South-East Europe Core Regional Transport Network Development Plan

The European Union s 2003 Regional CARDS Programme Albania, Bosnia & Herzegovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro, Serbia and UNMIK/Kosovo South-East Europe Core Regional Transport Network Development Plan Five Year Multi Annual Plan 2008 to 2012 Information and Analysis October 2007 Volume 2 This Project is funded by The European Union 5 Year Multi Annual Development Plan 2008 2012 A project implemented by SEETO Joint Venture i

South East Europe Core Regional Network Development Plan Five Year Multi-Annual Plan 2008 to 2012 Information and Analysis Volume 2 November 2007 This document has been produced under CARDS Contract 86/526 between the European Commission and SEETO Joint Venture: GOPA Consultants TRADEMCO S.A. The findings, conclusions, interpretations expressed in this document are those of the consultants alone, and should in no way be taken to reflect the policies or opinions of the European Commission, nor do they engage the European Commission in any way. 5 Year Multi Annual Development Plan 2008 2012 ii

South East Europe Core Regional Network Development Plan Five Year Multi-Annual Plan 2008 to 2012 List of Annexes Annex A: Annex B: Annex C: Annex D: Annex E: Annex F: Annex G: Definition and Mapping the Core Network Condition of the Core Network Performance of the Core Network Infrastructure and Performance Indicators Private Public Partnership Importance of the Rail Reform and Road Safety Information Contained in the Logframe Matrix 5 Year Multi Annual Development Plan 2008 2012 iii

South East Europe Core Regional Network Development Plan 2007 to 2011 Annex A Definition and Mapping the South East Europe Core Regional Transport Network B1 - Tabular Definition of the South East Europe Core Regional Transport Network - Road Network - Railway Network - Inland Waterways - Seaports - River ports - Airports 5 Year Multi Annual Development Plan 2008 2012 1

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South East Europe Core Regional Transport Network Airports on the Core Network CROATIA CROATIA CROATIA Bosnia and Herzegovina Bosnia and Herzegovina MONTENEGRO SERBIA SERBIA UNMIK/KOSOVO THE FORMER YUGOSLAV REPUBLIC OF MACEDONIA ALBANIA Country / Airport Zagreb (ZAG/LDZA) Split (SPU/LDSP) Dubrovnik (DBV/LDDU) Banja Luka (BNX/LQBK) Sarajevo (SJJ/LQSA) Podgorica (TGD/LYPG) Beograd (BEG/LYBE) Niš (INI/LYNI) Priština (PRN/LYPR)) Skopje (SKP/LWSK) Tiranë (TIA/LATI) South East Europe Core Regional Transport Network Sea Ports and River Ports on the Core Network Country / Sea Port CROATIA CROATIA CROATIA CROATIA MONTENEGRO ALBANIA ALBANIA Rijeka Split Ploče Dubrovnik Bar Durrës Vlorë Country / River Port SERBIA SERBIA Beograd Novi Sad 5 Year Multi Annual Development Plan 2008 2012 15

South East Europe Core Regional Transport Network Corridor VII Danube Inland WaterwayS of the Core Network Waterway, from -to approx. Length[km] CROATIA/SERBIA Batina (border) - Ilok (border) / 137.5 Kolut (border) - Backa Palanka SERBIA Bačka Palanka (border) - Prahovo 450.5 (border) Total: 588.0 Sava River Waterway, from -to Length[km] Belgrade - Sisak 593 Total: 593 16

Annex A2 DESCRIPTION OF CORRIDORS and ROUTES Multimodal Corridor Vb Road Branch b (road) Rijeka Zagreb Gorican SEETO is monitoring Croatian part of the Corridor Vb. The major development is that Corridor Vb will have in its entire length in Croatia (from Hungarian border until Rijeka) full profile motorway that will be completed in 2008. Rail Branch b (railway) Rijeka Zagreb Koprivnica - Gola (border) Dombovar (Hungary) Some of the rail projects concerning Croatian part of the Corridor Vb are building second track on 73 km section Dugo Selo Botovo, or a major overhaul on 14km section Koprivnica Botovo (border) for around 8 million. New priority project concerning construction of the railway with the highest speed in the region has been announced with a major investment of 627 million. Multimodal Corridor Vc Road Ploce Mostar Sarajevo Osijek Udvar (border Croatia / Hungary) Road Corridor Vc in SEE runs through Croatia and BIH (60%) in the total length of 559 km. Total investment costs of road projects (in the project pool) at Corridor Vc very high, exceeding 1.8 billion and referring to projects from Bosnia and Herzegovina only. Of the major investments the future Vc motorway in BIH is planned. The total investment is split into nine sections along almost 300 kilometers alignment with the unit costs estimated at more than 10 million. Sections of the Corridor Vc motorway in BIH, Sarajevo Bypass and Visoko-Kakanj in the total length of 25 kilometers are expected to be in operation by 2009. Also, the latest plans presented to EC and IFIs and recommended by SEETO include construction of Svilaj-Sarajevo South (Tarčin) in the length of 165km and Sarajevo South (Tarčin)-Southern border with R. Croatia in the length of 127km. Rail Ploce Mostar Sarajevo Osijek Beli Manastir (border Croatia / Hungary) In Bosnia and Herzegovina modernisation of signalling and telecommunication has been performed on 404 km long section Samac Capljina, rail track overhaul and reconstruction is planned for Samac Sarajevo (123 km with estimated investment of 83 million) and for 145 km of Sarajevo Capljina investment costs are 72 million while in Croatian part of Vc on 32 km section Beli Manastir Osijek major overhaul costs 19 million. Total investment requirements on this Corridor for railway projects in the SEETO project pool are 498 million. 17

