Feasability Study Hincesti - English

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Feasibility Study
for establishing
Hancesti Industrial Park
Developed by
Business Consulting Institute
January 2011

Feasibility Study for establishing the Hancesti Industrial Park

Feasibility Study on creation of Hancesti Industrial Park
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1
Contents
Abbreviations ............................................................................................................................... 6
Terms ........................................................................................................................................... 7
Executive Summary ...................................................................................................................... 9
1. Analysis of the region .......................................................................................................... 11
1.1 General overview .....................................................................................................................11
1.2 Cultural and social development ...............................................................................................11
1.2.1 Human capital ................................................................................................................................................ 11
1.2.2 Labor force ..................................................................................................................................................... 13
1.2.3 Education infrastructure ................................................................................................................................ 14
1.3 Economic development ............................................................................................................16
1.3.1 Industry .......................................................................................................................................................... 16
1.3.2 Agriculture ..................................................................................................................................................... 18
1.3.3 Services .......................................................................................................................................................... 19
1.3.4 Entrepreneurship ........................................................................................................................................... 19
1.3.5 Investments ................................................................................................................................................... 21
1.3.6 Infrastructure ................................................................................................................................................. 22
1.4 Reasoning the need for the Industrial Park ................................................................................23
2. Description of the concept of Industrial Park ........................................................................ 26
2.1. Concept of IP ............................................................................................................................26
2.2. Analysis of opportunities to set up a business incubator within the IP .......................................29
2.2.1. Concept of setting up the BI within the IP ................................................................................................. 30
2.3. Reasoning the technical options for IP establishment ................................................................31
3. Description of the Industrial Park ......................................................................................... 35
3.1. IP organization and operation ...................................................................................................35
3.2. Land .........................................................................................................................................39
3.2.1. Legal nature of the land............................................................................................................................. 39
3.2.2. Land features ............................................................................................................................................. 40
3.3. Utilities and infrastructure ........................................................................................................40
3.3.1. IP land development .................................................................................................................................. 40
3.3.2. Necessary utilities ...................................................................................................................................... 41
3.3.3. Internal infrastructure ............................................................................................................................... 43
3.3.4. External infrastructure .............................................................................................................................. 44
3.3.6. Labor force required for IP activity ............................................................................................................ 46
4. Assessment of investments in IP .......................................................................................... 47
4.1. Land .........................................................................................................................................47
4.2. Land development....................................................................................................................47
4.3. Internal Infrastructure ..............................................................................................................48


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2
4.3.1. Investments in internal infrastructure ...................................................................................................... 49
4.4. External infrastructure .............................................................................................................49
4.4.1. Investments in external infrastructure ...................................................................................................... 50
4.5. Buildings ..................................................................................................................................51
4.6. Assessment of costs for training labor force ..............................................................................51
4.7. Total investments .....................................................................................................................51
5. Project feasibility analysis ................................................................................................... 53
5.1. Introduction .............................................................................................................................53
5.2. General work assumptions .......................................................................................................55
5.3. Basic model of the Public Sector Comparator ............................................................................55
5.3.1. Cost estimation .......................................................................................................................................... 55
5.3.2. Income estimation ..................................................................................................................................... 60
5.3.3. Results of the basis PSC model .................................................................................................................. 62
5.3.4. Risk-adjusted PSC model ........................................................................................................................... 63
5.4. Reference model of Public - Private Partnership ........................................................................66
5.4.1. Option of project implementation through PPP ....................................................................................... 66
5.4.2. Type and structure of PPP project ............................................................................................................. 69
5.4.3. Payment mechanisms ................................................................................................................................ 70
5.4.4. Cost estimate ............................................................................................................................................. 71
5.4.5. Income estimation ..................................................................................................................................... 73
5.4.6. Results of the PPP reference model .......................................................................................................... 74
5.4.7. Risk-adjusted PPP reference model........................................................................................................... 75
6. Economic and financial forecast of Managing Company activity .......................................... 77
6.1. Sensitivity analysis of the Managing Company ..........................................................................80
7. Plan of IP implementation ................................................................................................... 83
7.1. Institutional forms of IP establishment .....................................................................................83
7.2. Stages of IP establishment ........................................................................................................85
8. Industrial Park impact over the zone .................................................................................... 88
8.1. Economic impact ......................................................................................................................88
8.2. Social impact ............................................................................................................................89
8.3. Environment impact .................................................................................................................89


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Tables
Table 1. Stable population in the period of 2005 - 2010, thousand persons ...................................................... 11
Table 2. Number of unemployed people registered by MNEA, uptrend ............................................................. 13
Table 3. Dynamics of number of educational institutions and students ............................................................ 14
Table 4. Structure of industrial enterprisers of Hancesti District, 2009 .............................................................. 16
Tables 5. Entrepreneurial sector of Hancesti District ......................................................................................... 20
Table 6. SWOT analysis of Hancesti Industrial Park ........................................................................................... 24
Table 7. Operational plan of Business Incubator ................................................................................................ 31
Table 8. Incubation Schedule of BI Residents ..................................................................................................... 31
Table 9. Structure of Industrial Park land ........................................................................................................... 33
Table 10. Structure of the zone of Residents ...................................................................................................... 34
Table 11. Needs of enterprises of Hancesti IP in public utilities ......................................................................... 42
Table 12. Amount of investments needed for development of Hancesti IP land................................................ 48
Table 13. Summary volume of investment required for building of the internal IP infrastructure ................... 49
Table 14. Summary volume of investment required for building the external IP infrastructure ........................ 50
Table 15.Structure of the land occupied by production premises of Hancesti IP ............................................... 51
Table 16. Capital costs of the project ................................................................................................................. 52
Table 17.Sources of financing capital costs of the IP established through traditional public procurement
mechanisms ........................................................................................................................................................ 56
Table 18. Distribution of costs for Hancesti IP project, thousand MDL .............................................................. 58
Table 19. Maintenance cost assumptions .......................................................................................................... 58
Table 20. Assumptions of management costs .................................................................................................... 58
Table 21. Maintenance and administration costs, MDL ..................................................................................... 59
Table 22.Assumptions on income from lease and services ................................................................................. 60
Table 23. Prices for consulting services and lease of conference and protocol halls ......................................... 61
Table 24. Estimated income, MDL ...................................................................................................................... 62
Table 25. Project costs and Income according to the basic PSC model, thousand MDL..................................... 62
Table 26. Risks and assumptions ........................................................................................................................ 65
Table 27.Project performance indicator realized according to the PSC model .................................................. 66
Table 28. Structure of land of Hancesti Industrial Park ...................................................................................... 66
Table 29. Structure of Industrial Park, option 1 .................................................................................................. 69
Table 30. Structure of Industrial Park, option 3 .................................................................................................. 69
Table 31. Sources of income for the IP Manager ................................................................................................ 71
Table 32. Capital costs of the project for the 3 options, MDL thousands ........................................................... 72
Table 33. Sources of funding IP project for the 3 options, thousands MDL ........................................................ 72
Table 34. Investment Costs of the project of Hancesti IP realized through PPP contract, thousands MDL ....... 73
Table 35. Performance indicators of the PPP reference model .......................................................................... 74
Table 36. Risk Allocation ..................................................................................................................................... 75
Table 37. Risks retained, calculated for PPP reference model, option 1, MDL ................................................... 75
Table 38. Performance indicators of the risk-adjusted PPP reference model .................................................... 76
Table 39. Present value of flows of the private partner according to option 1, MDL......................................... 78
Table 42. Results of financial analysis ................................................................................................................ 79


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Table 43. Amount of administration fee, MDL/sq.m. of land ............................................................................. 79
Table 44. Main steps for the establishment of Hancesti Industrial Park ........................................................... 85
Figures
Figure 1. Structure of population of Hancesti District as of January 1, 2010 .................................................... 12
Figure 2. Structure and share of population by age groups, as of January 1, 2010 ........................................... 12
Figure 3. Structure of active population of Hancesti District as of January 1,2010 ........................................... 13
Figure 4. Dynamics of the number of college students, people .......................................................................... 15
Figure 5. Dynamics of vocational schools students, people ............................................................................... 15
Figure 6.Value of manufactured products, mln MDL ......................................................................................... 17
Figure 7. Average number of industry employees, persons ................................................................................ 17
Figure 8. Dynamics of value of manufactured products, 2006=100% ................................................................ 17
Figure 9. Dynamics of the average number of employees of industrial sector, 2006=100% ............................. 17
Figure 10. Volume of vegetable products of agricultural enterprises in 2006-2008, tonnes ............................. 18
Figure 11. Evolution of enterprises and employees , 2005=100% ...................................................................... 20
Figure 12. Number of enterprises per 10,000 inhabitants.................................................................................. 20
Figure 13 Structure of private investment per types of economic activities, 2008 ............................................ 21
Figure 14 Regional investments from local budgets, MDL / capita ................................................................... 22
Figure 15 Regional investments from state budget, MDL / capita ..................................................................... 22


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Annexes
Annex 1 Basic economic indices of the companies that may be located in Hancesti Industrial Park ............... 90
Annex 2 Capital costs of the project , MDL ........................................................................................................ 91
Annex 3 Distribution of project capital costs, thousand MDL ............................................................................ 93
Annex 4 List of IP Manager Staff ........................................................................................................................ 94
Annex 5 Maintenance and administration costs, MDL ...................................................................................... 95
Annex 6 Matrix of Risks ..................................................................................................................................... 96
Annex 7. Risk value in case of establishing IP through the traditional mechanism of goods and services
procurement ..................................................................................................................................................... 100
Annex 8. Present value of in case of establishing IP through the traditional mechanism of goods and services
procuremen, MDL ............................................................................................................................................. 102
Annex 9 Structure and equipment of the administratiob building .................................................................. 103
Annex 10. Schedule of funding IP establishment, option 1, MDL .................................................................... 104
Annex 11 Schedule of funding IP establishment, option 2, MDL ..................................................................... 105
Annex 13 Estimated income from the PPP reference model, option 2, MDL .................................................. 107
Annex 14 Estimated income from the PPP reference model, option 3, MDL .................................................. 107
Annex 15 Calculated retained risks for the PPP reference model, option 2, MDL ........................................... 109
Annex 16. Calculated retained risks for the PPP reference model, option 3, MDL .......................................... 109
Annex 17 Analysis of sensitivity in terms of degree of occupancy of land and i production premises from the
zone of Residents ............................................................................................................................................. 110
Annex 18. Analysis of sensitivity in terms of lease and administration fee ..................................................... 110
Annex 19. Analysis of sensitivity in terms of amount of investments ............................................................. 111
Annex 20. Analysis of sensitivity in terms of income from consulting services ............................................... 111
Annex 21. Analysis of sensitivity in terms of costs of maintenance and administration ................................. 112
Annex 22 Schedule of activities within the project of IP establishment .......................................................... 113
Annex 23 Some measures that will be included in the IP Regulations on Environmental Protection ............. 115
Annex 24 Description of the environmental factors and of some measures of environmental protection .... 116
Sketches
Annex A. Plan of Hancesti IP land location, scale 1 : 25 000
Annex B. General plan of IP Hancesti, scale 1 : 1 000


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Abbreviations
BI Business Incubator
CDMA Code Division Multiple Access
CIS Commonwealth of Independent States
FIRR Financial Internal Rate of Return
GDP Gross Domestic Product
GSMC Global System for Mobile Communication
IE Individual Enterprise
IP Industrial Park
ISO International Organization for Standardization
LLC Limited Liability Company
LPA Local Public Administration
LVSLI Low-value and short-life items
ME Municipal Enterprise
NBS National Bureau of Statistics
NERA National Energy Regulatory Agency
NGO Non-governmental Organization
NPV Net Present Value
NRDF National Regional Development Fund
PPP Public - Private Partnership
PSC Public Sector Comparator
R
B/C
Benefit Cost Ratio
RIPR Regional Investment Performance Rating
SME Small and Medium Enterprises
VAT Value Added Tax


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Terms
Industrial Park - delimited territory with technical and production infrastructure, where economic activities
are being carried out, mainly industrial production, service provision, implementation of the scientific
researches and/or technological development, under a specific facilities regime, for the purpose of
capitalizing human and material potential of the respective region;

Managing company (administrator-enterprise) the enterprise which main activity goal is to administrate
the industrial park and to provide services to the residents of the park. It is a legal entity which legal-
organization form may be: state enterprise, municipality enterprise, company with public, public-private, and
private capital;

Resident of industrial park economic entity registered in the way established by law, carrying out
economic activity, based on the contract concluded with the administrator-enterprise, including such
activities as industrial production, service provision, implementation of the scientific researches and/or
technological development within the industrial park;

Industrial park established upon public-private principles - an industrial park established on public property
assets, integrally or partially, using the financial means of the private investor or the financial means
attracted by the latter, using different models of cooperation and association set forth by the Law on public-
private partnership;

Public property assets real estate (land, buildings etc.) from private domain of the state or administrative-
territorial units, including the Gagauzia autonomous territorial unit;

Regulation and control institutions public authority empowered with duties to regulate and control
involved in issuance of necessary permits for the industrial park establishment and operation;

Technical and production infrastructure - buildings and installations, energy power supply systems,
telecommunication networks, gas pipelines, water supply and sewerage systems, including pluvial ones,
transportation routes, and public illumination systems, etc.;

Holders of public utility networks providers of water supply services, gas, electricity and heating, sewerage
and filtering, telecommunications, and other public utility services;

Industrial park title right granted to the administrator-enterprise to benefit from facilities in establishing
and operating the industrial park, under the condition to respect the obligations stipulated in the Law on
Industrial Parks No. 182, dated 15.07.2010;

Industrial park resident title right granted to the resident to benefit from facilities in an activity launching
and developing within the industrial park, under the condition to respect the obligations stipulated in the
Law on Industrial Parks No. 182 and in the contract concluded with the administrator-enterprise;

Investment project - a project meant for creating new fixed assets, re-equipping and/or modernizing the
existing ones.

