFF) in order to support investment
in energy efficiency to enterprises in Republic of Moldova.
A credit line of 42 million euros, in conjunction with a grant component of 5-20% was provided for granting loans for
companies from Moldova, through the partner banks of the EBRD. MoSEFF, also, provides technical assistance for projects
through Fichtner - a German company leaders in the field of engineering and consulting. The MoSEFF loans are provided by
partner banks for Moldovan companies which requesting funding.
Size of MoSEFF loan is between 10 thousand to 2 million.
Funding is directed toward promote energy efficiency investments and renewable energy production. A team of technical and financial experts will help
candidates to evaluation and optimization projects. Local banks are responsible for assessing and financial analysis and final decision regarding loan
payment.
After project implementation independent consultant (Allplan, Austria) will verify energy savings. A grant with a value up to 20% of the loan amount will
be paid to the company. [ 20]

20
Sursa: http://www.moseff.org/
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3. Financial analysis, including calculation of financial performance indicators: internal rate of return net discounted value
and cost-benefit report.

Financial indicators are calculated based on the total amount of investment without the no-reimbursable co-financing part.

Option 1a

Investmen
Category t value 1 2 3 4 5 6 7 8 9 10
Revenues 0,00 5.010.168,32 7.129.969,91 7.775.221,82 14.920.734,44 16.948.276,09 17.117.758,85 17.288.936,44 17.461.825,80 17.636.444,06 17.812.808,50
Expenditur
es 16.320.000,00 3.610.204,29 6.530.948,42 6.960.552,01 11.796.549,19 12.865.837,08 12.952.609,05 13.040.248,74 13.128.764,82 13.218.166,07 13.308.461,33
Total 16.320.000,00 1.399.964,03 599.021,49 814.669,81 3.124.185,25 4.082.439,01 4.165.149,80 4.248.687,70 4.333.060,98 4.418.277,99 4.504.347,17

Cumulate
d Cash-
flow 14.920.035,97 14.321.014,48 -13.506.344,67 -10.382.159,43 -6.299.720,41 -2.134.570,61 2.114.117,09 6.447.178,07 10.865.456,06 15.369.803,23
Cost-
benefit
rate 1,39 1,09 1,12 1,26 1,32 1,32 1,33 1,33 1,33 1,34

Category 11 12 13 14 15 16 17 18 19 20
Revenues 17.990.936,59 18.170.845,95 18.352.554,41 18.536.079,96 18.721.440,76 18.908.655,16 19.097.741,72 19.288.719,13 19.481.606,32 19.676.422,39
Expenditures 13.399.659,55 13.491.769,74 13.584.801,04 13.678.762,65 13.773.663,88 13.869.514,12 13.966.322,86 14.064.099,69 14.162.854,28 14.262.596,43
Total 4.591.277,04 4.679.076,21 4.767.753,37 4.857.317,31 4.947.776,88 5.039.141,05 5.131.418,86 5.224.619,45 5.318.752,04 5.413.825,96

Cumulated 65.340.761,3
Cash-flow 19.961.080,27 24.640.156,48 29.407.909,85 34.265.227,16 39.213.004,03 44.252.145,08 49.383.563,94 54.608.183,39 59.926.935,43 9
Cost-benefit
rate 1,34 1,35 1,35 1,36 1,36 1,36 1,37 1,37 1,38 1,38

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Proiecţii economice estimate pe 20 ani/

Estimated economic projections for 20 years Values Updated values

Revenues 327.327.146,62 97.803.231,01

VAN/NPV 0,05 9.106.640,32
Expenditures 261.986.385,23 91.419.390,68
RIR/IRR 12,46% Residual value 2.722.800,00
1,07
Benefit cost- rate

Analysis of income and expenditure option 1a shows that the project registers a NPV (Net Present Value) by the MDL 9,106,640.32, an IRR (Return
Internal Rate) by the 12.46% positive fact and thereof recovery in year 11, and the benefit cost ratio is superior unit value and is equal to 1, 07.