Inland Waterways Corridor VII Corridor VII consists of the Danube and its connecting canals. The Danube is the second largest river in Europe, navigable over nearly 2,300 km of the 2,500 km of its total length, but geographically with strongly imbalanced traffic, concentrated towards the West and near the mouth in the East, the central part being characterised by very low traffic volumes. There is a tendency in traffic to shift from roads to IWW transport, the latter being cheaper, with lower energy consumption and transport costs, being ecologically more acceptable but at the same time with the higher safety than road transport. The potential for intermodal connectivity of the Corridor VII is high, and the ports along the Danube have both rail and road connections. The Danube, or Corridor VII, is part of the inland waterway E 80, as defined by the UN/ECE in the European Agreement on Main Inland Waterways of International Importance (AGN). Corridor VII also includes all other natural or artificial waterways being part of the water network of the Danube region, more precisely include the Black Sea-Danube Canal in Romania between Cernavoda and Constantza, the Tisa (Tisza) in Serbia and Hungary, the Vah in Slovakia and the planned Danube-Sava Canal in Croatia. A new project construction of Danube-Sava Canal, exceed by its value and benefits even some road infrastructure projects. This project is based on exploitation of potential of Vukovar Port with a construction planned to be completed by 2013. Vukovar is 16 kilometres away from City of Vinkovci, the biggest railway node in Croatia. Planed multipurpose canal Danube-Sava, which will connect those two rivers between Vukovar and Bosanski Šamac, is a part of the future Danube - Adriatic combined river-railway traffic corridor, starting from the Port Vukovar. According to construction plans, 34 meters wide and 4 meters deep canal is supposed to intersect Slavonija until Vukovar. The dug up material from the Canal will be used to fill the highway of Corridor Vc. Traffic capacity through the Canal will be 12 million tons of cargo annually, and it will have the same flotation as Sava river. Currently, projects at Corridor VII in the pool are from Serbia and Croatia, with the total investment requirement of 158 million. Multimodal Corridor VIII Road Corridor VIII alignment: Durres Tirana Elbassan Struge Kicevo Skopje Kumanovo Gjuesevo Radomir Sofia Plovdiv Orizovo - Jitarovo Burgas/Varna Total length of the roads at Corridor VIII is 960 km. Of the investment needs for road Corridor VIII, 440 million is required, including the funds for one priority project from Albania and one from the former Yugoslav Republic of Macedonia at SEETO pool. Majority of the roads from both of the alignments of this Corridor are modernized with two lanes and are enabled for speed up to 80 km/hour. Construction of the sections on the Corridor VIII up to motorway standard will be an impetus for the socio-economic development of each respective country. 18

The main sections Durres Rogozhine and Rogozhine the former Yugoslav Republic of Macedonia border is the main alignment of both road and rail Corridor VIII in Albania. Road part have a total length of 154 km. It is by its characteristics a type C main rural road (half motorway cross section), generally in good condition, with the exception of some local point in the section Rrogozhine Elbasan. Corridor VIII at the former Yugoslav Republic of Macedonia represents only 27.6 % of the total length of the Corridor. Respective road infrastructure has already been built to modern highway standards with another 8.7 % being currently under construction (Skopje bypass). Corridor VIII in the former Yugoslav Republic of Macedonia has several distinctive sections all being in generally good condition Kafasan Pesocani (37 km) as main rural road with a standard cross section (type E ) running through flat / hilly terrain; Pesocani - Gostivar (94 km) as main rural road (type E) within mountainous terrain with high longitudinal gradients up to 6%, Gostivar Skopje (54 km); Skopje pass urban road (26 km), Skopje Kumanovo (33 km) and Kumanovo Bulgarian border (74 km) main rural road, cross section E to F (standard to sub-standard) passing the mountainous terrain. Rail Corridor VIII alignment: Durres Tirana Elbassan Oukes (missing link) Kicevo Skopje Kumanovo (missing link) Gjuesevo Radomir Sofia Plovdiv Mihalovo Bezmer Jamboi Zimnica Karnobei Burgas/Varna Four railway projects on Corridor VIII submitted to SEETO have total investment requirements of 500 million. Corridor VIII represents construction of East-West axis, whose terminal points will constitute gateways leading westward i.e. towards Western Europe through the Otranto Channel, and eastward i.e. towards Turkey and the Caucasus, through the Black Sea. This is the main reason why the EU countries such as Italy, Bulgaria and Greece but also the Russian Federation and the Near East countries, want to have a major stake in the development of this Corridor. Corridor VIII has special significance for the whole region. There are also plans for its extension by connecting it with the Motorways of the sea connecting Varna / Burgas, Sofia, Skopje, Tirana, Durres to Bari / Brindizi in Italy (the Black Sea with the Adriatic Sea). Multimodal Corridor X Characteristics and Status - Road Corridor X The total length of the Road Corridor X is 2,300 km and includes the main axis as well as branches A, B, C and D. The multimodal Pan-European Transport Corridor X (main axis and four branches), as defined by the Helsinki declaration, connects: - Salzburg, Ljubljana, Zagreb, Belgrade, Nis, Skopje, Veles and Thessaloniki; 19

- Graz with Maribor and Zagreb (Branch A); - Budapest with Novi Sad and Belgrade (Branch B); - Nis with Sofia [to Istanbul via Corridor IV (Branch C); and - Veles with Bitola and Florina, continuing towards via Egnatia with Igoumenitsa port (Branch D). The part of Road Corridor X linking Salzburg and Thessaloniki through Ljubljana, Zagreb, Belgrade and Skopje is 1,450 km long with more than 80% length covered by multilane motorways. By 2008, with construction of all the Slovenian and recently finalized Croatian sections to full motorway profile, this percentage will be 90%. The maximum permitted speed along the Main Axis is 120km/h at most of its sections, and generally the infrastructure is in good condition. Total investment requirements according to the projects in the SEETO pool are 1.06 billion for the main axis of the road Corridor X, 184 for Corridor Xb, 535 million for two road projects, with no priority projects at Corridor Xc, and 126 for the road Corridor Xd, while Corridor Xa currently does not have projects in the project pool. The alignment of the Corridor X is as follows (bold letters denote portion of the Corridor X that SEETO covers): Road Alignment Salzburg Ljubljana Visna Gora/Obrezje Zagreb Novska - Lipovac/Tovarnik - Beograd Nis Sopot/Tabanovce - Skopje Gradsko Bogorodica/Idomeni - Thessaloniki Branch A from Graz Graz - Gruskovje (Slovenian/Croatian border) - Zagreb Branch B from Budapest Budapest Röszke/Horgos Subotica Novi Sad Beograd Branch C to Sofija Nis Dimitrovgrad/Kalotina Sofija Branch D to Florina (Via Egnatia) Gradsko Bitola - Medzitlija/Mesonision - Florina Construction and road projects status Corridor X ** Belgrade bypass (Serbia: Dobanovci Bubanj Potok) 35,5km 17 km constructed (still some works pending for completion) Leskovac (Serbia) Kumanovo (the former Yugoslav Republic of Macedonia) 127km 17,6km (Leskovac Grabovnica) constructed (2005) 102km (Grabovnica Presevo) approved Hi.P.E.R.B. grant (100 mil ) and national funds 7,4km (Tabanovce Kumanovo) secured WB financing (construction in 2008) 20