Public-private partnership - long-term contract concluded between public and private partner to carry out
activities of public interest, based on capabilities of each partner to properly distribute resources, risks and
benefits;

Public partner any public legal entity or an association of this entity who establishes a public-private
partnership relation;


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Private partner - any private legal entity or individual and / or their association, which have become, under
the law, party to a public-private partnership;

Public interest - any benefit, the form and value of which is determined by decision of the public partner,
obtained to the benefit of the public partner, of people living and / or working on the territory of the
Republic of Moldova;

Business Incubator institution designed to create a favourable and sustainable environment for start-ups
and innovative companies with growth potential;

Resident of the business incubator - beneficiary of the incubation program; potential entrepreneurs
intending to start a business in compliance with the national legislation or already established businesses
with at most 3 types of activities as of the date of registration of the application to join the incubator.

Feasibility analysis - conceptual framework applied to any quantitative, systematic evaluation of a public or
private project to determine whether or to what extent this project is worthwhile from a public or social
perspective. The results of this analysis can be expressed in several ways, including internal rate of return on
investment, net present value and benefit cost ratio.

Sensitivity analysis - analytical techniques to systematically assess (by simulation) the effects on profitability
of a project, if events differ from estimates made at the planning stage. It is carried out by changing an
element or a combination of elements as well as by determining the effect of change on the outcome
(usually on IRR or NPV).

Financial sustainability analysis - analysis carried out in order to check whether financial resources are
sufficient to cover all outgoing financial flows, year after year for the entire term of the project. The financial
sustainability is checked if the cumulative cash flow is never negative over all the years considered.

Discount rate - rate at which future values are currently updated.

Internal rate of return interest rate at which a stream of costs and benefits has the net present value (NPV)
equal to zero. The internal rate of return should be compared to a standard in order to assess the
performance of the proposed project (usually, the discount rate stands for standard). It expresses financial
profitability of the project.

Net present value - amount resulting when the net present value of expected costs of an investment is
deducted from the discounted value of expected benefits.

Benefit/Cost Ratio - present value of benefits divided by the current cost flow. When the Benefit/Cost Ratio
is used, the selection criterion is to accept all independent projects with a Benefit / Cost Ratio greater than 1.

Residual value - net present value of goods in the final year of the period selected for evaluation analysis.


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Executive Summary
The goal of the present feasibility study is to analyze the opportunity and conditions to establish a greenfield
Industrial Park in Hancesti District on state owned land. Given that the administrative boundaries of Hancesti
District run relatively at a distance of 20 km from the land designed for the Industrial Park (hereinafter
referred to as the IP), Hancesti District was considered as a zone of direct IP influence. Hancesti District is
located in the central part of the country at the border with Romania and has an area of 1,483.4 km
2
and a
population of 122,800 inhabitants.
The land intended for the location of Hancesti Industrial Park is owned by Hancesti LPA, it has an area of 6
hectares and is located within the build-up area of Hancesti, which, being crossed by major roadways to
Romania and Ukraine (E 581: Marasesti - Tecuci - Albita - Leuseni - Chisinau Odessa; E 577: Poltava -
Kirovograd - Chisinau - Giurgiulesti - Galati), as well as by national roadways (R3 - Chisinau - Hancesti -
Basarabeasca and R34 Hancesti - Leova - Cantemir), provides a good road access and mobility to
international markets. It is also located at a distance of 44 km from Leuseni customs, at the border with
Romania, about 35 km from Chisinau railway station, 50 km from Chisinau International Airport, 160 km from
Marculesti Airport and 172 km from the Giurgiulesti International Free Port.
Currently, within a radius of 20 kilometres of the town, the region has an unused potential of labor force
qualified in such fields like food, clothing, wine industry and electrotechnics. The total economically active
but unemployed population makes up about 38,500 people. A good part of them (about 12,900 persons)
went abroad, another part of the rest is unemployed or works occasionally (at home or abroad).
Given the conditions, provided by the location of the land designed for the IP, and the specifics of
development of Hancesti District, the activities of IP are: (a) machinery and equipment manufacturing, (b)
electrical and electronic equipment manufacturing, (c) manufacturing of radio, television and
communications devices and equipment, (d) manufacturing of medical, precision and optical equipment and
instruments, (e) manufacturing of installations conversing renewable energy (solar, wind) in electric power,
(f) transport and communications (storage, processing, packaging).
In order to stimulate new business in Hancesti and in the region as well, it is proposed to establish within the
IP a Business Incubator (hereafter referred to as the BI) in the field of industrial production, including
agricultural food, and other activities associated with the IP profile. The advantages of the BI location within
the IP are primarily related to the fact that Business Incubator Residents will be able to enjoy facilities
provided due the title of IP Resident. Therefore, after the incubation period, the BI Resident will be able to
continue its activity as IP Resident. Thus, additional conditions to enhance sustainability of set up businesses
are created. The Business Incubator will be managed by the IP Managing Company (hereinafter referred to as
the Manager), but the BI activity will be organized separately from that of the IP.
IP consists of three zones: (i) zone of Residents, (ii) administrative zone and (iii) land occupied by
infrastructure. The area occupied by the zone of Residents makes up 5.4 hectares and consists of 2 subzones:
(i) subzone of leased production premises for BI Residents of 0.54 ha and (ii) subzone of land parcels with an
area of 4.86 ha. 10 BI Residents will operate within the subzone of leased production premises by the
Manager, and within the subzone of land parcels 10 parcels (0.49 ha each) will be made available to
Residents for the construction of production facilities. Residents of this subzone can be BI Residents that will
benefit from a special package of incubation services, which can include only consulting and support services.
Depending on the configuration of Residents zone and funding of its infrastructure, three options were
analyzed: option 1 - the subzone of leased production premises consists only of BI production premises


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10
occupying 10% of the zone of Residents, and the subzone of land parcels for IP Residents makes up 90%. The
construction of the BI production premises is supposed to be performed due to external grants, and the
access road of Hancesti IP land will be funded by private partner; option 2 the zone of Residents has the
same configuration as in option 1, but in this case BI production premises are funded by the private partner,
and the access road is built from foreign grants; and option 3 the zone of Residents is constituted only by
the subzone of land parcels (100%), i.e. throughout the entire IP territory, land parcels will be leased by IP
Residents allowing them to build their own production premises.
According to options defined above, capital costs of the project through PPP without IP Residents
investments in their own production premises, make up 36.76 mln MDL in case of options 1 and 2, and
respectively 21.77 mln MDL in case of option 3.
As this IP project can be implemented by the public administration (or LPA with central authorities) and
through the public private partnership, an analysis of the project cost for both these approaches was carried
out. This analysis was conducted based on estimates of the total project costs, including its risks,
replacement, management and maintenance costs, decreasing them by financial income generated by the IP
Managing Company for the entire period of IP existence of 30 years. Based on this analysis, it was concluded
that the IP implemented through public - private partnership has a lower cost than if being implemented
under own management by public authorities.
It is therefore recommended to implement this project through public private partnership, where the
Managing Company will be selected through tender. The PPP contract duration will be equal to the period of
activity given to the Industrial Park of 30 years.
Establishment of Hancesti Industrial Park will have many positive effects on the economy at local, regional
and national levels, by raising the rate of labor forces employment, creation of conditions to use the
agricultural potential, diversification of industrial businesses and boost of small and medium enterprises,
which will finally increase the economic potential and competitiveness of businesses in the region. Thus, the
Industrial Park is not just a way to provide an infrastructure necessary for business, but first is an entity for
attracting investments to start up new industry-related businesses.
It is estimated that about 920 direct jobs, plus about 55-100 indirect jobs in the fields of IP services will be
created, and about 150-200 jobs during the IP construction. It is also expected to increase the ratio of
survival of small and medium enterprises as a result of BI operation, which will contribute to the economic
stability of the town and region.
The positive social impact on the population living within a 20 km radius from the Industrial Park will be
reflected by the fact that a part of unemployed people will be occupied, and about 10% of those who have
gone abroad. The labor remuneration fund will increase by about 57.9 mln MDL a year, which in its turn will
increase household income in the region. However, the local community will benefit from the infrastructure
development as well, including by improving water supply, sewerage and telecommunications services.


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1. Analysis of the region
Ensuring sustainable economic growth is a strategic priority of the Republic of Moldova, which is possible
only after the implementation of effective policies of boosting investment activity and industrial
development. The range of tools used to implement these policies has grown since the approval of the new
Law on industrial parks, which has created new opportunities for establishing industrial parks by means of
public private partnerships.
In order to identify opportunities to establish an Industrial Park in Hancesti, resources and costs required for
its creation and its impact on the development of the region, an analysis on Hancesti area was conducted,
which represents an area delimited by a radius of about 20 km from the land designed for IP.
1.1 General overview
Hancesti District is located in the Central Region of the Republic of Moldova, and borders on Romania on the
west, on Ialoveni District on east, on Straseni and Nisporeni districts on the north, and on Leova and Cimislia
districts on the south. The area of Hancesti District makes up 1,483.4 km
2
, which constitutes 4.6% of
Moldova's territory. It consists of 63 localities, including a town - Hancesti and 62 villages with a population
of 122,800 people. Hancesti is a residential center located at a distance of 35 km from the capital and 120 km
from Iasi (Romania).
The district is crossed by major roadways to Romania and Ukraine (E 581: Marasesti - Tecuci - Albita - Leuseni
- Chisinau - Odessa, E 577: Poltava - Kirovograd - Chisinau - Giurgiulesti - Galati), as well as by national ones
(R3 - Chisinau - Hancesti - Basarabeasca and R34 Hancesti - Leova - Cantemir).
The localities are situated in the temperate climate belt, being a part of the natural steppe. The four seasons
are well stressed, winters are mild and summers are long and with plenty of sunshine. Temperatures vary
between +23 and +27
0
C in June-August and -11
0
C in December-February. Annual average of rainfall makes
up 500-600 mm/m
2
, the maximum levels are recorded in summer-autumn.
1.2 Cultural and social development
1.2.1 Human capital
The stable population of Hancesti District as of January 1, 2010 makes up 122,800 persons. This figure
continues a trend of the overall negative demographic volume for the period of 2005-2008 (see Table 1).
Table 1. Stable population in the period of 2005 - 2010, thousand persons
Locality 2005 2006 2007 2008 2009 2010
Hancesti District 126.5 125.3 124.3 123.5 123.2 122.8
Hancesti 18.3 18.2 17.2 16.8 16.8 16.8
Villages
(communes)
108.2 107.1 107.1 106.7 106.4 106
Source: Statistical Yearbook of the Republic of Moldova, NBS
It is noteworthy that population evolution during this period was negative for all administrative units in the
region. Population decline recorded in this period made up 3,700 persons, representing 3%, compared to the


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current situation on January 1, 2005. The main cause of this decline is the negative natural population
growth and migration.
As of January 1, 2010 population of Hancesti made up 16,800 people, being at the same level as during 2008-
2009, and decreased by 1.5 thousand persons compared to 2005. Population density of Hancesti District
makes up 83 pers/km
2
. The share of population of Hancesti District makes up about 3.5% of the total
population of the Republic of Moldova.
According to the National Bureau of Statistics, as of January 1, 2010 the situation of residence of district
population shows a major predominance of rural population compared to urban population, registering a
discrepancy of 86.3% to 13.7% (see Figure 1).
Figure 1. Structure of population of Hancesti District as of January 1, 2010

Total per republic Women
Centre Men
Hancesti

The number of men in Hancesti District makes up 50.6% and of women - 49.4%. It is one of the most
balanced distribution compared to other districts. Analyzing the dynamics of this phenomenon, we observe
that the situation remained unchanged over the years 2007-2010. Overall, there are 100 men per 97 women.