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Option 1b

Investmen
Category t value 1 2 3 4 5 6 7 8 9 10
Revenues 0,00 1.950.589,06 3.360.060,58 3.509.746,73 8.099.584,08 10.058.914,23 10.159.503,37 10.261.098,41 10.363.709,39 10.467.346,48 10.572.019,95
Expenditur
es 12.419.068,00 2.317.725,26 4.478.334,02 4.915.756,29 6.240.061,80 7.299.899,07 7.363.598,06 7.427.934,04 7.492.913,38 7.558.542,51 7.624.827,94
-
Total 12.419.068,00 -367.136,20 -1.118.273,44 -1.406.009,56 1.859.522,28 2.759.015,16 2.795.905,32 2.833.164,37 2.870.796,01 2.908.803,97 2.947.192,01

Cumulate
d Cash-
flow -12.786.204,20 -13.904.477,64 -15.310.487,20 -13.450.964,92 -10.691.949,76 -7.896.044,44 -5.062.880,07 -2.192.084,06 716.719,91 3.663.911,92
Cost-
benefit
rate 0,84 0,75 0,71 1,30 1,38 1,38 1,38 1,38 1,38 1,39

Category 11 12 13 14 15 16 17 18 19 20
Revenues 10.677.740,15 10.784.517,55 10.892.362,73 11.001.286,35 11.111.299,22 11.222.412,21 11.334.636,33 11.447.982,69 11.562.462,52 11.678.087,15
Expenditures 8.299.016,22 8.366.633,98 8.434.927,92 8.503.904,80 8.573.571,45 8.643.934,76 8.715.001,71 8.786.779,32 8.859.274,72 8.932.495,06
Total 2.378.723,93 2.417.883,57 2.457.434,81 2.497.381,56 2.537.727,77 2.578.477,45 2.619.634,62 2.661.203,37 2.703.187,80 2.745.592,08

Cash-flow cumulat/
Cumulated Cash-flow 6.649.875,86 9.067.759,43 11.525.194,24 14.022.575,79 16.560.303,56 19.138.781,01 21.758.415,64 24.419.619,01 27.122.806,81 29.868.398,89
Rata cost
beneficiu/Cost-benefit
rate 1,39 1,39 1,39 1,39 1,39 1,40 1,40 1,40 1,40 1,40

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Estimated economic projections for 20 years Values Updated values

Revenues 190.515.359,18 54.864.726,49

NPV 0,05 1.454.433,62
Expenditures 155.181.800,29 56.368.292,86
IRR 5,16% 2.958.000,00
Residual value
0,97
benefit cost- rate

Analysis of income and expenditure option 1b shows that the project registers a NPV (Net Present Value) by the MDL 1.454.433,62 lei, an IRR (Return
Internal Rate) by the 5,16% positive fact and thereof recovery in year 14, and the benefit cost ratio is superior unit value and is equal to 0, 97.

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Option 2

Investment
Category value 1 2 3 4 5 6 7 8 9 10 11
Revenues 0,00 1.132.070,54 2.453.393,91 3.051.880,06 5.379.584,08 7.311.714,23 7.384.831,37 7.458.679,69 7.533.266,48 7.608.599,15 7.684.685,14 7.761.531,99
Expenditures 6.800.000,00 1.042.845,12 2.230.287,07 2.641.170,44 4.530.294,32 6.562.752,27 5.643.406,44 5.696.587,16 5.750.299,68 5.804.549,32 5.859.341,46 4.155.916,53
Total -6.800.000,00 0,00 0,00 0,00 849.289,77 748.961,96 1.741.424,93 1.762.092,53 1.782.966,81 1.804.049,83 1.825.343,68 3.605.615,46
SURSA: CALCULAT PE BAZA METODOLOGIEI DIN "GUIDE TO COST-BENEFIT ANALYSIS OF INVESTMENT PROJECTS, EUROPEAN COMMSSION - DG REGIONAL POLICY , 2000"

Cumulated - - -
Cash-flow -6.800.000,00 -6.800.000,00 -6.800.000,00 5.950.710,23 -5.201.748,28 3.460.323,35 1.698.230,82 84.735,99 1.888.785,82 3.714.129,49 7.319.744,96
Benefit-cost
rate 1,09 1,10 1,16 1,19 1,11 1,31 1,31 1,31 1,31 1,31 1,87

Estimated
economic
projections for
20 years Values Updated values
NPV VAN 0,05 3.926.700,22
Revenues 64.760.236,65 46.165.046,79
IRR RIR 15,68%
Expenditures 54.915.449,82 39.628.743,06
benefit cost- rate 1,16

Analysis of income and expenditure option 2 shows that the project registers a NPV (Net Present Value) by the MDL 3.926.700,22, an IRR (Return
Internal Rate) by the 15,68% a positive fact, and the benefit cost ratio is superior to unit value and is equal with 1,16.
Cash-Flows for selected solution is presented in Annex 6.