Gevgelija Demir Kapija 44,4km 10,2km (Gevgelija Smokvica) constructed (2005) 33,2km (Demir Kapija-Udovo-Smokvia) under negotiation for financing by Hi.P.E.R.B. (50 mil ), IPA (32.4 mil ), national budget (13.1 mil ), and EIB Branch A Macelj Krapina (Croatia) 19,4km (constructed in 2007) Branch B Horgos Batajnica (Serbia) 176km Concession signed for the construction of Horgos Pozega motorway Branch C Nis Dimitrovgrad (Serbia) 104km Recent decision of Serbian government for construction with own funds Branch D Veles Prilep Bitola (the former Yugoslav Republic of Macedonia) 104,6km No progress ** information by Corridor X Secretariat Corridor X enters SEETO countries at Obrezje (Slovenian/ Croatian border). In Croatia this alignment via Zagreb to Lipovac (Croatian/ Serbian border) is multilane motorway having investment costs of 1.22 billion and a cost per km of 4.0 million. It is fully completed on the whole section (the latest section Županja Bajakovo was opened to traffic in June 2006). The main axis of Corridor X then continues through Serbia for almost 500km, with more than twothirds being multilane motorway. The remaining 102km long section of the main axis in Serbia that need reconstruction is Leskovac Presevo (Serbian/ the former Yugoslav Republic of Macedonia border). This section is covered by feasibility, technical and environmental impact studies with the contribution from both public and private sectors. The construction of a motorway section Leskovac Grdelica Vladicin Han Presevo (122 km) is planned for after 2010. For 2008 completion of works on Ostruznica Bubanj Potok (21km, the first phase) section is planned. In 2009 completion of works of rehabilitation of Beska existing bridge and of construction of second carriageway on Horgos Novi Sad (126km) section are foreseen, while until 2010 completion of works on Dobanovci Bubanj Potok (the second phase) and Prosek Dimitrovgrad (96km) sections are planned. The construction of Belgrade Novi Sad Horgos (Branch Β) motorway is planned for 2009. According to the REBIS study, the motorway Novi Sad-Belgrade and completion of Belgrade by-pass are the main bottlenecks on the Corridor X in Serbia. 21

The remaining sections of the main part of Corridor X in the former Yugoslav Republic of Macedonia that need reconstruction are Tabanovce Kumanovo (7.4km) and Demir Kapija Smokvica section (33km). Joint financing, under the Stability Pact, of the section Demir Kapija Gevgelija (the former Yugoslav Republic of Macedonia/ Greek border) is available for improvement of a critical section of the Corridor X. This north-south Corridor near the border with Greece is going to be improved by the construction of the first two-lane carriageway of a motorway Furthermore, for the section Bitola Medzitlija (20km) the two-lane reconstruction/ road widening is ongoing, financed by EBRD and WB, and the completion of works is planned for 2008. For the section Veles Prilep, 73km, the two-lane reconstruction/ rehabilitation is under consideration for financing from EBRD and WB with no estimated costs available yet. For the year 2010, commencement of works on Veles Medzitlija (127km) section is planned. Regional developments can also have a direct impact on the traffic on Corridor X sections as monitored by SEETO. For example, Slovenian 75km section Bic Obrezje (Slovenian/ Croatian border), has around 20km still under construction, even though 86% of foreseen investments in the amount of 150 mil. has been secured for the remaining works. This has a direct impact to the traffic continuing to/from the SEE countries. Corridor Xa The section of Branch A with a length of 61 km links Gruskovje (Slovenian/ Croatian border) with Zagreb. By the end of May 2007 the transformation of the highway section Krapina Macelj, 19,4km, to a motorway was done. The whole length of Krapina Macelj (60 km) is now motorway, apart from 3.7 km that is still semi motorway. Total investment cost for this motorway was 491 million while the cost per km was 8.2 million. Corridor Xb The section of Branch B is Subotica (Hungarian/ Serbian border) Novi Sad Beograd, of 185,93km length, with motorway / highways structure. Corridor Xc The section of Branch C is Dimitrovgrad (Bulgarian/ Serbian border) Nis, is 108,82km long, with highways at most of its whole length. Corridor Xd The the former Yugoslav Republic of Macedonia section of Branch D is the highway Veles Bitola Medzitlija (the former Yugoslav Republic of Macedonia/ Greek border), with a length of 125km. Rail Corridor X Concerning railways, investment costs are the highest for the main regional axis, rail Corridor X, followed by Corridor Vb, Xb, with at Corridor Xc (although with no SEETO priority projects) and Corridor Xd. Rail Alignment 22

Salzburg Ljubljana Dobova/Savski Marof Zagreb Novska Vinkovci - Tovarnik Sid - Beograd Nis Presevo/Tabanovce - Skopje Veles Gevgelija/Idomeni Thessaloniki Branch A from Graz Graz - Gruskovje (Slovenian/Croatian border) - Zagreb Branch B from Budapest Budapest Kelebia Subotica - Novi Sad Beograd Branch C to Sofija Nis Dimitrovgrad/Kalotina Sofija Branch D to Florina (Via Egnatia) Veles Bitola - Kremenica/Mesonision Florina In terms of conditions on the rail Corridor X it is mostly electrified and double track in over half of entire length throughout Croatia, overwhelmingly electrified and double in one-third of the total length in Serbia (with 100% electrified lines and double track on the stretches Sid-Belgrade and Velika Plana-Nis) and in the former Yugoslav Republic of Macedonia railway is with electrified single tracks. With regards to the planned and recent developments, there are a preliminary and a technical study for construction of a new double railway track connecting Sisak and Kutina (32km). The construction of second track from Zagreb to Sisak and from Kutina to Novska, 26km (total length 76km) and the reconstruction of the station of the line have also been studied (preliminary and technical study). Both studies have the year 2020 as horizon for implementation, with the participation of national and international financial institutions (EBRD/ WB). This timeline for the development of the railway infrastructure is too far in the future to predict whether the studies will be implemented or if other problems will prevent it in the meantime. More sections need reconstruction (rehabilitation) of the respective railway lines like Okučani to Novska in the length of 19.5 km (investment value 38.5 mil with implementation from 2009 until 2011), as well as section Novska to Dugo Selo in the total length of 81.3 km (in 3 phases, with the investment value of 135 mil with the time window 2010 2013). Sections with projects in progress (implementation planned between 2007 and 2009) include Vinkovci to Tovarnik in the length of 34 km that has obtained EU ISPA fund financing for reconstruction (rehabilitation) of the railway line. Total investment amounts to 75.8 mil, with EU ISPA funding of 28.8 mil (38%) and the rest is coming from the national budget. The intention of this reconstruction is to project is to increase the speed to 160 km/h, increase the axle load to 225 kn, having in mind safe and efficient electric traction and increased safety (modernisation of signalling system with automatic safety devices). Section Tovarnik Belgrade (main Axis), 120 km, needs doubling of track with financing by the Serbian government, EIB and WB with construction planned until 2010. Section Gevgelija Skopje Blace requires rehabilitation and capital overhaul of single track railway, on 200km with an estimated total cost of 20 mil, to be covered by E.I.B. For the section Zgropolci Demir Kapija Miravci (total length 71,5km) there is a feasibility and technical study for upgrading financed by EIB. 23