Analyzing the structure of the population in terms of the share of different age groups in the total population
(age pyramid), it is clear that Hancesti District is affected by demographic aging. Current trends show a
steady decrease in the first age group, a phenomenon caused by low birth rate. This indicates that the aging
process is still ongoing, and its effects will worsen in coming years.
Figure 2. Structure and share of population by age groups, as of January 1, 2010


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Men Women
Source: Developed by author based on data from National Bureau of Statistics
The age group with the largest share (10.2%) is that of 20-24 years old, followed by 9.5% of 15-19 age group.
Young people making part of the age group of 15-34 years old represents 44,200 people, or 36% of the total
population of Hancesti District. Their distribution by residence area makes up 14.1% for urban and 85.9% for
rural areas.
According to statistics from January 1, 2010, there were 100 children aged 0-14 years old per 67.2 people
aged 60 years old and more. At the same time, the demographic burden per 100 individuals aged 15-59 years
old makes up 45.7 persons
1
.
1.2.2 Labor force
Economically active population of Hancesti District makes up 64,700 people, or 52.7% of the total
population. Its distribution by residence areas shows that the potential of labor force is concentrated in rural
area of the district, whereas 9.8% of active population belongs to the urban area and 42.9% - rural area.
District labor force consists of 47.4% men and 52.6% women.
Figure 3. Structure of active population of Hancesti District as of January 1,2010

Source: Developed by author based on data from National Bureau of Statistics
Men Women
Persons employed in early 2010 make up 13,593 persons, showing a decrease by 937 and 1,918 people
compared to 2009, and 2008 respectively.
In early 2010, the Employment Agency of Hancesti District registered 1,327 unemployed persons, i.e. less
than 1% of the district population. The number of unemployed people doubled in 2010 compared to 2009
(see Table 2).
Table 2. Number of unemployed people registered by MNEA, uptrend
Locality
2008 2009 2010
Total Women Total Women Total Women
Hancesti District 895 392 658 358 1327 721

1
Children aged 0-14 years old and elderly aged 60 years old and over.


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The share of unemployed women in early 2010 made up 54.3%, a similar share in 2009 and 10.5% higher
than in 2008, while the share of unemployed men - 45.7%. It is important to note that the actual number of
unemployed people is much higher than that registered by the MNEA.
The total labor force that has a steady job is estimated at 13,600 persons, which constitutes 20.1% of the
working population compared to the national average of 50.2%.
The price of labor force in Hancesti District is quite attractive for domestic and foreign investors, currently
representing around 100 EURO per month for working professions and 200 EURO per month for specialists
graduated of universities and colleges. As of January 1, 2010, the average monthly salary of an employee
from Hancesti District reached a level of 1,917 MDL, which makes up only 69.75% of the republic average.
The economically active population from Hancesti District makes up 64,700 people. Of these, only 13,600
people have a permanent job, while about 20% (12,900 people) went to work abroad. Under such conditions,
we estimate an availability of labor force of about 38,500 people specializing in such fields as food, clothing,
wine industry and electrotechnics.
1.2.3 Education infrastructure
Hancesti educational infrastructure consists of one college, 3 professional schools, 54 educational institutions
and 53 kindergartens. Although the number of these institutions has remained unchanged over the past 5
years, there has been a decreasing trend in the number of enrolled students (see Table 3).
Table 3. Dynamics of number of educational institutions and students
Indicators Academic Year Total per
Republic
Center Hancesti District
Number of institutions
2005/06 1551 545 56
2006/07 1539 540 55
2007/08 1534 537 54
2008/09 1519 534 54
2009/10 1505 530 54
Number of students
2005/06 517,029 163,182 19,546
2006/07 491,482 154,726 18,559
2007/08 460,951 144,877 17,232
2008/09 434,320 135,937 16,041
2009/10 413,657 129,278 15,093
The district does not have any institution of higher education, but students can study in Hancesti
Construction College, which has the following specialties: Civil, industrial and agricultural constructions;
Building assessment; Railways, roads and bridges; Heat, gas supply and ventilation; Cadastre and territorial
organization; Woodworking technology; Accounting.
In 2009 the number of students studying at the college made up 678 persons, increasing by 7.4% compared
to the previous academic term, and 62.2% compared to 2005/06 academic term (see Figure 4). Their studies
are funded mainly by the state budget. At the beginning of 2009/2010 academic term, the share of budget-
funded students made up 81.3%, by 12.3% more than compared to 2005/2006 academic term.


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15
Figure 4. Dynamics of the number of college students, people

Number of students
Number of enrolled students
Number of graduates

In 2009 secondary education institutions were attended by 612 students, which shows an increase of about
6% compared to 2005 (see Figure 5). Most students of secondary vocational education study in one of these
three vocational schools.
Figure 5. Dynamics of vocational schools students, people

Number of students
Number of enrolled students
Number of graduates
Although Hancesti District lacks higher education and / or research institutions, young people who wish to
continue their studies can choose one of the 30 higher education institutions of the closest, but also of the
most developed university center in the country - Chisinau.


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1.3 Economic development
Within the complex of national development of the Republic of Moldova, Hancesti District is an agrarian and
industrial region. About 31,500 economic entities operate in the district. Most of them are private and are
organized under the form of enterprise with the right of legal entity (village households and individual
entrepreneurs).
The main areas of economic activity are:
Processing industry (winemaking, fruits and vegetables drying, dairy and meat industry, textile, leather
goods and forged metal industries);
Retail and wholesale of consumer goods in commercial associations and markets;
Service provision (telecommunications, security guard services, transportation services, car services,
translation, notary, banking and financial services, etc.);
Construction (complete and partial construction of buildings, rehabilitation and restoration of old
buildings, civil engineering, road construction and repair).
Below we present a brief analysis of the main sectors of Hancesti District economy.
1.3.1 Industry
Industrial sector of Hancesti District is represented by 135 enterprises, by 21 enterprises less than in 2008.
Most of them are involved in the industry of processing agricultural raw materials (see Table 4).
Table 4. Structure of industrial enterprisers of Hancesti District, 2009
Number of industrial enterprises, of which: 135
Enterprises of food and drink industry, including: 131
wineries 16
agricultural production processing points 12
mills 41
oil mills 41
bakeries 18
others 3
Light industry enterprises (textile, knitwear, clothing, leather
and footwear )
2
Source: Ministry of Economy
Hancesti District is specialized in light, food, wine and constriction materials industries. Mining industry of
Hancesti District is represented by 2 sand and clay quarries, which production is used only locally.


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Figure 6.Value of manufactured products, mln MDL
Figure 7. Average number of industry employees,
persons

Value of manufactured products Average annual number of the industrially
productive personnel
In 2009, the industrial output of Hancesti District made up 81.7 mln MDL, i.e. about 605,000 MDL per
enterprise or 663 MDL per person, decreasing by 70.15% compared to 2006 (see Figure 6). During this period
the national value of manufactured products decreased only by 5.22% or by 1,124.2 mln MDL. Hancesti
District industry involves only 6.6% of 13,600 people who have a permanent place of work in the district. At
the national level, 18.2% of employed people work in industrial sector. Analyzing dynamics of people working
in the industrial sector, it is observed that in 2009 industrial enterprises from Hancesti District employed only
900 people, that is 2 times less than in 2006 when at the country level a reduction of industrial personnel
from 122.2 to 105,400 people or by only 13.75% was recorded. Comparative dynamics of these indicators
shows that Hancesti industry recorded a stronger pace of decline compared to the national average (see
Figures 8-9).
Figure 8. Dynamics of value of manufactured
products, 2006=100%
Figure 9. Dynamics of the average number of employees
of industrial sector, 2006=100%

Hancesti Republic of Moldova


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18
The main problem faced by Hancesti industry is the very limited ability to set up new business in this sector.
1.3.2 Agriculture
Over the years, agriculture has remained the main occupation of a significant number of inhabitants of
Hancesti District. Agricultural land has an area of 93,361 hectares or 63.4% of the total area of the district.
Soils have a productivity degree of 58 points, which is below the regional and national averages. The
structure of agricultural land is relatively stable, whereas 71.6% of agricultural land is occupied by arable
land. Area of agricultural land is characterized by a fragmented territory, making impossible mechanization of
agricultural works.
In 2008 there were 47 agricultural enterprises in Hancesti District. In recent years, an uptrend of agricultural
entities is observed. Despite this, the result of their activity suffered major declines mainly due to the
drought of 2008 and recorded a profit by about 4 mln MDL less than in 2007.
Main vegetable products of agricultural enterprises are cereals and pulse, grapes and sunflower. Evolution of
structure in recent years is shown in Figure 10.
Figure 10. Volume of vegetable products of agricultural enterprises in 2006-2008, tonnes

Grapes
Fruits and berries
Field vegetables
Potatoes
Sugar beet
Sunflower
Cereals and pulse


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In 2008 agricultural output made up about 55,400 tonnes, twice the output of 2007 when the drought
affected most farmers. Analyzing the dynamics of structure of main crops (including pulse) it is observed that
cereals and grapes constitute 65-75% of total agricultural output, their share varies depending on weather
conditions. In the recent years, there is a tendency to maintain and / or increase yields of cereals, grapes,
fruits and berries, sunflower. Of these, cereals had the greatest increase in harvest. The decrease was
marked by potatoes, sugar beets and vegetables yields.
Depending on weather conditions, grapes constitute 15-40% of total agricultural output. Due to this fact,
wine industry is one of the most important sectors of the agriculture of the district. There are 18 wineries
located in the district. Grape plantations occupy an area of 10,468 ha, with a higher rate of expansion than
fruit crops.
Livestock sector of Hancesti District is represented by breeding of sheep and goats. In early 2009, there were
43,509 heads of sheep and goats, or an increase compared to 2008. It is noteworthy that the herd is fully
included in the household sector.
Fisheries sector is represented by seven basins with an area of 37.2 ha, whose flow makes up 500,000 m
3
.
The monthly amount of fish makes up about 20 tons per month.
1.3.3 Services
The sector of services of Hancesti District does not differ much from the regional average. The total volume
of rendered services makes up 124.5 million MDL, being down compared to 2008 with 3.9 million MDL.
Services are provided by both public and private sectors, the latter having a share of about 20% of the total.
The sector of services of business support is represented by 18 subsidiaries of commercial banks, 22 loan
associations and business incubator providing consulting services, as well as by other business associations.
There are three hotels ("Neptun", "Rusca", "Regal") in the district, with are able to shelter 47 persons and
three restaurants as well. Services of processing agricultural raw materials and technical maintenance
services provided to farmers enjoy a higher accessibility. The amount of retail sales of 282.8 mln MDL is
provided by 782 commercial associations, including 507 stores.
At the same time, Hancesti District has a high tourism potential, which is ensured by the existence of specific
natural resources represented by forestry, water resources, landscape reserves and numerous monuments
of tourist destination. They allow for organization of visits of nature reserves: landscape (Hancesti Forest),
meditative herbs (Sarata Galbena), or forest area (SE "Hancesti - Silva"). Hancesti cellar also presents interest
for tourists. The area 15 Orthodox churches and one of the most visited monasteries in Moldova - Hancu
Monastery. Making these tourist destinations attractive requires both infrastructure development and
promotion to make them known to international tourists.
1.3.4 Entrepreneurship
According to the NBS, in 2009 537 economic entities carried out their activities in Hancesti District, with
23.8% more than in 2005. Although their number increased, the share of the SME sector has remained
practically unchanged (96-98%). Increasing number of businesses was possible due to the development of
several micro and small enterprises, whose share makes up 90-92% so far.


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Currently, the SME sector involves 2 / 3 of employees and achieved a turnover of 712 mln MDL, and large
companies use only one third of the labor force and reached a sales volume of 545 mln MDL. Employment
situation in the two "sectors" reflects a reverse picture in 2005, a phenomenon caused by the liquidation of
six large enterprises, which hired about 5,600 people.
Tables 5. Entrepreneurial sector of Hancesti District
T
y
p
e

o
f

e
n
t
e
r
p
r
i
s
e

Enterprise Employees Turnover, million MDL
2005 2009 2005 2009 2005 2009
No. % No. % No. % No. % No. % No. %
Micro 308 71.1 374 69.6 820 6.4 1025 13.4 50.0 5.1 86 6.8
Small 83 19.2 122 22.7 1488 11.6 1763 23.1 338.8 34.4 333.5 26.5
Medium 24 5.5 29 5.4 2398 18.6 2327 30.5 232.0 23.5 292.7 23.3
Total SME 415 95.8 525 97.8 4706 36.6 5115 66.9 620.9 63 712.2 56.7
Large 18 4.2 12 2.2 8168 63.4 2526 33.1 365.1 37 544.6 43.3
Total 433 100 537 100 12874 100 7641 100 986 100 1257 100
Thus, although the number of enterprises increased, the number of jobs decreased by 37% (see Figure 11),
Figure 11. Evolution of enterprises and employees ,
2005=100%
Figure 12. Number of enterprises per 10,000
inhabitants

Number of enterprises Hancesti, Central Region, Total of Republic
Average number of employees
Source: Authors calculations based on data from the Statistical Yearbook of the Republic of Moldova, NBS

and the degree of enterprises localization remains quite low. With only 44 enterprises per 10,000
inhabitants, Hancesti District is situated below the regional average and shows a week "entrepreneurial
spirit". The number of businesses per 10,000 inhabitants is 2.8 times lower than the national average.


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1.3.5 Investments
Hancesti District ranks the 14
th
place of 38 places of the Regional Investment Performance Rating
2
,
particularly due to investment diversity and performance.
In 2008 Hancesti economy attracted investment in the amount of 176.6 mln MDL. The volume of private
investment per capita increased steadily during 2004-2008 from 388.3 MDL up to 1438.0 above the region
average.
Figure 13 Structure of private investment per types of economic activities, 2008

Transport and telecommunications
Sector of power and water supply
Agriculture
Processing industry
Trade
Public administration
Source: National Bureau of Statistics

However, most investments (52%) were targeted to infrastructure: transport and telecommunications,
electric power and water supply. Agriculture and processing industry follow, sectors, which together
attracted about 1/6 of total investment.