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4. Risk adjustment of financial performance indicators: internal rate of

return and cost-benefit report
Calculations indicators of financial performance not include risks associated with the project.
Thus it is necessary to adjust with risk of financial performance indicators.
Risks associated with the project were determined and evaluated. According to the classification of
risks these are divided, by their mode control, in the retained risks and transferable risks. Risk
allocation is given to the part which holds the best risk control.
Were included in the adjusted reference model with risks only those risks retained whose impact
varies in dependence of option selected. Transferable risks, not included in the reference model
adjusted with risk.
Retained risk assessment is presented in Annex 7.
Economic indicators are calculated on the basis of total values of investment.
Indicators Option 1 a Option 1b Option 2
financial NPV 9.106.640,32 lei 1.454.433,62 lei 3.926.700,22 lei
financial IRR 12,46% 5,16% 15,68%
Financial NPV
adjusted with risk -3.727.353,73 lei -2.595.058,76 lei 1.094.472,83 lei
Economic NPV
adjusted with risk -5.346.401,35 lei -4.214.106,38 lei -524.574,79 lei
financial IRR
adjusted with risk 1% 2% 8,31%
Economic IRR
adjusted with risk -1% 0% 3,64%
B/C Rate adjusted
with risk 0,88 0,90 1,09

Analyzing the indicators in based on the described options we can state that the best version of
project realization is for option 2, which consists in realization of investment project in extension of
the number of boiler by pellets in Leova district during the first 4 years of the activity in same with
service provision of assurance with thermal agent of institutions which have biomass boiler station.
This option has the best financial indicator values before of adjustment with risk and after of
adjustment with risk.
Economic IRR adjusted with risk by the 3.64% shows that the project can not be achieved under
reimbursable financing (own contribution or loans) and require funding from grants, because the
value of IRR is below the 5% discount rate used in the calculations.
In the case of calculation of financial IRR value (without the grant amount invested) we obtain a
rate of 8.31%, confirming that if the project will be realized with nonreimbursable funding in the
amount of MDL 1.700.000,00 (20% from total investment value) for a period of 11 years, the
investment will be profitable.
According to EU recommendations, FRR / K (rate of return financially of its own capital) after
subsidies should not exceed a certain limit (EC recommends 8%) for in order to avoid an excessive
return for project beneficiary at the expense of Public taxpayer.
In the case of PPP project which consists in providing of insurance services
with thermal agent from biomass, revenues within the activity will originate from public funds
(grant), and respectively profits from PPP activity must not be too large in order to avoid excessive
return. In the case of option 2, the financial IRR is 8.31%, which also confirms a return not too high
for the project.

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Rate benefit / cost for PPP project according to option 2 is over-unit and confirms that the project is
susteinabil and deserves to be funded.

5. The sensitivity analysis of the project

Sensitivity analysis of the project was carried out for option 2 which as a result of the
analysis of financial indicators has been identified the most appropriate version.

Following modifications on income, expenses and capital costs, basic indicators financial NPV
(3,926,700.22), IRR (15.68%) and their modification according to the table demonstrates the
viability of the project.
The investment is viable because it is difficult to influenced by reduce of returns up to 10%.
Following the analysis of the table it may be established that a negative development in the first
years of the expenditure not influence an essential the project.
Also, reducing of revenues does not significantly influence the project because the obtained IRR
(7.01%) at therevenues reduce with 10%, however, is higher than the minimum required of 5%, and
NPV not registered negative values.
Reducing the capital cost estimated by the beneficiary would lead to a good thing as it can analyze
from financial indicators that have obtained better values than the calculation base, ranging from
14.34% to 15.92%, and as a result of increasing of the capital costs it can be seen that its not
achieve a critical threshold