Reconstruction is also required and planned for the sections Gevgelija Idomeni (10km) in 2008, Zgropolci Demir Kapija (72km) section in 2009 and for Miravci Gevgelija (30km) section in 2010. The section of Branch B is Subotica (Hungarian/ Serbian border) Novi Sad Belgrade, of 150 km length, with 100% electrified lines and single tracks at a percentage of 97,6% of its total length. The modernisation of section between Stara Pazova and the Hungarian border is one of the priorities on rail Corridor Xb. For this section doubling of track by 2010 is foreseen, with financing by the Serbian government, EBRD and WB. The Branch C of the Corridor X is Nis - Dimitrovgrad (Bulgarian/ Serbian border), single-track and non-electrified line at its whole length of 104 km so in the whole length it needs electrification and upgrading. Branch D is Veles Bitola Kremenica (the former Yugoslav Republic of Macedonia/ Greek border), of 146 km length, with diesel single tracks, so one of the first steps should be electrification. The current situation of the rail infrastructure at Corridor Xd is considered poor with low levels of maintenance. Route 1 Road Route 1 is passing through Bosiljevo (Croatia) Split (Croatia) Ploce (Croatia) Neum (Bosnia and Herzegovina) Dubrovnik (Croatia) Bar (Montenegro) thus it passes through three countries. The overall condition of the road is medium to good. Average AADT for the route is 9,500 but there are very wide seasonal variations due to tourism. The condition of the Montenegrin project section is poor with AADT of 6,000. This is set to grow by 7% pa due to the development in tourism sector. The fatality rate of 85 per billion vehicle km is more than twice the EU average. One project from Montenegro, Debeli Brijeg Bar has been included in the priority list. The total investment requirements of the projects in the pool are around 150 million. Rail Rail alignment is running in its entirety within Croatia, from Ostarija to Split. The condition of the infrastructure is medium, with investment requirements of 70 mil (funding from IFI loans) for the modernisation and reconstruction of rail stations on the line Ostarije - Knin - Split. Route 2a (Road) Route 2a links Corridors Vc (Lasva) and X (Okucani) via Banja Luka through BIH and only a few km through Croatia. SEETO included in project pool three received BiH projects Construction of a new motorway Gradiska-Banja Luka, Construction of section Lasva- Donji Vakuf motorway/expressway with the total investment requirement of 335 million, while one Croatian was only included in the database. Route 2b 24

Road The road Route 2 B is passing through Sarajevo (Bosnia and Herzegovina) Podgorica (Montenegro) Vlore (Albania) so covering three countries. The route also passes through several ethnically different and socially diverse areas. Poor connectivity and social fragmentation characterize the remoter areas of SEE. Development of the route 2b work will help improve social integration and access to markets and provide better infrastructure for the development of tourism. The route passes through National Parks so the environmental impact of rehabilitation and upgrading some sections of the route will need very close attention. There are four SEETO priority projects at this route, upgrading Hani Hotit Shkoder road (Albania), Niksic Bypass and road rehabilitation Scepan polje - Pluzine (Montenegro) and construction of the road section Brod na Drini/ Foča Hum/ Šćepan Polje (Bosnia and Herzegovina), representing 25 % of the total route length with required investments of more than 163 million. Rail Route 2b is stretching from Podgorica in Montenegro to Vlore on Albanian coast, with poor to medium conditions and with no investment requirements submitted to SEETO. Route 2c (Road) SEETO monitored part of the Route 2c is completely in Albania, from Fier to Kakevile at the Greek border. In the project pool there are two received Albanian projects Upgrading Fier - Tepelene road (excluding bypasses), Upgrading Tepelene - Gjirokastre road, with total investment required of 88.6 million. Route 3 (Road) Route 3 links Route 4 in Serbia with Sarajevo. There are no SEETO priority projects on Route 3. There was two projects received from BIH and placed in the project pool, Construction of border crossing at Vardiste and Construction of section Renovica Mesici with the total investment of more than 50 million, while for the Serbian project Upgrading of border crossing at Kotroman no sufficient information was received, so consequently this one was not included in the project pool. Route 4 Road Route 4 is passing from Vatin (Romanian border) through Beograd (Serbia) via Misici to Bar (Montenegro). It also passes through Podgorica, capital of Montenegro, where is the location of the current SEETO priority project (Eastern mini-bypass Podgorica). Montenegro, not being located on any Pan TEN depends on Route 4 for access to the main corridors and the EU. Route 4 is of considerable economic importance to Montenegro as well as providing a de facto corridor from Bar to Southern Romania. Bar being on the motorway of the sea also connects with Naples. The development of the route is also of interest to Italy. The condition of the route varies widely and the route in mountainous areas suffers frequently with landslides. Total investment requirements for all projects in the pool on the road Route 4 are around 200 million, with 20 million for the priority project mentioned above. Railway 25

Route 4 extends from Vrsac on the Romanian border passing through Belgrade (Serbia) to the Port of Bar in Montenegro. The route provides the most direct access (601 Km) from Vrsac (Romanian border)belgrade to the Adriatic Sea. Rail route No. 4 from Belgrade to Bar is a single electrified line of 25kv 50 Hz. The condition of the line is medium although speed is reduced to 50 kph. Total investment costs for all projects in the pool on the railway Route 4 are exceeding 245 million. SEETO priority projects on Route 4 (rehabilitation and additional works on Vrbnica Podgorica - Bar railway line) are located in Montenegro, covering 167 km of tracks and have an estimated cost of 35 million. No EIRR information has been supplied, so each project still requires full feasibility study. Related soft measures must include technical assistance to the Ministry to prepare new laws and regulations in line with contemporary requirements and to Montenegrin Railways for restructuring, creating conditions for open access. Bar Vrbnica line is 167 km long, electrified, built in 1976, with maximum load on single axle 22.5 t. Daily frequency of trains on the line Bar Vrbnica (as a part of Bar Belgrade) in winter period is from 5 passenger trains to 15 trains during summer period, as well as between 20 and 25 local trains in inland transport. In the same way, depending on utilization of the railway, 5 to 15 freight trains operate per day. On 167 km railway length there are 106 tunnels, 107 bridges, 9 galleries and 371 passages, in other words around 37% of the railway are complex infrastructure projects. There are 12 localities on the railway where the speed limit due to safe reasons is reduced, so that total average speed of trains is reduced from designed 70 km/h to 55 km/h. From maintenance point of view, this is one of the more complicated and expensive railways in Europe. According to the standards from surrounding countries for maintenance of less complex railways, it is necessary to provide around 70,000 /km a year. Accordingly, it would be necessary to provide around 11.8 million Euro annually for Bar Vrbnica railway line, which was not the case so far. During the last years between 3 and 7 million was spent per year for its maintenance, and programs necessary to be implemented on the railway required approximately 17 million. Route 5 (Road) Route 5 connects Corridor X from Paracin to the Bulgarian border, currently with no SEETO priority projects. The only submitted project placed in the project pool is Rehabilitation of road section Paracin - Bulgarian border. Route 6 (Road) Route 6 connects Montenegro, western Serbia, UNMIK/Kosovo, and Skopje in the former Yugoslav Republic of Macedonia and currently does not have SEETO priority projects. However, two projects submitted by Montenegro, Road rehabilitation on section Ribarevina-Spiljani and Ribarevina Road rehabilitation and upgrading as well as one from UNMIK / Kosovo, Pristina - Blace (border with the former Yugoslav Republic of Macedonia) were placed in the projects pool with the total investment costs of around 60 million, while another five from UNMIK / Kosovo and two from the former Yugoslav Republic of Macedonia were not included because of insufficient information received. Route 7 (Road) 26