2
Probleme si solutii investitionale in Regiunea de Dezvoltare Centru, Expert - Grup Analytical Centre


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22
Figure 14 Regional investments from local
budgets, MDL / capita
Figure 15 Regional investments from state
budget, MDL / capita

Center Hancesti
Source: Authors calculations based on data from the Statistical Yearbook of the Republic of Moldova, NBS
Both investments from local budgets, as well as from state budget placed the regional level over the years
2005 - 2008, reaching in 2008 the amount of 336 MDL per capita. Investment volume per capita from local
budget increased twice compared to 2005, and exceeds twice the amount of investments recorded in the
Central Development Region. On the other hand, the level of investments per capita made from the state
budget declined almost double compared to 2007.
1.3.6 Infrastructure
Road network of Hancesti District is represented by 352.2 km of public roads, of which 138.7 km are of
national importance, and 213.5 km of local importance. This situation remained unchanged over the last five
years. The length of roads made up 1,664.5 km, of which 355.4 km have a rigid coating. Another 13 localities
of the district have no rigid coached roads accessing the public roads network. Hancesti District has six local
routes with 10 units of transport. Population benefits from taxi services provided by 100 cars.
Public utilities in the region are provided by several providers that operate locally or nationally.
Electric power provider is the Joint Stock Company Enterprise with Foreign Capital RED Union Fenosa,
which provides electric power at a tariff of 133 MDL / kWh excluding VAT.
Gas sector is developed within the National Programme of Gasification of the Republic of Moldova and the
National Program "Moldovan Village". Hancesti is supplied with gas at a level of 99%, including all public
institutions. This service is provided by the State Enterprise "Rotalin Gas Traiding LLC, Hancesti No.1
subsidiary - Swiss company.
The Joint venture Amen Ver" provides greening and development services, water collection, treatment and
distribution throughout the district.


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Banking infrastructure consists of 10 commercial banks and their subsidiaries: "Banca Sociala",
"Moldincombank", "Energbank", Fincombank, "Agroindbank. There are three internet access centres,
which are equipped with about 60 computers at an average price of 8 MDL / hour.
Hancesti mass-media has a local radio station and a local newspaper "Courierul de Hancesti", which number
of subscribers amounts to 2,570 people. Population benefits also from other 7 radio stations and 20 TV
stations, which have 3,500 users.
Fixed telephony services are provided by Moldtelecom Company, and mobile telephony services by
Orange, Moldcell" and "Unite. The first two mobile telephony providers operate according to GSM
standard, and the last mentioned according to CDMA standard. Extension of communications sector allows
acceleration of the flow of information, application of new technologies, which ultimately has a positive
impact on the region.
1.4 Reasoning the need for the Industrial Park
Following the global industrial changes, more and more investors analyse the possibility to relocate or
transfer production facilities in countries where they could benefit from lower costs. From this point of view,
Republic of Moldova, and namely Hancesti District, could become a genuine attraction point. Establishment
of Industrial Parks is one of the strategies in developing business environment that aims to reduce
production costs by improving access to production factors, especially to those that are or may be largely
influenced by public authorities. Due to the approval of the Law No. 182 of July 15, 2010 on industrial parks,
a number of problems, which currently cause reduced investment activity in the country and thus in the
region, can be largely solved by establishing Hancesti Industrial Park. Provisions of this law create conditions
and offer some features that could help solving the following issues:
- Limited access to industrial land for the launch and deployment of industrial activity: This problem is
characterized by insufficient industrial land and difficult procedure to change agricultural land purpose. IP
Law facilitates the holder of IP title and its residents exempting them of compensation of losses caused by
exclusion of lands from the category of agricultural land;
- High costs and risks related to bureaucratic procedures upon initiation and carrying out of industrial
activity: Establishment of a special committee under the Local Council will be responsible for provision of
technical, legal, consulting support and coordination for obtaining authorisation documents required by law;
- Higher costs and risks related to state control of business activities: Within the IP state controls over
the activity of IP residents are optimized by conducting planned inspections according to the annual schedule
approved by Government decision or unannounced inspections conducted by the Ministry of Economy in
compliance with the legislation in force;
- High costs for connection to utilities: According to the Law on industrial parks No. 182 of July 15, 2010
(art. (13), par. (1)) building technical and production infrastructure is funded by the amount allocated from
the state budget and the budgets of administrative-territorial units reducing investment costs.
In order to make a conclusion on the need in and opportunity of establishing Hancesti IP, we will present a
SWOT analysis of selected location for construction of IP. The analysis reveals the strengths and weaknesses
of the IP site and region compared to other regions of the country and identifies possible opportunities and
threats coming from outside of Hancesti Industrial Park area.


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Table 6. SWOT analysis of Hancesti Industrial Park
Strengths Weaknesses
Geographical position provides a comparative
advantage by placing on E581 and E577 road
corridor links to the European Union and the
Black Sea
No other access to the railway than that at a
distance of 36 km from Chisinau
Close location to the Chisinau Municipality, an
urban area, which constitutes a market of almost
one million consumers
Insufficient budgetary income of local public
administration
Existence of available young and educated labor
force
Downward trend of the main indicators of
industry
Reduced labor costs Labor force emigration
Good climate and land resources for agriculture
development
Relatively low entrepreneurship of population
Existence of traditions in wine, livestock and fruit
production
Small local outputs
Existence of public land for IP building Low rate of economic growth in the area
Existence of territory located near the Industrial
Park for public utilities sufficient for economic
development of IP
Underdeveloped social and cultural services,
less attractive.
Relatively developed business infrastructure,
banking and telecommunications sector
Local infrastructure of poorly maintained
roads
Knowledge of business culture of neighbour
country

Local public administration open for
collaboration to establish the IP

Opportunities Threats
Tendency of capital transfer from EU to
surrounding areas
National political instability, expressed by
policy incoherence in regional development;
frequent changes of the regulatory framework.
Programs to support economic development of
Moldova, including through lower income taxes
(or exemption)
Country's general investment climate is
relatively less attractive, including due to
corruption
Relatively easy existence and accessibility of
surrounding markets from Romania and Chisinau
by road infrastructure
Underdeveloped transport infrastructure in
the country access to markets and the CIS
Use of quality scientific and technical potential in
Chisinau

Legal framework on IP is favourable for its
development

Hancesti is located at a distance of 36 km from Chisinau to south-west, along Cogalnic River being crossed by
major roadways to Romania and Ukraine (E 581: Marasesti - Tecuci - Albita - Leuseni - Chisinau Odessa; 577
E: Poltava - Kirovograd - Chisinau - Giurgiulesti - Galati) and national roadways (R3 - Chisinau - Hancesti -
Basarabeasca and R34 Hancesti - Leova - Cantemir), which ensures a good road access and mobility to


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international markets. Also, the town is located at a distance of 44 km from Leuseni customs, located at the
border with Romania, 35 km from Chisinau railway station, 50 km from Chisinau International Airport, 160
km from Marculesti Airport and 172 km from Giurgiulesti Free International Port. Its approximation to the
most developed economic center of the country (Chisinau) is quite advantageous, while stressing the
necessity and importance of creating a competitive investment climate.
Currently, the area in a radius of 20 kilometres of the town, has un unfavourable potential of labor force in
such fields as food, clothing, wine industries and electrotechnics, this phenomenon is the result of complex
economic and social processes that occurred during the last 20 years.
The number of people that have a stable job is estimated at 14,530 thousand, which constitutes 20.1% of the
working population compared to the national average of 50.2%, highlighting the availability of labor force in
the region. However, Hancesti District has a level of general culture and relatively high production culture,
which presents a comfortable life environment for local and foreign investors. Most people speak two
languages and shows aptitude for easy learning of foreign languages, which gives further opportunities for
education, employment and requalification. This allows us to notice the attractiveness of the district in terms
of labor force for investors.
Within the complex of national development of the Republic of Moldova, Hancesti District is a region with a
large agrarian and industrial potential. In the recent years the number of agricultural enterprises increases.
Most of them are involved in the industry of processing agricultural raw materials. But the agricultural sector
remains one with a low added value. Therefore, it is necessary to create conditions for development of the
processing industry for better use of the agricultural potential.
It is obvious that the region's economy could be strengthened by creating incentives and tools to support
industrial development, which currently comprises 6% of total businesses, compared to the national average
of 8%, and employs only 10.4% of the population employed in Hancesti District.
Development of an Industrial Park in the region would create those premises of elimination of reasons that
determine reluctance of potential investors, economic developers, and industry in particular, to make
investments in economies similar to the Republic of Moldova in order to use opportunities particularly
generated by human potential, favourable geographical location and facilities offered by business
environment and supported by the legal framework. Thus, the Industrial Park is not only a way to provide
infrastructure necessary for business, but first is an entity for attracting investments in order to set up new
industrial businesses.
Establishment of the Industrial Park will provide a number of advantages to Hancesti and to region by raising
rates of labor force employment, establishing conditions for the potential of agriculture, industrial
diversification and stimulation of SMEs sector, which will eventually increase the economic potential and
competitiveness of businesses in the region.


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2. Description of the concept of Industrial Park
2.1. Concept of IP
IP Organization. Local public administration of Hancesti recognizes the need to develop industry in Hancesti.
Hancesti foresaw in the Urban General Plan a zone of about 30 hectares for business development, primarily
in industry. Even if this area is close to the center of the town, in order to use the potential of this zone,
additional financial resources will be required, because this zone is located in the valley of Cogalnic River with
groundwater on the surface. This approach perfectly falls in the policy of rational soil use and simultaneously
will be able to meet all requirements for protection of aquatic resources. Undoubtedly this is an impediment
that will leave an imprint on the cost of buildings of the IP and will also influence the IP profile.
The land intended for the location of Hancesti Industrial Park with an area of 6 ha is an integral part of the
above mentioned zone and is located in the north-west part of the town, in the valley of Cogalnic River at a
distance of about 615 meters from the town road, which links the national highway R3 - Chisinau - Hancesti -
Basarabeasca with the national highway R34 Hancesti - Leova - Cantemir. The Park will have its own
infrastructure, which will provide utilities necessary for the operation of IP Residents.
Responsible for IP management will be the Managing Company of the Industrial Park (hereinafter referred to
as the Manager). All relations between the Manager and LPA are stipulated in the contract of establishment,
operation and administration of IP. The Parks Manager is responsible for designing and building of the IP
infrastructure, infrastructure maintenance and provision of services to Residents on a contractual basis. The
Manager is responsible to the LPA in order to achieve IP development objectives, which will be clearly
stipulated in the Contract. According to the strategy chosen by the Manager, it can construct IP buildings that
will make them available for Residents in the form of lease or purchase, including in instalments. For services
related to costs necessary to maintain and develop the IP, the Manager will charge from Residents an
administration fee (or lease fee). Other services provided by the Manager will be paid separately in
compliance with the stipulations of the contract signed with Residents.
The main document defining the obligations and operational rights of the Manager, Residents and LPA is the
Industrial Park Regulations approved by the LPA. The provisions of the contract signed by the Manager and
the LAP and of the Regulations do not exclude or diminish the rights and benefits offered to Residents within
the legal framework.
Residents of the Park can be only economic entities legally registered in the Republic of Moldova, including in
IP.
Goal of the IP. The main goal of establishing Hancesti IP is to encourage establishment of new industrial
businesses by creating favourable conditions for local and foreign investors in areas that would lead in the
best manner to use and develop human capital of Hancesti and of adjacent localities.
Type of activities developed in IP. IP Hancesti is situated very close to Chisinau Municipality (35 km) which
may serve for Hancesti businesses as a provider of information, investment, knowledge, qualified labor force
as well as an attractive outlet for food first. From this point of view IP may serve as a tool to replace imports
in some fields for Chisinau consumption.
IP zone is an agricultural area with a high potential for the development of wine sector, orchards, livestock,
vegetables and other agricultural products competitive on specific soils in the region. By establishing IP,
conditions for development of the processing industry shall be provided for better use of this potential.