Table 5.1. Influence of income change, expenses and capital costs of NPV and IRR key variables

Calculated risks IRR (%) NPV (€) Admissibility of

Value Influence Value Influence on NPV Cash-Flow
on
IRR
Estimated values in 15,68% 3.926.700,22 positive
project
Reducing incomes by 13,53% 16,81% 7.970.650,04 9.082.089,22 positive
1%
Reducing incomes by 12,87% 16,15% 4.572.982,92 5.684.422,10 positive
2%
Reducing incomes by 10,79% 14,07% 3.253.981,59 4.365.420,77 positive
5%
Reducing incomes by 7,01% 10,29% 1.055.646,03 2.167.085,21 positive
10%
Increased operational 13,70% 16,98% 5.131.935,11 6.243.374,29 positive
costs with 1 %
Increased operational 13,21% 16,49% 4.811.553,08 5.922.992,26 positive
costs with 2%
Increased operational 11,70% 14,98% 3.850.406,97 4.961.846,15 positive
costs with 5%
Increased operational 7,01% 10,29% 2.248.496,79 1.055.646,03 positive
costs with 10%
Reducing the cost of 14,34% 17,62% 5.517.079,05 6.628.518,23 positive
capital with 1%

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Reducing the cost of 14,51% 17,79% 5.581.840,96 6.693.280,14 positive

capital with 2%
Reducing the cost of 15,02% 18,30% 5.776.126,67 6.887.565,85 positive
capital with 5%
Reducing the cost of 15,92% 19,20% 6.099.936,20 7.211.375,38 positive
capital with 10%
Increased capital 14,02% 17,30% 5.387.555,24 6.498.994,42 positive
costs with 1%
Increased capital 13,86% 17,14% 5.322.793,34 6.434.232,52 positive
costs with 2%
Increased capital 13,39% 16,67% 5.128.507,63 6.239.946,81 positive
costs with 5%
Increased capital 12,65% 15,93% 4.804.698,10 5.916.137,28 positive
costs with 10%

6. Estimates of the employed force by creating public-private partnership

project

7. Environmental impacts and mitigation solutions including its costs.

During operation period

During the burning process

Table 7.1. Pollutant emissions ratio by different types of fuel [ 21]

Fuel Emissions ratio, kg/kWh Ash Powder

CO 2 SO2 NOx
Natural gas 0,245 0,7
Coal 0,396 0,58 0,035 0,055 0,0039
Black oil fuel 0,32 0,5 0,02
Wood pellets 0,021 0,05 0,002 0,007 0,0002
Packs of straw 0 0 0 0,008 0,0001

Table 7.2. Emissions calculations of noxious substances

min medium max

1 Fuel consumption at Boiler plants t/year 28,06 131,29 610,52

Quantity of solid particles emissed
2 in the ambient air t/year 0,10 0,10 0,10

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Admissible maximum concentration

3 of sulphur oxide; η,SO2 mg/m3 0,50 0,50 0,50
Quantity of sulphur emissed in
4 ambient air SO2(t/year) 0,02 0,11 0,49
Admissible maximum cincentration
5 of η,CO mg/m3 5,00 5,00 5,00
Quantity of CO emissed in ambient
6 air CO (t/year) 0,12 0,03 0,01
Admissible maximum cincentration
7 of nitric oxide, η,NO2 mg/m3 0,085 0,085 0,085
Quantity of NO 2 emissed in NO 2
8 ambient air (t/year) 0,00 0,00 0,02

Total emissions of gas t/year 0,24 0,23 0,61

AS TO THE PROPOSED CONSTRUCTION

Fire safety

Self-protection plan

Hygiene and population health

Hygiene of air

Water quality protection

Illumination

ASSIGNMENT FOR THE BENEFICIARY

Labour protection measures

Basic quality requirements
A. Resistance and stability
B. Trouble-free operation Reliability in operation
C. Fire safety
F. Noise-protection via Protecţia împotriva zgomotului prin:
Sanitary installations

The beneficiary has the right Beneficiarul are dreptul:

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VI General conclusions in terms of Public-Private Partnership

implementation alternatives in biomass-based pelleting in Leova
district.

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II. Technical drawings

VIII. Annexes

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