Regional Route 7 is passing through Lezhe (Albania) Pristina (UNMIK/Kosovo) Doljevac (Serbia) - Nis linking the Corridor X with the Adriatic. The Route 7 complements the corridors X and VII and has a vital role in economic and social enhancement of substantial parts of the landlocked and underdeveloped region. Like the other routes it extends through territory of three SEETO partners. SEETO projects on road Route 7 (project Group 11 and 12) includes Albanian project Upgrading Milot Morine Road, UNMIK/Kosovo project Morina Pristina Merdare while on Merdare/Doljevac Niš (connection to Corridor X) there are no priority road projects at the moment. The current AADT in the Pristina region mounts to 16.800 over section North (forecast for 2012 is 23.500), 27.200 in the central section (forecast 38.900) and 14.700 (forecast 21.800) in section South. Daily flow at the border crossings to Albania and Serbia are 3.100 and 2.100 respectively. Traffic growth forecasts in low, moderate and high scenarios are considerable all along the UNMIK/Kosovo section of Route 7. A 2006 economic feasibility study shows an Internal Rate of Return for the UNMIK/Kosovo central section (approx. 35 km in length) of the Route 7 that varies between 7% and 8.8% and recommends a Motorway Pilot investment package of 179.4 million. This central section has a main junction with Road Route 6 (Skopje Pristina Podgorica - Belgrade) south of Pristina and with Pristina International Airport. A first study on a framework for PPP and potential PPP schemes for the Motorway in UNMIK/Kosovo has been concluded in June 2007. Substantial soft measures are required in re-categorisation, road safety and controlled roadside development and road access. A road safety audit and an environmental assessment are highly recommended. Further soft measures relate to integrated border management and implementation of performance based contracting for maintenance. Route 9 (Rail) This is railway route connecting Corridor Vc at Doboj and Banja Luka. The only project submitted to SEETO has been Reconstruction of the line Doboj Josavka, the railway line that has parallel alignment to Corridor X. Investment costs of this project are 40 million with 2 million unit costs. Route 10 (Rail) Railway route is passing from Route 11 in Serbia through Pristina up to Skopje. This northwest southeast route has three projects from Serbia ( 127 million on the 163km long section from Lapovo to Raska) and several from UNMIK/Kosovo of which some projects submitted are currently being reviewed. For the moment no project from the Route 10 is in the priority pool. Route 11 (Rail) This is the railway route connecting Corridor X (Pozega) and the Route 4 (Stalac), so it is completely within Serbia. Two projects were submitted showing estimated investments of 86.6 million on 118 km long section from Cacak to Stalac via Kraljevo, but with none of the projects in the priority pool. 27

Annex A3 Road Core Network by Corridor or Route Road Corridor and Route Lengths Albania Bosnia and Herzegovina Croatia the former Yugoslav Republic of Macedonia Montenegro Serbia UNMIK / Kosovo Total Length in km % of Corridors % of the whole network Corridors Vb 272 272 9% 5% Vc 400 134 534 18% 9% VIII 378 347 725 24% 12% X 306 196 514 1,016 34% 17% Xa 60 60 2% 1% Xb 185 185 6% 3% Xc 110 110 4% 2% Xd 117 117 4% 2% TOTAL Corridor Length 378 400 772 660 0 809 0 3,019 100% 50% % of Corridors 13% 13% 26% 22% 0% 27% 0% 100% % of Routes Routes Route 1 7 566 130 703 24% 12% Route 2a 228 8 236 8% 4% Route 2b 132 104 160 396 13% 7% Route 2c 136 136 5% 2% Route 3 131 54 185 6% 3% Route 4 176 414 590 20% 10% Route 5 107 107 4% 2% Route 6 20 79 25 135 259 9% 4% Route 7 139 96 114 349 12% 6% TOTAL Route Length 407 470 574 20 545 696 249 2,961 100% 50% % of Routes 14% 16% 19% 1% 18% 24% 8% 100% TOTAL 785 870 1,346 680 545 1,505 249 5,980 100% % 13% 15% 23% 11% 9% 25% 4% 100% 28

Annex A4 Rail Core Network by Corridor or Route Description Albania Bosnia and Herzegovina Rail Corridor and Route Lengths the former Yugoslav Republic Montenegrbia Ser- of Macedonia UNMIK / Kosovo % of Corridors % of the whole network Croatia Total Corridors Vb 308 308 10% 7% Vc 397 126 523 17% 11% VIII 358 259 617 20% 13% X 447 515 215 1,177 39% 26% Xb 149 149 5% 3% Xc 97 97 3% 2% Xd 179 179 6% 4% TOTAL Corridors [km] 358 397 881 0 761 653 0 3,050 100% 67% % of Corridors 12% 13% 29% 0% 25% 21% 0% 100% % of Routes Routes Route 1 326 326 21% 7% Route 2 119 25 143 9% 3% Route 4 167 420 587 38% 13% Route 9 87 87 6% 2% Route 10 70 32 150 252 16% 6% Route 11 138 138 9% 3% TOTAL Routes [km] 119 87 326 192 628 32 150 1,534 100% 33% % of routes 8% 6% 21% 12% 41% 2% 10% 100% TOTAL 476 484 1,207 192 1,390 685 150 4,584 100% % of whole network 10% 11% 26% 4% 30% 15% 3% 100% 29

South East Europe Core Regional Network Development Plan 2007 to 2011 Annex B CONDITION OF THE CORE NETWORK 30