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27
However, given that the costs with production factors, primarily related to labor remuneration are relatively
lower than those in the region, and provided that the general investment climate is improved, Hancesti IP
will be an attractive destination for foreign investors. This applies primarily to areas with a high share of
labor costs per unit of product, such as textile, light industry (share of clothing and footwear), processing
industry, etc.
Relatively direct access to road infrastructure in the country and region allows transportation of commodities
and raw materials by vehicle. However, the lack of direct access of the Industrial Park to railways, water ways
imposes restrictions on size and weight of goods, which will be manufactured in the Park. Based on these
conditions it is clear that the goods manufactured in the Park should not have large size, should be relatively
light and quite expensive so as transportation costs per unit of production would not significantly increase its
cost of sales.
Location of Industrial Park land directly in the locality imposes some restrictions on production technologies
of Industrial Park businesses. They should not pollute the environment and produce noise. Also IP land
requires flood protection works, and underground multi-storey buildings can be built only with increased
costs due to groundwater close to the surface.
However, according to the Urban General Plan of Hancesti:
Location of establishments with technological danger or which pollution exceeds allowable limits is
forbidden;
Location close to public roads of activities, which, by their nature, have an ugly look (waste, solid fuel
storage facilities etc.) is forbidden.
Given the potential and opportunities of the IP zone, and the above-mentioned restrictions, the existence of
strong businesses, which provides rather complex processing of local raw materials, characteristics of district
development, fields of specialization of Hancesti Industrial Park will be mainly the followings: (a)
manufacture of machinery and equipment, (b) manufacture of electrical and electronic equipment, (c)
manufacture of radio, television, and communication equipment and devices, (d) manufacture of medical,
precision and optical, equipment and instruments, (e) production of installations for transforming renewable
energy (solar, wind) in electric power, (f) transport and communication (storage, processing, packaging).
In order to facilitate the establishment and operation of the Industrial Park, the state, represented by public
central and local authorities, offers to the holder of Industrial Park and Residents titles the following
facilities:
a) exemption from compensation of losses caused by the exclusion of lands from agricultural land
category according to the Law on normative price of land and procedure of sale and purchase of land;
b) free amortization or transfer in gratuitous use of public assets to the Managing Company for
establishment and development of the Industrial Park upon the decision of their owner according to
the Law on management and privatization of public property;
c) the right to privatize state owned land for constructions at the normative price of land, established
upon its gratuitous transfer to the Manager or lease to Residents of Industrial Park, only after the


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28
purchase and / or commissioning of industrial constructions and installations and of related purpose,
according to the Law on normative price of land and procedure of sale and purchase of land
3
;
d) providing tax incentives according to the Tax Code;
e) application by the Manager of 0.3 discount rate of the fee of annual payment for state-owned land
established according to the Law on normative price of land and the procedure of sale and purchase of
land, or of basic fee for annual lease of public assets, established by the Law on State Budget for the
respective year;
f) optimization of the state controls over the activity of IP Residents by carrying out planned inspections
according to the annual schedule approved by the Government Decision or of announced controls
made with the consent of the Ministry of Economy according the law in force;
g) allocation, if required, of financial resources for building technical and production infrastructure from
the state budget, local budget, the National Regional Development Fund and other sources;
According to the Law on industrial parks, IP Manager may also conduct business activity on the IP territory,
other words it may itself be an IP Resident.
Also, a Business Incubator could operate on the territory of IP that will foster the set up of new industrial
businesses in the fields allowed in the IP. It will be established only if there are some long-term incubation
programs. The Business Incubator could be a separate IP Resident or its incubation services could be
provided by the Park Manager. If incubation services are offered by the Manager, they will be regulated
separately on the accounts of the Manager. Forms and volume of the support granted by LPA for incubation
activities, regardless of their form of provision, will be stipulated in a Regulations specially designed for the
organization and activity of the BI. Also, it will specify eligibility conditions for BI Resident (or IP Resident in
incubation).
Minimum services offered by IP is:
lease of plots, parcels;
water and sewerage connection;
gas connection;
connection of electric power, telephony, other communications;
rainwater sewerage system;
public lightening within the Park;
parking for visitors.
The Manager maintains common green areas, rainwater sewerage system and other services of the
minimum package of services. In addition to the above mentioned services, the Manager may offer other
services to Residents on the basis of commercial principles as lease of premises for offices and production,
conference and protocol halls, public catering, consulting services in planning and business development,

3
Facility stipulated in par. (1) let. c) is granted if investments were made in constructions and installations covered by
the project, on which basis the Resident or the Managing Company was selected, and which value is greater than the
amount consisting of three normative prices of land, set at the time of its transfer in use to the Managing Company or
leased to Residents plus the payment for compensation of losses caused by the exclusion of land from the agricultural
land category, estimated as of the date of land purpose change, of it occurred.


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development of projects, marketing and staff recruitment, management and knowledge transfer, audit and
accounting, etc. For this purpose the Manager will build with its own resources and on its own risk the whole
necessary infrastructure.
IP performance index. Key performance index of establishment and development of the Industrial Park will
be duration of IP commissioning, IP Residents turnover, area occupied by IP, the number of jobs created
within IP and companies outside IP, amount of investment attracted to IP, income to the consolidated local
and state budget obtained from the payment of taxes and fees by Park Residents and Manager.
2.2. Analysis of opportunities to set up a business incubator within the IP
In order to create a favourable environment for setting up of new businesses in Hancesti and only provided
that a long-term incubation program is clearly defined, it is foreseen to establish within IP a Business
Incubator of industrial production, including food and other activities associated with IP. Advantages of BI
location on IP territory are primarily related to the fact that BI Residents will be able to benefit from facilities
offered by the title of IP Resident. Therefore, after the incubation period, Residents will be able to continue
their activity, if they whish, as IP Residents. Thus, additional conditions are created for the enhancement of
sustainability of created businesses.
Another advantage of BI location within the IP is the fact that with the contributions of public authorities,
private partner and foreign donors, to the establishment of the Park they automatically contribute to the
creation of BI as well. From this point of view public costs related to activities of stimulating business in
Hancesti and adjacent area are reduced.
The Business Incubator located within the IP can provide areas (i) by leasing for the period of incubation
provided that these premises are left after expiration of the incubation period, (ii) by leasing with the
possibility of becoming Resident of the Park, (iii) with the possibility of buying premises and subsequent
privatize land, or (iv) provision of plots for construction of facilities. In all these cases the BI Residents will
benefit from a package adjusted by consultation and support according to BI Regulations.
The direct activity of BI can be organized in 2 manners: (i) BI is a Resident of the IP, or (ii) BI is integrated into
the IP i.e. it becomes an activity of the Park Manager. In the first case BI residents become residents of the IP
only after losing the BI Resident title, and in the latter case they can become IP residents when obtaining the
title of BI Resident. These 2 forms of organization have advantages and disadvantages especially if we refer
to forms of funding.
The Business Incubator as IP Resident can easier access funding of external donors, as well as record of use of
resources is easier to monitor and verify. However, in case of the full version, there are advantages in terms
of administration costs, as well as procedures for transition from the BI Resident to IP Resident becomes
more simple and flexible. For these reasons, it is proposed that the BI to be managed by the IP Manager.
Namely, this solution was taken into account in circumstances described further.
In general, BI activity requires support from the public sector. In this respect authorities that need and want
to create a business incubator must find resources to support BI. BI funding resources may come from local,
regional or central public authorities, private partners and external donors.


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2.2.1. Concept of setting up the BI within the IP
The BI will be managed by the IP Manager, but as a distinct unit of activity related to IP administration. The
Manager is responsible for operational aspects and management of the business incubator. The main tasks
of BI management BI are: responsibility for BI management; conclusion of lease contracts of premises in
production premises and of provision of services with incubators residents; provision of services to
residents, recruiting personnel for provision of incubation services; assurance of BI assets integrity;
development of the activity to attract investments for the development of incubator; establishment and
maintenance of relationships with international networks of business and technology incubators; creation
and maintenance of a database related to incubator business, use all legal facilities for the benefit of
incubated businesses.
The BI extension on all IP territory will not be taken into account, because this is contrary to the concept of
Industrial Park. Thus, BI will offer for rental production premises at prices lower than those of the market,
and administration and consultancy services at lower prices (see Chapter 5.3.2) compared to those offered to
IP Residents. Fees applied within the BI
4
will be approved by the Local Public Administration. If they do not
cover the cost of incubation services, they will be funded through incubation programs. After passing
incubation stages, companies will be able to become Residents of the Park in fair conditions or they will leave
the IP.
BI size and structure. For BI activity production premises will be constructed with an area of 3,500 sq.m. on a
plot of 5,400 sq.m. BI project will include the costs of connecting the production premises to internal
networks of water supply and sewerage, electric power and natural gas supply. Also, the project will include
development costs, including land connection to the internal road network. For an BI company a minimum
production area of 350 sq.m. was established, BI will have production premises, with the possibility to
provide incubation services for 10 companies at the same time.
BI will lease for companies production facilities and will provide incubation services for a period of 5 years.
Stages of incubation and service portfolio offered by BI. Stages of incubation process and interventions in
incubated businesses can be viewed in parallel with business cycles of SMEs, as follows:
Pre-incubation stage. This is the first stage of intervention and it consists in assisting in development of the
business idea. This is a stage that can be realized only in some incubators, if they benefit from public or
external support. This type of intervention is often needed in industries, etc. Duration of this stage makes up
one year. The company is supported to start it own business, to develop business plans, feasibility studies,
identifying sources and methods of investment, procurement and assembly of equipment, launching
production activity. Pre-incubation activity foresees lease of production facilities for a period of up to one
year.
Incubation stage. This stage occurs when the company launched its production activity. Incubator provides
services of a high complexity to support business survival and balanced development on medium and long

4
Both in the case when BI is created from public sources, as well as if it is financed by the private partner, so that in the
latter case the losses that will occur between applied tariffs and incurred expenses by BI will be recovered by an
incubation program or LPA.


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term. Incubator can provide assistance in refining the plan, building the team, implementing marketing plan,
accounting, costing and reporting. Actual incubation period lasts 3 years.
Postincubation stage. This stage is passed by enterprises that benefited from incubation services during
three years. Businesses become profitable and no longer need incubators services. Although intervention is
no longer necessary, incubator continues to host enterprises at this development stage for a period of one
year, while the tenant decides where to go further.
Operational plan. The operational plan regarding starting BI activities falls within the IP operational plan.
Since the commissioning of production premises, it will have an operation cycle, which will be repeated each
5 years (pre-incubation - incubation - postincubation).
Table 7. Operational plan of Business Incubator
No.
Measures Term
1 Development of the project for construction of production premises 2012, quart. I
2 Obtaining permits, approvals, coordination, etc. 2012, quart. I
3 Development and filling funding application for creation of BI of IP 2012, quart. II
4 Construction of production premises of the BI 2012, quart. IV 2013, quart. III
5 Organisation of tenders for selecting BI Residents Starting from quart. III, 2012
6 Signing contracts with first Residents 2013, quart. II
7 Official ceremony of launching the BI 2013, quart. II
8 Launch of production activities in the BI 2014
If we suppose that the rate of demand for BI rooms will have an equal distribution per years, fact that will
not lead to increased future income, we will establish a schedule of incubation (see Table 8).
Table 8. Incubation Schedule of BI Residents
Indicators 2014 2015 2016 2017 2018 2019 2020
Preincubation (1 year) 3 2 3 2 0 3 2
Incubation (3 years) 3 5 8 7 5 5
Postincubation (1 years) 3 2 3
Incubated companies 3 5
Thus, within IP incubation period, we will obtain 26 incubated companies.
2.3. Reasoning the technical options for IP establishment
In order to achieve the objectives of the Industrial Park several Park configurations can be used. The main
elements of these configuration are related to utilities and services provided by Manager and delimitation of
responsibilities between service and utility providers, Manager and Residents. All technical solutions in terms
of this subject can be divided into 3 categories:
(i) The Manager provides and ensures all infrastructure elements at the minimum level described in
the Concept. In this case Manager's investment amount is minimum and more freedom of
development is left to Residents. Relations between utility providers and Residents are one with


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minimal involvement of the Manager. The Manager makes available, in compliance with
Regulations of the Park, only land parcels for business development by the Residents.
(ii) The Industrial Park is seen as a unit with an utilities and services infrastructure almost separated,
minimizing implications of Residents and providers within the Park. The Manager provides
Residents within the described technical limitations with necessary utilities and services.
(iii) In terms of supplying utilities and services the Industrial Park is something intermediate between
the first two solutions. The Manager can combine for Residents depending on utilities and
structure different approaches on provision of residents with utilities and services, some may be
provided with access to municipal providers, for others Residents connect themselves to utilities
through the Manager's infrastructure.
Taking into account the type of the IP described in the Concept, including the fact that IP will contain
incubation services, further a technical solution of the category (iii) is proposed. The main advantages of
this approach are provision of an increased flexibility in order to meet the requirements of utilities of
Residents and allow finding an optimum formula in providing IP requirements, which ultimately help to
reduce their costs..
Another important aspect related to IP is its configuration according the functional structure. In terms of
purpose, the IP plot is divided into (i) zone of Residents, (ii) administrative zone and (iii) lands occupied
by the infrastructure. In compliance with the IP Concept, it is necessary to keep in mind that IP will
provide incubation services for a particular type of Residents, as it wants to cover and a part of the
demand for production spaces of foreign investors for shorter periods of time (5-10 years) in such areas
as textiles and others. For this purpose a certain part of the zone of Residents shall be designed for the
lease of production facilities. Residents area is therefore divided into: (i) the subzone of BI where the
Manager provides production facilities by lease, and (ii) which provides sub-leased plots on which
Residents build with their own sources the required facilities. In order to identify the size of subzones of
Residents, three options were figured out.
Technical solution proposed for IP establishment has the following basic characteristics:
Provided services:
a) Services provided by the IP:
- lease of land plot, parcel;
- lease of production premises/ a part of them;
- public lighting along the external road;
- parking for visitors parking;
- distributed utilities and equipment at the level of each parcel: access to road, water and sewerage,
gas, rainwater sewerage, connection to electric power, telephony and other communications
networks;
- maintenance of production premises and BI objects, parking, public lighting, rainwater sewerage
system, fence.
b) Additional services provided by the Manager:


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- lease of areas for offices, public catering, other areas for services expected to be ensured by
companies providers of services (banking, courier, mail, health assistance services);
- consulting services provided by IP development service in business development and planning,
project development, marketing and staff recruiting, management and knowledge transfer, audit
and accounting.
c) Incubation services provided by the Manager:
- lease of production premises built by the Manager for BI residents;
- assistance in business development and implementation, including until business launch (plan,
studies, funding sources, tools and equipment, supply);
- assistance in balanced development of enterprise in medium and long term, in building team,
implementation of marketing plan, accounting, cost calculation and optimization;
- assistance in preparing for leaving the BI.
Functional purpose of land plots will have the following configuration:
According to the destination of IP plots, it is divided into the administrative zone, zone of Residents and plots
occupied by infrastructure (roads, engineering networks, etc.).
Table 9. Structure of Industrial Park land
Destination Area, ha Share, %
Area occupied by
buildings and facilities,
ha
Share of
land, %
Administrative zone 0.25 4% 0.07 28%
Zone of Residents 5.40 90% 3.25 60%
Land occupied by infrastructure 0.35 6% 0.35 100%
Total 6.00 100% 3.67 61%
The zone of Residents consists of: (i) subzone of leased production premises for BI Residents and (ii) subzone
of land parcels on which the IP Resident builds necessary facilities with its own funds.
The subzone of leased production premises is the plot on which production premises are located and are
designed to be leased by IP Residents. For an enterprise of BI, we supposed a lease of a minimum area of 350
sq. m., while 10 enterprises can benefit from production spaces.
The subzone of parcels is occupied by production infrastructure and connections of internal common
utilities
5
. Production infrastructure of Residents will include production / industrial buildings for production
activities corresponding to the IP profile, warehouses, and platforms. The minimum size of parcels subjected
to lease procedures through tender makes up 0.49 ha. The maximum number of Residents in the subzone
makes up 10 companies. No limit for the size of Residents plots is established, so Residents are able to adjust
the size of land according to their needs. But it is obvious that this can happen only on land available for this
subzone and in compliance with the management plan of the Manager. Residents of this subzone can also be

5
Except for heat networks, which will be provided by each Resident individually according to its needs.


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BI Residents and enjoy a special set of incubation services, which may include only consulting and support
services.
Table 10. Structure of the zone of Residents
Indicators
Subzone of production
premises leased by BI
Residents
Subzone of land plots for
IP Residents
Total
Share of the zone of Residents 10% 90% 100%
Land area, ha 0.54 4.86 5.40
Area designed for constructions, sq. m. 3,500 29,000 3,2400
Minimum area per Resident, ha 0.05 0.49
Minimum area designed for
constrictions per resident, sq.m.
350 2,900
Maximum number of enterprises -
Residents
10 10 20
Number of employees 90 730 820
b) The administrative zone is occupied by: administration building (if it will be built), car parking, green
spaces.
c) The areas occupied by infrastructure include land occupied by common utilities within the IP, including
water pumping station, transforming substations and waste collection platform.
Proposed technical solution for implementation of the IP with characteristics mentioned above is shown in
Annex B.


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3. Description of the Industrial Park
3.1. IP organization and operation
According to the Law on industrial parks No. 182 of July 15, 2010, the local public administration of Hancesti
will start the establishment of Hancesti Industrial Park. This project is seen by local public administration as
an important tool for social and economic development of the town and surrounding region. For this reason
this project is developed with the participation of local authorities with the support of regional and central
authorities.
After confirming the opportunity of establishing an Industrial Park through its feasibility study, the initiators
for establishment of Hancesti IP will develop and approve specifications under which the tender for selection
of the winner partner for IP establishment will be held.
In order to support the establishment and operation of the Industrial Park, the Local Council of Hancesti will
enable the executive body of local public administration to establish the Commission for establishment and
operation of Hancesti Industrial Park, which will provide the necessary support to contribute to:
a) process of change of land purpose;
b) process of obtaining the decision of the local public administration on land purpose;
c) process of obtaining licenses, approvals, coordination and other permissive documents foreseen by
the law required for establishment of industrial park, infrastructure and buildings designed for the Park,
where applicable;
d) performance of other administrative procedures necessary to establish the Industrial Park, launch and
conduct of Residents activities.
Commission decisions will aim to support the process of drawing up documents necessary for the
establishment and development of Hancesti Industrial Park, and to prevent the occurrence and / or to
remove any impediments to solving problems relating to IP establishment and development.
This Commission will also have the task of selecting the future applicant of Industrial Park title.
Further, applicants of Industrial Park title will submit to the Local Council of Hancesti an application on
establishment and operation of Industrial Park, enclosing copies of documents confirming the right of
ownership for at least 30 years of the Industrial Park land provided that it meets the requirements stipulated
in art. 5
6
of the Law on industrial parks. In order to obtain the title of industrial park, the applicant shall

6
Land designed for industrial park with buildings and utilities located on it, must meet the following
conditions:
a) to make free of any tasks;
b) not to be subject to pending litigation and / or settlement in courts or arbitration;
c) to have access to transport routes;
d) to be accessible to technical and production infrastructure connecting the park to public utilities;
(footnote continued)


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submit to the Ministry of Economy the application for Industrial Park title, enclosed by the documents
specified in art. 8 of the Law on industrial parks.
The Ministry of Economy will consider the application and the set of documents for granting the title of
Industrial Park within 30 calendar days since their submission. According to art. 11 of the Law on industrial
parks, the Ministry of Economy may decide to grant the title of Industrial Park for a period of 30 years to a
company, which is entitled to use for at least 30 years, or owns a land designed for the establishment of
industrial park meeting the requirements stipulated in art. 5 of the same law.
In terms of the field for which the Manager obtained the title of the Industrial Park, its duties will be the
following:
to coordinate and monitor the process of building technical and production infrastructure, as well as
production activity of the Industrial Park;
to organize tenders to select Industrial Park Residents;
to develop and promote strategies and programs to develop the Industrial Park;
to attract investors for the development of production activities and provision of services within the IP;
to ensure normal operation of utilities networks according to technical requirements;
to develop technical and production infrastructure, as well as common utilities of the Park according to
the technological needs of the Park;
to conclude contracts with IP Residents and monitor fulfilment of conditions stipulated therein;
to cooperate with specialized bodies of public administration and with local public administration;
to bear responsibility for the rational use and appropriate to funds allocated from state budget or from
budgets of administrative and territorial units to build technical and production infrastructure of IP;
to establish and approve
7
the conditions of commissioning / leasing of land, production premises,
buildings (offices in the Managers building) and other owned or used facilities, as well as amount of
payments;
to ensure accounting and statistical accounting of its activity and to submit on a quarter basis reports on
the activity carried out within the IP to the Ministry of Economy;
to submit to specialized central bodies and LPA proposals on development of the managed Park;
Managers main sources of income may include:
Income from the rent / lease of land and production premises (if they are built);
Income from entrepreneurial activity in the Industrial Park;
Payments and fees paid for participation in tenders for obtaining the right of Resident of the Industrial
Park and for registration as Resident;

e) to have an area of at least 5 hectares.
7
Amount of payments approved by the LPA where sources of funding buildings / production premises are public.


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Income from provision of services of Industrial Park Residents;
Income from lease of rooms of administration building;
Income from receipt of administration fees;
Donations;
Other income related to its functions.
In order to facilitate the creation and operation of the Industrial Park, the state, represented by central and
local authorities, give to the holder of the title of Industrial Park and Residents the following facilities:
a) Exempt from compensation of losses caused by exclusion of lands from the category of agricultural
lands according to the Law on normative price of land and procedure of purchase and sale of land;
b) Free alienation or transfer in gratuitous use of state-owned property to the Managing Company in
order to create and develop the Industrial Park upon its owner's decision under the Law on
administration and privatization of public property;
c) right to privatize state-owned land for construction at normative price of land, established upon its
transfer to the Managing Company or leasing by Industrial Park Residents only after purchase and / or
commissioning of constructions and industrial and related facilities, according to the Law on normative
price of land and procedure of purchase and sale of land
8
;
d) provision of tax incentives under the Tax Code;
e) application by the Managing Company of the discount rate up to 0.3 of annual fee for lease of state-
owned land, established according to the Law on normative price of land and procedure of sale and
purchase of land, or of the basic fee for annual lease of public property assets, established by the Law
on state budget for the respective year;
f) optimization of state controls over the activity of Residents of Industrial Parks by conducting planned
controls according to the annual schedule approved by the Government Decision or unannounced
controls carried out with the consent of the Ministry of Economy as required by the applicable law;
g) allocation, as appropriate, of financial resources for establishment of the technical and production
infrastructure from the state budget, local budget, National Regional Development Fund and other
sources;
Residents and investment projects implemented within the IP will be selected through a tender, organized
by the Managing Company. Tender winners will enter into lease contracts regarding land parcels or
production premises built by the Managing Company. Conditions for leasing parcels, production premises,
or use of infrastructure owned by the Managing Company are set in the contracts concluded between the
Managing Company and IP Residents.

8
Facility stipulated in par. (1). let. c) is granted if investments were made in constructions and facilities
covered by the project, on which basis the Resident or Manager was selected, and which value is greater
than the amount of three normative prices of land, set out when commissioning to the Manager or when
being leased by Residents, plus payment to compensate losses caused by exclusion of land from the category
of agricultural lands, estimated the day when the purpose of the land was changed, if this occurred.


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Parcels of land to be leased, will be used by Residents throughout the contract term under conditions
foreseen by the IP Regulations and contract, and upon the termination of the contract they will be left and
transferred to the Managing Company. At the same time, Residents will be granted the right to privatize
leased parcels of land according to art. 12 of the Law on IP. After privatization of land, IP Residents will
operate within the Park throughout the duration of activity of IP or will sell their own investments to other
future Residents of the IP. The latter will have to obtain the title of IP Resident and to comply with the IP
Regulations.
The Resident has the following duties:
1. The production activity must have at least 80% share in all activities of the Resident. Throughout the
entire contractual period it is forbidden to change the purpose of premises or of activity for which the
contract was concluded without prior written consent of the Managing Company, which will not be
refused unreasonably.
2. The following types of land occupation and use are forbidden: industrial, storage constructions or
services involving polluting activities; constructions of residential buildings and other than those listed;
waste storage facilities and others.
3. To make appropriate investments and developments, so that within the term established in the
Contract concluded between the Resident and the Manager the goal, for which the land plot was
leased, could be achieved. In the event of failure within the term set out in the investment contract,
the contract looses its force, the Residents are obliged to leave the land and sale their own investment.
4. Any necessary investment or development will be made only upon a Construction Permit with all
approvals required by law.
5. To take all measures required to protect the environment and the conditions under the law in force
relating to environmental protection.
6. To pay monthly fees and payments to the Managing Company established by IP Regulations.
7. To pay the unique fee for obtaining the Resident right.
8. To deposit an amount as guarantee, equivalent to six months administration fee set out in the
contract. If necessary, penalties and amounts due to the Managing Company will be levied of this
amount.
9. Upon a possible sale of its investments made on the leased parcel of land, to invite in written form the
Managing Company to participate as a concerned party in signing sale contract, negotiation and
signing of a new lease agreement and obtaining the title of Resident by a new tenant. The resident is
required to complete the sale procedure within the period specified in the Contract between the
Resident and Manager upon contract termination. For the entire area until the land plot is left, the fee
previously agreed is paid. If the above mentioned terms are exceeded, the Resident shall pay to the
Managing Company compensation of damages calculated for daily loss of the unrealized profit by
failure to use the land.
The Manager undertakes:
1. To notify the Resident on the occurrence of any circumstances that may damage its rights;
2. To contribute, within its powers, to provision of a business climate suitable for development of
companies located within the IP;


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3. To provide and maintain technical and production infrastructure, as well as common utilities in
compliance with the technological needs of the Park;
4. To assist with specialized services in areas of Residents competence in issues of its concern;
5. To ensure issuance of permits and authorizations of their field of competence in emergency regime;
6. To provide Residents with access to information and documents of public interest and to those strictly
related to the IP, required for development of its activity;
7. Upon the conclusion of contracts with its Residents, the Managing Company will deliver, and upon
termination of the lease / tenancy contract will accept land parcels and / or production premises being
subject of the rent/ lease based on protocol.
IP Residents will be selected by the Managing Company through a tender on obtaining the right to lease land
parcels/ production premises, which will indicate:
The annual level of administration fee in MDL;
Investments that they undertake to make specifying reference indicators (dynamics of planned
construction, building area, usable area, planned amount of investments for commissioning, planned
number of employees and of own or attracted funding sources);
Commitment on technological process necessary for business in terms of used technologies and
manner they meet environmental standards;
Final deadline for making investments;
Specifications on indicators of investment business plan, namely its development by stages, where
applicable (amount of total investment and the breakdown by year / stage, Internal Rate of Return, Net
Present Value);
Data on the amount of monthly consumption of utilities (water, gas, electric power supply, sewerage,
waste collection, etc.)
Other needs related to the need to lease administration buildings, public catering, conference halls,
consulting services, etc.
3.2. Land
The land designed for Hancesti Industrial Park, in case of construction of a road accessing the south-east side
of the plot to the town road, connecting R3 and R34 national roadways, could have access to R3 and R34
highways. The land is located at a distance of 44 km from Leuseni customs, located at the border with
Romania, about 35 km from Chisinau railway station, 50 km from Chisinau International Airport, 160 km from
Marculesti airport and 172 km from Giurgiulesti International Port.
3.2.1. Legal nature of the land
The land for IP location an area of 6 ha is owned by Hancesti Town Hall, being situated in the town plot.
According to the Urban General Plan of Hancesti Town, the land belongs to the zone of economic units
(industrial or agricultural). Currently the zone of economic utilities occupies an area of about 60 ha, with an
extension possibility of up to 117 ha. At the same time, according to strategic plans of Hancesti LPA, the area