Annex B1 ROAD CORE NETWORK CONDITION by CORRIDOR or ROUTE Description Albania Bosnia and Herzegovina Croatia the former Yugoslav Republic of Macedonia Montenegro Serbia UNMIK / Kosovo Total % of Corridors % to TOTAL Corridors Very Good 137 38 615 61 851 28% 14% Good 104 58 147 402 219 931 31% 16% Medium 304 10 249 529 1,092 36% 18% Poor 106 8 114 4% 2% Very Poor 31 31 1% 1% Total Corr [km] 378 400 772 660 0 809 0 3,019 100% 50% % of Corr 13% 13% 26% 22% 0% 27% 0% 100% Routes % of Routes Very Good 31 325 78 31 40 505 17% 8% Good 97 7 161 9 189 12 476 16% 8% Medium 30 442 88 20 375 180 65 1,200 41% 20% Poor 47 74 132 252 9% 4% Very Poor 249 21 37 222 529 18% 9% Total Route [km] 407 470 574 20 545 696 249 2,961 100% 50% % of Routes 14% 16% 19% 1% 18% 24% 8% 100% Total [km] 785 870 1,346 680 545 1,505 249 5,980 100% % of TOTAL 13% 15% 23% 11% 9% 25% 4% 100% Annex B2 Rail Core Network Condition by Corridor or Route Corridor Or Route Length of Corridor or Route % of TOTAL Not Specified % of Corridor or Route Good [km] % of Corridor or Route Medium [km] % of Corridor or Route Poor [km] % of Corridor or Route Very Poor [km] % of Corridor or Route Corridor Vb 308 7% 0% 53 17% 79 26% 176 57% 0% Corridor Vc 523 11% 0% 118 23% 334 64% 72 14% 0% Corridor VIII 617 13% 210 34% 0% 102 16% 103 17% 202 33% Corridor X 1175 26% 0% 151 13% 673 57% 350 30% 0% Corridor Xb 149 3% 0% 0% 149 100% 0% 0% Corridor Xc 97 2% 0% 0% 97 100% 0% 0% Corridor Xd 179 4% 0% 0% 0% 129 72% 50 28% Route 1 326 7% 0% 0% 326 100% 0% 0% Route 2 143 3% 0% 0% 25 17% 119 83% 0% Route 4 587 13% 0% 0% 587 100% 0% 0% Route 9 87 2% 0% 0% 87 100% 0% 0% Route 10 252 6% 0% 0% 220 87% 32 13% 0% Route 11 138 3% 0% 0% 138 100% 0% 0% TOTAL: 4582 100% 210 5% 322 7% 2817 61% 981 21% 252 6% 31

South East Europe Core Regional Network Development Plan 2007 to 2011 Annex C PERFORMANCE OF THE CORE NETWORK 32

Annex C1 TRAFFIC Table D-1Core Road Network Traffic Analysis Traffic Range Corridors Routes Total Vehicle/day km % km % km % 0 999 45 1% 47 2% 92 2% 1,000 1,999 47 2% 443 15% 490 8% 2,000 4,999 468 15% 1,064 36% 1,532 26% 5,000 9,999 1,205 40% 798 27% 2,003 33% 10,000 14,999 688 23% 350 12% 1,038 17% 15,000 19,999 218 7% 150 5% 368 6% > 20,000 215 7% 39 1% 254 4% Data missing 134 4% 70 2% 204 3% Totals 3,019 100% 2,961 100% 5,980 100% Note: 2005 data used Bosnia and Herzegovina Core Rail Network Traffic Analysis (number of passenger trains) Traffic range Corr Routes Total Number of passenger trains/day km % km % km % a) 0-19 1315 43% 1047 68% 2362 52% b) 20-49 1414 46% 487 32% 1901 41% c) 50-100 0 0% 0 0% 0 0% d) 100-199 60 2% 0 0% 60 1% g) Data missing 260 9% 0 0% 260 6% TOTAL: 3049 100% 1534 100% 4583 100% 33

Annex C2 BOTTLENECKS Core Road Network: Sections with Traffic Exceeding Level of Service C (v/c> 0.77) Country/territory Albania Bosnia and Herzegovina* Croatia Montenegro Serbia Len gth [km] L a n e s Traffic flow (VEHIC LE / day) in 2006 v/c 200 6 Corridor/Route Road Section LOS 2006 v/c 2012 Corridor VIII Lushnje to: Fier 31 2 10,940 0.84 D! 1.41 F! Corridor VIII Fier to: Vlorë 39 2 6,664 0.51 B 0.86 D! Corridor VIII Durrës to: Rogozhine 37 2 14,200 1.09 F! 1.84 F! Corridor VIII Lushnje to: Fier 31 2 10,940 0.84 D! 1.41 F! Corridor VIII Fier to: Vlorë 39 2 6,664 0.51 B 0.86 D! Route 2b Shkoder to: Lezhe 43 2 6,426 0.49 B 0.83 D! Route 2b Lezhe to: Milot 13 2 6,900 0.53 B 0.89 D! Route 2b Milot to: Mamurras 14 2 9,904 0.76 C 1.28 F! Route 2b Mamurras to: Fushe Kruje 14 2 10,102 0.78 D! 1.31 F! Route 11 Durrës to: Rogozhine 37 2 14,200 1.09 F! 1.84 F! Corridor Vc Šešlije to: Doboj 15 2 11,248 0.87 D! 1.44 F! Corridor Vc Doboj to: Karuše 8 2 14,327 1.1 F! 1.84 F! Corridor Vc Karuše to: Maglaj 21 2 8,364 0.64 C 1.07 F! Corridor Vc Maglaj to: Zenica 58 2 9,244 0.71 C 1.19 F! Corridor Vc Zenica to: Lasva 8 2 12,330 0.95 E! 1.58 F! Corridor Vc Lasva to: Visoko 35 2 12,330 0.95 E! 1.58 F! Corridor Vc Sarajevo(Ilidza) to: Blažulj 9 2 52,548 4.04 F! 6.74 F! Corridor Vc Blažulj to: Tarcin 19 2 7,950 0.61 C 1.02 F! Corridor Vc Tarcin to: Konjic 24 2 7,756 0.6 C 1 E! Corridor Vc Konjic to: Jablanica 22 2 7,246 0.56 C 0.93 D! Corridor Vc Jablanica to: Mostar By-pass 51 2 6,538 0.5 B 0.84 D! Corridor Vc Mostar By-pass to: Mostar By-pass end 20 2 13,069 1.01 F! 1.68 F! Corridor Vc Mostar By-pass end to: Buna- Žitomislići 10 2 8,985 0.69 C 1.15 F! Tasovcici-Čapljina to: Doljani BH Corridor Vc (border) 9 2 8,024 0.62 C 1.03 F! Neum northwest BH (border) to: Neum southeast BH (border) 7 2 8,713 0.67 C 1.12 F! Route 1 Route 2a Gradiška to: Klašnice 31 2 13,212 1.02 F! 1.7 F! Route 2a Travnik to: Lasva 33 2 8,316 0.64 C 1.07 F! Route 3 Sarajevo(Ilidza) to: Pale (Ljubogošta) 21 2 6,258 0.48 B 0.8 D! Route 4 Mostar By-pass to: Mostar By-pass end 20 2 13,069 1.01 F! 1.68 F! Corridor Vc Karanac to: Osijek - North 28 2 11,582 0.89 D! 0.96 E! Corridor X Zagreb - West (Jankomir) to: Zagreb - South (Lučko) 5 4 49,735 0.96 E! 1.03 F! Corridor X Zagreb - West (Jankomir) to: Zagreb - South (Lučko) 5 4 49,735 0.96 E! 1.03 F! Corridor X Zagreb - South (Lučko) to: Zagreb - Buzin 8 4 38,968 0.75 C 0.81 D! Route 1 Split to: Omiš 23 2 12,600 0.97 E! 1.05 F! Route 1 Dubci to: Makarska 19 2 11,100 0.85 D! 0.92 D! Route 1 Dubrovnik - Sustjepan to: Cibasa 8 2 11,266 0.87 D! 0.94 E! Route 1 Igalo to: Kamenari 18 2 6,307 0.49 B 0.78 D! Route 1 Petrovac to: Petrovac 10 2 6,589 0.51 B 0.81 D! Route 1 Petrovac to: Bar 9 2 6,589 0.51 B 0.81 D! Route 2b Podgorica to: Tuzi 9 2 7,477 0.58 C 0.92 D! Route 4 Sotonici to: Petrovac 8 2 0 A 0.91 D! Corridor X Dobanovci to: Novi Beograd 15 4 40,950 0.79 D! 1.25 F! Corridor X Novi Beograd to: Beograd 7 4 123,807 2.38 F! 3.77 F! Corridor X Beograd to: Bubanj Potok 10 4 49,858 0.96 E! 1.52 F! Corridor X Grdelica to: Preševo SR (border) 95 2 6,849 0.53 B 0.83 D! Route 4 Vršac to: Pancevo 57 2 9,715 0.75 C 1.18 F! LOS 2012 34

the former Yugoslav Republic of Macedonia UNMIK / Kosovo Route 4 Beograd (Čukarica) to: Orlovača (ring) 8 2 1.99 F! 3.15 F! Route 4 Orlovača (ring) to: Lazarevac 44 2 1.3 F! 2.06 F! Route 4 Lazarevac to: Ljig 25 2 8,400 0.65 C 1.02 F! Route 4 Ljig to: Rudnik 26 2 6,951 0.53 B 0.85 D! Route 4 Rudnik to: Gornji Milanovac 12 2 7,286 0.56 C 0.89 D! Route 4 Gornji Milanovac to: Čačak 15 2 11,349 0.87 D! 1.38 F! Route 4 Čačak to: Požega 41 2 9,455 0.73 C 1.15 F! Route 4 Požega to: Užice 22 2 9,238 0.71 C 1.13 F! Corridor Vb Izvor to: Kičevo 15 2 4,730 0.36 B 0.89 D! Corridor Vc Kafasan MK (border) to: Struga 11 2 2,017 0.16 A 0.81 D! Corridor VIII Kafasan MK (border) to: Struga 11 2 2,017 0.16 A 0.81 D! Corridor VIII Izvor to: Kičevo 15 2 4,730 0.36 B 0.89 D! Corridor VIII Kičevo to: Zajas 19 2 7,693 0.59 C 1.04 F! Corridor VIII Kičevo to: Zajas 19 2 7,693 0.59 C 1.04 F! Route 6 Mitrovica to: Priština/Prishtinë 35 2 15,100 1.16 F! 1.42 F! Priština/Prishtinë to: Lipljan - QMI Route 6 Junction 12 2 27,200 2.09 F! 2.55 F! Lipljan - QMI Junction to: Donja Grlica 23 2 15,100 1.16 F! 1.42 F! Route 6 Route 6 Donja Grlica to: Kacanik-Kaqanik 17 2 13,000 1 E! 1.22 F! Route 7 Prizren to: Suva Reka 19 2 8,800 0.68 C 0.83 D! Route 7 Suva Reka to: Crnoljevo 18 2 12,300 0.95 E! 1.15 F! Route 7 Crnoljevo to: Lipljan - QMI Junction 19 2 14,700 1.13 F! 1.38 F! Route 7 Lipljan - QMI Junction to: Priština/Prishtinë 2 27,200 2.09 F! 2.55 F! Route 7 Priština/Prishtinë to: Luzane 18 2 16,800 1.29 F! 1.58 F!.* Traffic Forecast for Bosnia and Herzegovina based on year 2005 35

Annex C3 OPERATING SPEED vs DESIGN SPEED MAPS 36

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Annex C3 ACCESSIBILITY MAPS TRAVEL TIMES AND SPEED LIMITS 39

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Annex C3 ACCIDENT ANALYSIS Table C3-1 Number of Accidents, Vehicles and Population Population Number of vehicles Number of accidents 2004 2005 2006 2004 2005 2006 2004 2005 2006 Albania 3,127,263 3,142,065 3,149,147 275,838 284,655 320,347 1,110 1,182 1,051 BiH Croatia 4,440,000 4,440,000 4,440,000 1,720,119 1,790,971 1,866,741 76,540 58,132 58,271 fyrom* Montenegro 622,118 623,277 108,090 5,377 6,192 7,185 Serbia 7,463,157 7,440,769 1,603,606 1,702,133 1,726,447 62,434 62,036 63,913 UNMIK 2,250,000 2,300,000 2,350,000 220,000 250,000 280,000 6,564 13,917 14,582 Total 17,902,538 17,946,111 9,939,147 3,927,653 4,027,759 4,193,535 152,025 141,459 145,002 Table C3-2 Number of Injuries and Fatalities Number of accidents with fatalities or injuries Number of Injured persons Number of Fatalities 2004 2005 2006 2004 2005 2006 2004 2005 2006 Albania 801 853 1,018 853 875 774 257 307 277 BiH Croatia 17,140 15,697 16,665 24,271 21,733 23,070 608 597 612 fyrom* 4,176 143 Montenegro 1,220 1,347 1,554 1,750 1,942 2,257 91 95 85 Serbia 13,397 12,769 13,912 14,691 14,150 15,230 960 843 900 UNMIK 2,223 4,361 4,961 2,053 4,206 4,789 170 155 178 Total 34,781 35,027 38,110 43,618 47,082 46,120 2,086 2,140 2,052 Source : SEETO RSQ Questionnaires, UNMIK MoT, Ministry of Infrastructure of Serbia, MUP RH, MVD MK, MUP CG *fyrom : The former Yugoslav Republic of Macedonia 42