40
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of 6 hectares of the land designed for Hancesti IP could be extended in future to 35 ha. IP land is intended
for industrial constructions, has a productivity of 65 degrees. The land is free from any legal burdens (not put
in pledge, not leased).
3.2.2. Land features
The land of the Park is located in the valley of Cogalnic River. The valley has a width of about 500 meters. In
the east and west part - along the valley there are steep slopes at a distance of about 400 meters with a
height of up to 200-250 meters. This situation in cases of heavy rainfall or snow melting can cause intense
flooding of the Industrial Park. According to the data of the Scheme of the Urban General Plan and the Urban
Area Plan of Hancesti Center, developed by URBANPROIECT" Institute, IP land is assigned to D zone -
conditionally favourable for construction because of underground water floods and possibilities floods with
overflow or drained surface waters. In this area it is necessary to take a set of measures aimed at flood
protection, such as deepening the bed of Cogalnic River, raising the level of Park land, etc.
The area of the land designed for the Industrial Park makes up 6 ha. Land sizes are presented in Annex B. The
southern side of the land is bordered by private lands, and the other sides are bordered with state owned
lands of Hancesti Town Hall.
Near the land a road runs on a higher land than the land of about one meter height. This road passes over a
footbridge on the right bank of Cogalnic River. In the southern part of the land, private lands are raised
artificially with a meter high with soil brought from elsewhere. Thus, the land designed for the location of the
Industrial Park is surrounded by land of about a meter higher and in reality is a place for water accumulation.
In order to avoid accumulation of water on the field and exclude the probability of flooding, it is necessary to
cover it with a layer of about one meter thickness.
According to data of the Seismic Zoning Map of the Republic of Moldova (scale 1: 4,000,000, year 2010),
approved by the Ministry of Construction and Regional Development by order No. 25 of December 23, 2009,
Hancesti is located in a seismic zone of 7 degrees according to the MSK scale of 12 degrees. This thing
imposes some restrictions on the degree of seismic resistance of buildings and constructions, which will be
built within the industrial park.
Groundwater flows at a depth of 2 meters. In such conditions, in order to comply with the requirements for
construction of buildings resistant to earthquakes of about 7 degrees according to MSK scale, buildings will
be constructed on stilts, which will increase construction and building costs with about 20%.
3.3. Utilities and infrastructure
3.3.1. IP land development
In order to ensure the functionality of IP, the following minimum works of land development will be carried:
Raising of land level, land covering with a thick layer of soil of about one meter, compaction and
levelling;
Development of green spaces;
Installation of road lighting system;
Construction of a platform for the accumulation and disposal of solid waste from the common area of
the IP;


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Installation of litter bins;
Construction and development of a parking plot;
Installation of information and road indicators on the road towards the IP;
Fencing of the Park land along its entire perimeter.
Description and specifications of these works are presented below.
Raising of land. The amount of soil to be brought on the Industrial Park for these purposes will make up
about 60,000 cubic meters.
Green spaces. According to the proposed zoning, the land of Hancesti IP will be virtually split in the zone of
Residents (about 90% of the land), zone occupied by the infrastructure (about 6% of the land) and the
administrative zone (about 4% of the land). In order to provide freedom of development on Residents areas,
we propose cultivation of decorative trees of common spaces of the IP by the Manager. Thus, the arranged
area will make up around 1000 m
2
.
Installation of lighting system. On the land of Hancesti Industrial Park, public internal roads are not foreseen
because, according to the data of the Scheme of the Urban General Plan with the Urban Area Plan of
Hancesti Center, the public external road will go directly on the western edge of the Park land and along
Cogalnic riverbed. Only the external road will be lighted within the Park. The lighting system will be ensured
by an air power transmission line of 0.4 kV with a length of 560 m, which will pass along the west side of the
plot, on the plot on which pillars street lighting LED lamps will be installed. The distance between line pillars
will make up 40 meters. Overall the line will have 14 pillars.
Platform for accumulation and disposal of solid waste. It is proposed to establish a platform for the
accumulation and disposal of solid wastes in the form of asphalted fenced territory, with an area of 10 sq. m.
The platform will serve for collection of garbage from the common area. Accumulation and disposal of
Residents waste will be carried out on their expense.
Litter bins will be installed on the territory on Managers building, parking and external road. Their number
will make up 16 units.
Car parking plots. Hancesti Industrial Park needs 20 car parking plots of 18 sq.m. each. The total area of
asphalted parking plots will make up about 360 sq.m., which is equivalent to 60% of the carriageway surface
of the road of IVth category with a length of 360 / 6 = 60 meters.
Road and information indicators will be installed along the external public road. The number of billboards
will make up about 4 units, the rest will be road indicators and information schemes.
Park land fencing. The perimeter of the IP land has a length of 1,249 m. Thus, in order to fence 1,249 m
2
of
fence with a height of 2m of metal bars is required.
3.3.2. Necessary utilities
Hancesti has a relatively well-developed local infrastructure: provision of electric power is stable and can
fully meet the need of industrial sector; services of water supply and sewerage are functional and there is
easy access to the gas network; there are no problems with connection to telecommunications networks
(fixed, mobile telephonies, Internet).


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42
The needs of Industrial Park businesses in electric power, natural gas, drinking water and sewerage (see
Table 11) were assessed based on data about the respective needs of enterprises with capabilities similar to
those in Annex 1
9
, and based on generalized rules of consumption (per unit of production) of electricity,
natural gas, drinking water (except volume of water used repeatedly for cleaning their internal systems) and
the volume of wastewater to be discharged through the sewerage.
Table 11. Needs of enterprises of Hancesti IP in public utilities
10

No.
Type of activity
Electric
power, kVA
Natural gas,
m
3
/h
Drinking
water ,
m
3
/h
Sewerage,
m
3
/h
1. Production of telecommunications
devices
650 35 10,5 10
2. Production of digital measuring
devices
600 30 10,5 10
3. Development, testing and
production of solar and wind
power stations with capacities of
up to 5 kW
750 35 10 9
Total
2000 100 31 29

The land designed for location of Hancesti IP is situated at a distance of 472 m from the water and sewerage
system of Hancesti and 405 m from the point of connection to gas pipeline. Parallel to the IP land, from just
90 m, the power transmission line of 6 kilovolts passes. Currently unused capacities of these networks can
meet the estimated needs of IP.
From Table 11 it is noted that in order to ensure the operation of enterprises of the Industrial Park, it is
necessary to install within the Park several transformers with total capacity of about 2000 kVA and their
connection to the power transmission line of 10 kV, which passes within 100 meters from the western side of
the Park.
It is also necessary to build an average pressure natural gas pipeline of 405 meters in length, which would
provide Park enterprises with about 100 m
3
of gas per hour, a drinking water pipeline of a length of 472
meters, which would provide with drinking water the enterprises of the Park from the local drinking water
pipeline in a volume of about 31 cubic meters of water per hour or 8.7 litres per second.
It is necessary to build within the Park a sewage water lift station with a capacity of not less than 29 m
3
/ h or
about 8 litres per second and a waste water pipeline with a length of 472 meters from the station to the
place of its connection with the town sewerage system.
Capabilities and configurations of roads and internal and external public utilities networks of the Industrial
Park shall ensure for its residents smaller distances from the place of location of their enterprises to points

9
Enterprises listed in Annex 1 and Table 19 constitute just a possible configuration of Hancesti IP Residents and were
considered for assessment of the need in IP utilities.
10
Except for heat networks, which will be provided to each Resident individually according to their needs.


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43
connecting with roads and public utilities networks that lead to the minimization of summary connection
costs, while ensuring the lowest possible cost for the construction and operation of roads and public utilities
networks.
3.3.3. Internal infrastructure
Internal Road
In order to rationally use the land of Hancesti IP, as its width makes up only 109 m, no construction of an
internal road within the IP is foreseen. Park Residents will build their own roads accessing the external public
road, which will run directly on the western edge of the Park and thus will have access to municipal road
connecting with R3 and R34 highways.

Pipelines of water, sewerage, medium pressure gas networks and cables for electric power supply and
telephony will be constructed within the Park along the western side at a distance of at least 2 meters from
the fence. The method is as follows: in order to install networks, a channel with steps of 1.4 m height will be
dug, so that the distance between the pipelines and cables could be of 1 m diagonally. The sewerage system
will be installed in the deepest channel. The next two steps of the channel will be designed for installation of
gas and water pipelines in various parts. Wells of sewerage systems will be installed at a distance of 40 m
apart. In the wells of the sewerage, branches to the pipeline will be constructed on parcels of adjacent lands
with a length of 10 m. In addition, branches will be constructed to water and gas pipelines with the same
intervals and lengths, which initially will be sealed with plugs. On steps of the channels below the cover of
roads electric power and cables of telephone networks will be mounted. Ramifications of the power cables
to adjacent parcels of land will be constructed with a length of 10 m. The channel will be covered with soil.

Electric power supply
Construction of electric power and telephone networks can be made by mounting them in underground or
air channels. We chose the first method of electric power supply, because the supplier can check at any time
consumption and energy thefts from the network are excluded. In order to satisfy the IP needs in electric
power (see Table 11) 3 TM transformers will be installed with a capacity of 1000, 630 and 400 kVA, which will
transform electricity of 6 kV in electricity of 0.4 kV. In order to install transformers, a IP land area of about 48
sq. m. will be required.

Internal water pipelines
Length of internal drinking water pipelines will be equal to 500 meters. The approximate diameter of water
pipeline is calculated as follows:

where Q
total
total of consumed water in litres per second,
v speed of water movement though pipes (for large diameters 1.5 2 m/s, and for small diameter - 0.7
1.2 m/s).
For the total water consumption of 8.7 litres per second, pipe diameter will be about 74 mm. Given the
universal nature of IP, for IP needs a polyethylene pipeline with a standard diameter of 110 mm is required.


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44
Internal sewerage pipelines
The length of the internal sewerage pipe will be equal to 500 meters.
According to normative data, for the estimated volume of discharged water of 8 litres per second, we will use
polyethylene pipes with a diameter of 200 mm.
Gas supply
Common internal natural gas pipelines will be constructed jointly with water pipelines, sewerage system,
electric power lines, etc. Their length will make up 500 meters.
The approximate diameter of gas pipeline in centimetres is calculated as follows:
,
where Q is gas consumption in cubic meters per hour, t gas temperature 0 (14 degrees), p
m
- gas
medium pressure in pipeline (medium pressure makes up 0.10132 MP ), V-gas speed 15 m/s of medium
pressure,
and makes up 50 mm. The standard outer diameter of polyethylene pipeline covering the above mentioned
needs makes up 75 mm with wall thickness of 5.6 mm.
Rainwater sewerage system
Republic of Moldova may be hit by torrential rains with possible rainfall of about 160 mm water per a rainfall
with an average duration of 150 minutes. Rainfall accumulations shall correspond to 0.064 m
3
per hour or
0.018 litres per second per square meter of land area. The torrents of water accumulated from asphalted
territory and from roofs of buildings of the Park should be evacuated. The area of these territories makes up
around 25% of the Park area, or 15,000 sq. m. The maximum capacity of water discharge at critical points of
exit from the plot should make up 270 litres per second. Rainfall waters with a drain speed of 2 m / s will be
collected in the channel of 500 m length, built along the western side at a distance of one meter from the
fence. They will be discharged from the channel though 5 metal pipes with a diameter of 300 mm and a
length of 60 meters, mounted beneath the carriageway of the road. IP Residents will be required to organize
the rainwater drainage in the channel.
3.3.4. External infrastructure
On the area of land designed for the location of the Industrial Park, there is no surface or underground
constructions. In the immediate vicinity there are roads, networks and utilities listed below.
Access condition of the site
Currently the access road to the Industrial Park is not built. In order to provide access of Hancesti Industrial
Park to republican and local road networks, it is necessary to built an asphalted road of IVth category from
the town road (connecting R3 and R34 national highways) to the southern side of the land designed for the
Park and extended along the western side of this land to the end of this side. The total length of the road will
make up 980 meters.


45
45
Electric power supply
The electric power transmission line of 6 kilovolts runs parallel to the western side of the field at a distance
of about 90 meters and is located on the right bank of Cogalnic River. In order to ensure access of the Park
to electric power, a power transmission line of 6 kilovolts with a length of 100 meters should be constructed.
Supplier of electric power is JSC "RED Union Fenosa. According to the decisions of the Board of NARE No.
365 of January 14, 2010 on electricity fees, JSC RED Union Fenosa provides electricity at a tariff of 133 MDL
/ kWh excluding VAT.
Water network
The drinking water pipeline in Hancesti is situated near the asphalted town road (connecting R3 and R34
national highways) at a distance of about 472 meters of southern side of the land designed for Industrial
Park. Thus, it is necessary to construct a pipeline that will connect the local drinking water network with the
Park site. The pipeline will be parallel to the access road to the Park and extended inside the Park. The
pipeline diameter makes up 110 mm.
The municipal drinking water pipeline has sufficient capacity to supply companies, which will be located
within the Industrial Park.
Sewerage system
The locality has a sewerage system to which the sewerage system of the Industrial Park can be connected
constructing a waste water lift station in the most southern point of the land of the Industrial Park near the
internal public access road. The waste water lift station will provide waste water pumping of a volume of 70
m
3
per hour and it lifting up to 27 m.
The distance from the wastewater lift station within the Industrial Park land to the town sewerage system
(located near the town road connecting R3 and R34 highways) makes up about 472 meters.
The waste water lift station will be connected to the sewerage system of Hancesti through a pipeline with a
diameter of 200 mm and a length of 472 meters.
Natural gas supply
The natural gas supply pipeline of medium pressure of Hancesti is situated not far from town road at a
distance of about 405 meters from the southern side of the plot and has sufficient capabilities to meet the IP
needs. The gas pipeline of medium pressure will link the gas pipeline of the locality with gas pipelines from
Park land and will run parallel to the asphalted road running to the Park at a distance of 3 meters of such
road from its right side. Pipeline diameter makes up 75 mm.
Supplier of natural gas in Hancesti is JSC "Rotalin Gaz Traiding. The price for 1000 m
3
of gas supplied
through medium pressure gas pipeline according to the provisions of the Decision of the NARE Board of
February 1, 2011 makes up 4,903 MDL without VAT (VAT makes up 6%).
3.3.5. Buildings
For the construction of production premises in the zone of Residents, we supposed an area occupied by
buildings and construction of 3.25 ha, including 0.35 ha for BI production premises and 2.90 ha for
production premises built by Residents.