South East Europe Core Regional Network Development Plan 2007 to 2011 Annex D INFRASTRUCTURE AND PERFORMANCE INDICATORS 43

Annex D1 SOURCE DATA FOR THE TRAFFIC FORECAST Population Growth and GDP growth figures for the traffic forecast *Annual Population Growth **Annual GDP Growth Country or Territory 2005-2009 2010-2012 Estimated 2005-2009 2010-2012 Estimated Albania 0.8 0.8 6.5 6.5 Bosnia and Herzegovina 0.5 0.5 5,5 5,5 Croatia 0.5 0.5 3.7 3.7 the former Yugoslav Republic of Macedonia 0.5 0.5 4.3 4.3 Sources: Montenegro 0.5 0.5 5 5 Serbia 0.5 0.5 4.9 4.9 UNMIK/Kosovo 1 0.5 ***2.5 ***3 * World Bank and REBIS estimates **The World Bank Country profiles (Dec. 2006), ***EAR Data (2002) Forecasted Average Growth for 2012 The results of the traffic forecast model Average Yearly Traffic Growth 2007-2009 Average Yearly Traffic Growth 2010-2012 Forecasted Average Growth for 2012* Albania 10.8% 10.8% 84.9% Bosnia and Herzegovina 8.9% 8.9% 66.8% Croatia 6.1% 6.1% 42.9% The former Yugoslav Republic of Macedonia 7.1% 7.1% 50.5% Montenegro 8.1% 8.1% 59.8% Serbia 8.0% 8.0% 58.5% UNMIK/Kosovo 4.8% 5.6% 34.2% *: base year 2006 Applied parameters: GDP elasticity=1.5, population elasticity=1 Applied model: ln(v2012) = A + 1.5*ln(GDP/capita)+1*ln(population) 44

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South East Europe Core Regional Network Development Plan 2007 to 2011 Annex E INVOLVEMENT OF PRIVATE SECTOR IN INVESTMENT FINANCING 51

INVOLVEMENT OF PRIVATE SECTOR IN INVESTMENT FINANCING Large-scale, privately financed projects are often very complex owing to the large number of stakeholders involved, the high costs and risks, and the long duration of project development and the contract period. Grouped under the term Design, Build, Finance and Operate (DBFO), they in-clude Build, Operate, Transfer (BOT) projects, Build, Operate, Own (BOO) projects, as well as projects developed under Private Finance Initiative (PFI) terms, a system originally developed in the UK but latterly used in many other countries. For all stakeholders, the success of a DBFO project can be measured by one yardstick: its sustainability over its entire lifetime. Any attempt to optimize specific aspects of the project independently of the rest will almost certainly upset the balance of the whole and any project stake-holder looking for a short term profit may not only provoke long term losses for all stakeholders but also risks endangering the entire project. Sound business plans, creative financing schemes and sophisticated contracts are simply the tools to make projects happen. Before they can come into play, the project must be conceived and designed to achieve success. The history and development of project financing shows that small misjudgments during the early stages can have a disproportionately large impact years down the line. Transport projects are different in nature from other types of project. Their market is geographically fixed: for example, spare capacity on one road cannot be used to relieve congestion elsewhere in the country, unlike prisons or hospitals; in the case of roads, drivers are often unaccus-tomed to paying for a premium service roads are traditionally regarded as a public good, and imposing a monetary cost on a particular route may well displace traffic onto less environmentally suitable, but free, routes. When the user pays at the point of use, for example by buying a train ticket, or at a toll booth on a motorway or bridge or tunnel, this introduces a degree of uncertainty: will sufficient number of users be willing to pay enough money to make the project viable? On the other hand, it also gives the concessionaire an opportunity to be creative and innovative with regard to revenue generation as well as well with cost control. Some DBFO transport contracts are moving towards payments based on availability, safety and level of service targets, as well as on traffic levels, to deal with these issues. The critical factors are: The availability of a wide database of existing travel patterns in the project corridor An accurate traffic forecast that anticipates road users response in the event of tolls being imposed An accurate assessment of the willingness of the market to pay for the service Secure economic forecasts: GDP and travel demand are closely correlated A well-defined project in terms of pricing strategy, junction location (for roads), and phasing An attractive marketing policy which caters for both local and long distance traffic, discounts for frequent users, premium prices at times of exceptional demand, and easy payment systems Proper risk allocation between the public and private sectors. 52

The key to success in these areas is partnership between the public and private sectors (PPP schemes), where each side is willing to accept the appropriate risk in an environment of mutual trust. It also means that tenders must be evaluated on a wider basis than narrow, short-term financial criteria, so that the most sustainable, long-term solutions are obtained. One of the major difficulties in developing transport infrastructure projects is the availability of funds. In its communications Developing the trans-european transport network: Innovative funding solutions Interoperability of electronic toll collection systems (COM / 2003 132) the European Commission has clearly identified this issue, recognizing the fact at the current rate of investment it would take almost 20 years to implement the schemes scheduled for completion by 2010. In the same document it is recognized that the cooperation between the public and the private sector in funding specific infrastructure projects can provide a viable solution with a number of benefits for both sides. It is recognized, however, that the countries still face major economic, legal and, in some cases, political obstacles and that the existing regulatory framework needs to be updated to make PPP schemes even more attractive. The concept of PPP cannot be easily apprehended in the form of a single formula. In general terms PPP states the dialogue between various systems of actors from the public and the private sector to arrive to a new form of co-operation. One speaks about PPP when the centre of inter-est of the public and private partners is turned towards common objectives, when synergy effects can be carried out to achieve these goals, when the objectives are at the same time social and economic and when the identity and the responsibility of the partners remain intact. PPP models can nevertheless comprise at the same time hybrid and complex arrangements. Relationships of competition and co-operation are interrelated in a complementary way. Some of the main characteristics of a PPP scheme are: The relatively long duration of the relationship, involving cooperation between the public partner and the private partner on different as-pects of a planned project. The method of funding the project, in part from the private sector, sometimes by means of complex arrangements between the various players. Nonetheless, public funds in some cases rather substantial - -may be added to the private funds. The distribution of risks between the public partner and the private partner, to whom the risks generally borne by the public sector are transferred. However, a PPP does not necessarily mean that the private partner assumes all the risks or even the major share of the risks linked to the project. The precise distribution of risks is determined case by case, according to the respective ability of the parties con-cerned to assess, control and cope with this risk. The latter is usually the most critical factor when developing concession schemes and often takes long lasting negotiations and voluminous legal documents. When risks allocation is agreed, the crucial factor of success for a concession project is the risk management procedures undertaken by the con-cessionaire. 53