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46
3.3.6. Labor force required for IP activity
From the data presented in Annex 1, it is observed that the number of jobs that can be created by the
residents of the Industrial Park will make up a total of around 810 jobs of which about 260 jobs will require
professionals of the mechanical engineering and 550 jobs in the industry manufacturing measuring
instruments.


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47
4. Assessment of investments in IP
4.1. Land
In Hancesti the market price of a public hectare makes up about 1,291,700 MDL, while a hectare of land of
privatized companies makes up 258,665 MDL.
The land designed for Hancesti IP location is ownership of Hancesti Town Hall, is situated on within the town
residential area, is a land designed for industrial construction and has an area of 6 hectares with a
productivity of 65 degrees.
According to par. (12) of art. 10 of the Law on normative price of land and procedure of sale and purchase of
land when calculating the annual lease fee for state-owned land within industrial parks, established in
compliance with Law on industrial parks No. 182 of July 15, 2010, the Managing Company will apply a
reduction coefficient of up to 0.3 of the annual land lease fee set by law. For small towns such payment
makes up 0.5% of the normative price of land.
The normative price of land is calculated based on the fee set put in the Annex to the Law on normative price
of land and procedure of sale and purchase of land No. 1308-XIII of July 25, 1997 (republished in the Official
Gazette No. 141-149/1161 of December 6, 2001), which makes up 19,873.34 MDL per one hectare degree for
land of the town residential area. For the land with a productivity of 65 degrees of normative price of 1
hectare will make up 19,873.34 * 65 = 1,291,767.1 MDL.
The fee per 1 leased hectare of land with a productivity of 65 degrees in Hancesti will make up 1,291,767.1
MDL * 0.005 = 6,458.8 MDL per year, and for economic entities - Residents of Industrial Park it will make up
0.3 of this amount - only 1.937,65 MDL or 19.4 bani per sq.m. per year.
4.2. Land development
Land raising. The expenses for loading works, transportation from a distance of about 5 km, spreading and
levelling of a cubic meter of land are estimated at about 55 MDL. The cost of these works for a volume of
60,000 m
3
will make up 3,300 thousand MDL.
Green spaces. The area planted with ornamental trees will make up about 1000 sq. m. Therefore, expenses
on development of green spaces will make up about 50,000 MDL.
Installation of lighting system. Given the prices of necessary materials and the experience of performing
similar works, the minimum cost of construction of one kilometre of power transmission line of 0.4 - 10
kilovolts makes up about 206,000 MDL. The cost of power transmission line of 0,4 kV along the western side
of the Park with a length of 560 meters will make up about 115,360 MDL. On each pillar (total 14) of the line,
a LED street lighting lamp will be installed at a cost of 2,000 MDL. The cost of lamps will make up 28,000
MDL. The total cost of the lighting system will make up 143,360 MDL.
Platforms for the accumulation and disposal of solid waste. Costs for construction of these platforms are
assessed in the amount of 5,0 thousand MDL.
Litter bins. Given the cost of an 300 MDL for a -5 litter bin, the total cost of 16 litter bins necessary in the
Park will make up around 4,800 MDL.


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48
Car parking plots. The area of 20 parking plots proposed to be created is equivalent to the area of a road of
IVth category with a length of 60 meters. The cost of one kilometre of road of the IVth category makes up
16,178,000 MDL. Expenses for the carriageway of the road will make up 60% of the road cost. So, the cost for
creation of 20 parking plots will make up 16,178,000 MDL/1km * 0.6 * 0.06 km = 582.400 MDL.
Information and road indicators. Total expenses for the purchase and installation of four billboards are
estimated at 80,000 MDL.
Park land fencing. Costs for the purchase and installation of 100 m of fence of 2 m height of metal bars type
"" make up about 41,200 MDL. The length of IP land perimeter makes up 1,249 m. Investments for
the purchase and installation of the fence will make up 514,590 MDL.
Table 12. Amount of investments needed for development of Hancesti IP land
Name of land development objects
Amount of investments,
thousands MDL
Land raising 3,300.0
Development of green spaces 50.0
Installation of lighting systems 143.36
Construction of platforms for the accumulation and
disposal of solid waste
5.0
Purchase of street litter bin 4.8
Construction of car parking 582.39
Creation and installation of information and road
indicators
80.0
Park land fencing 514.59
Total 4,680.14
The amount of investments needed for development of Hancesti IP land is presented in Table 12 and makes
up 4,680,140 MDL.
4.3. Internal Infrastructure
Internal Roads
As stated in Chapter 3.3.3 the construction of an internal road within Hancesti IP is not foreseen.
Electric power
In order to satisfy IP needs in electric power 3 TM transformers with capacities of 1000, 630 and 400 kVA will
be installed of a total cost of 355,000 MDL. The total cost of construction and installation works is estimated
at about 10% of the transformers cost and will make up about 35,500 MDL. Underground electric power
transmission line of 0.4 kV is estimated at 560 m with a total cost of 448 thousand MDL. So, required total
capital investments will make up about 838,500 MDL.
Water pipes
The cost of construction of water pipeline with a standard diameter of 110 mm and a length of 1 km in the
conditions of this project makes up about 300 thousand MDL. Thus, the total investment for the construction
of 500 m of pipeline will make up about 150,000 MDL. Preparation of Residents plots connection to the


49
49
network makes up 10% of the cost of the network, or 15,000 MDL. Total investment volume will make up
165,000 MDL.
Sewerage pipes
For the construction of sewerage polyethylene pipelines with a diameter of 200 mm and of wells at a
distance of 40 m, expenses of about 800,000 MDL per 1 km are required. Capital investment for the
contraction of internal public sewerage pipelines with a length of 500 m will make up about 400 thousand
MDL. Costs for connection of Residents plots to the sewerage system are included in the total cost. Total
investment volume will make up 400.0 thousand MDL.
We previously stated that a channel for rainwater sewerage system would be constructed along the external
road of a total length of 560 meters. Of this channel every 100 m of pipe channels will be constructed under
the carriageway of the road. The cost per 1 kilometre of such sewerage system makes up about 1.1 million
MDL. Thus, costs for contraction of and rainwater sewerage system will make up about 616,000 MDL.
Natural gas
According to the experience of the Republic of Moldova for the construction of a medium pressure gas
pipeline from polyethylene pipes with a diameter of up to 75 mm at a distance of 1 km, expenses amounting
to 220 thousand MDL are necessary. Therefore, the length of 500 m requires capital investment of about
110,000 MDL. Preparation of plots for connection of residents sites to the network makes up 10% of the cost
of the network, or 11,000 MDL. Total investment volume will make up 121,000 MDL.
4.3.1. Investments in internal infrastructure
The summary volume of investments required to build the internal infrastructure of the Park is
presented in Table 13.
Table 13. Summary volume of investments required for building the internal IP infrastructure
Building Name
thousand MDL
Construction of public internal road 0
Procurement and installation of 3 transformers with total installed
capacity of 2000 kVA and a transport line with a length of 560 m
838.5
Construction of public internal pipelines of drinking water with a length
of 500 m
165.0
Construction of public sewerage pipelines with length of 500 m
400.0
Construction of sewerage system for rainfall
616.0
Construction of natural gas pipeline of public use with length of 500 m
121.0
Industrial Park land development 4,680.14
Total 6,820.64
4.4. External infrastructure
Highways


50
50
In order to ensure the access of Hancesti Industrial Park to republican and local highways networks an
asphalted highway of IVth category from the town road should be built (connecting R3 and R34 national
highways) to the southern side of the land designed for the Park and extended further along the western
edge of this land to the end of this side. The total length of the highway will made up 980 meters. Expenses
necessary for the construction of one kilometre of road of IVth class make up about 16,178,000 MDL. Capital
investments for the construction of this road will make up 15,853,950 MDL.
Electric power
The minimum cost of construction of one kilometre of power transmission line of 6 kV makes up about 400
thousand MDL. For the construction of the town's power transmission line with a length of 100 meters about
40.0 thousand MDL will be spent.
Water networks
Capital investments required for the construction of drinking water pipe with a diameter of 100 mm and a
length of 472 meters, which will join the local drinking water network with the Park site, will constitute
141,600 MDL.
Sewerage systems
Waste water lift station costs about 64 thousand MDL. The construction of the building with an area of 12 m
2

with of a pool necessary for station installation will cost about 36 thousand MDL. The total cost of waste
water lift station will make up about 100,000 MDL. Capital investment for the construction of a pipeline with
a diameter of 200 mm and a length of 472 meters that will connect the waste water lift station with the town
sewerage system will make up 118,940 MDL.
Natural gas
Polyethylene gas pipeline of medium pressure with a diameter of 75 mm, which will connect the gas pipeline
of the locality with Park gas pipelines, has a length of 515 meters. Capital investments for the construction of
this pipeline will make up 113,300 MDL.
4.4.1. Investments in external infrastructure
The summary volume of foreign investments required to build the external infrastructure of the Park is
presented in Table 14.
Table 14. Summary volume of investment required for building the external IP infrastructure
Building#
thousand MDL
Construction of access roads of IVth category of 980 m length
15,853.95
Construction of power transmission line for connection to the
town line of 6 kV with a length of 100 m
40.00
Construction of polyethylene pipeline with a diameter of 110 mm
for connection to the external source of drinking water with a
length of 472 m
141.60
Construction of a sewerage pipe with a diameter of 200 mm and a
length of 472 m for connection to the town sewerage system
118.94

Construction of waste waters lift station 100.00


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Building#
thousand MDL
Construction of natural gas pipeline with a diameter of 75 mm and
a length of 515 m
113.30

Total 16,367.79
The total amount of investment in internal and external infrastructure required to build Hancesti Industrial
Park will make up about 23.2 million MDL.
4.5. Buildings
Production premises. We estimated the necessary amount of investments supposing that the construction
of a square meter of production premises, warehouses, etc. will make up 3,235.5 MDL (around 200 EURO).
Table 15.Structure of the land occupied by production premises of Hancesti IP
Production premises Area, ha
Investments,
thousands MDL
Production premises BI 0.35 11,324.25
Production premises of Residents 2.90 93,829.50
Total of production premises
(production infrastructure)
3.25 105,153.75
Funds required for the construction of production premises are presented in Table 15 and make up about
105 mln MDL.
4.6. Assessment of costs for training labor force
In order to provide adequate labor force for the IP needs, vocational training and retraining will be organized.
We believe that 75% of the necessary labor force will be trained or 615 workers will be employed in IP
Residents enterprises. The average duration of training course will make up about 2 months. Thus, the costs
for labor force training will be equal to the actual cost of training and the amount of scholarships offered to
future employees for two months. The cost of training per person makes up about 1,400 MDL, the
scholarship for 2 months will cost 800 MDL / month * 2 months = 1,600 MDL. In this way, the cost of training
per person will make up around 3,000 MDL. The total cost of labor force training will make up 1,845 mln
MDL.
4.7. Total investments
Estimated value of investment necessary to establish Hancesti Industrial Park are presented in Table 16 and
primarily include costs for the construction of common utilities from inside and outside the IP, interior and
exterior IP development, as well as minimum necessary constructions for the IP operation
11
. The total

11
Residents investments were not took into account in the analysis of financial feasibility of Hancesti IP.


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52
amount of investments without Residents investments for establishment of IP are estimated at 36,756 mln
MDL. Capital costs are presented in details in Annexes 2 and 3.
Table 16. Capital costs of the project
Capital Costs
Assessment
with
Residents
Investment ,
MDL
Share,
%
Assessment
without
Residents
Investment ,
MDL
Share,
%
Feasibility Study
100,000 0.1% 100,000 0.3%
Projects, studies, funding applications
1,585,208 1.2% 1,585,208 4.0%
Infrastructure and common utilities outside IP
16,367,794 12.3% 16,367,794, 41.5%
Access to the road network from outside of IP
15,853,950 11.9% 15,853,950 40.2%
Public utilities outside the IP

electric power
40,000 0.0% 40,000 0.1%
gas
113,300 0.1% 113,300 0.3%
water
141,600 0.1% 141,600 0.4%
sewerage
218,944 0.2% 218,944 0.6%
Infrastructure and common utilities within the IP
6,820,638 5.1% 6,820,638 17.3%
Public utilities within the IP

electric power
838,500 0.6% 838,500 2.1%
gas
121,000 0.1% 121,000 0.3%
water
165,000 0.1% 165,000 0.4%
sewerage
400,000 0.3% 400,000 1.0%
rainwater sewerage
616,000 0.5% 616,000 1.6%
Interior development of IP
4,680,138 3.5% 2,007,138 11.9%
Administration building, equipment and furniture
3,231,704 2.4% 3,231,704 8.2%
BI production premises
11,324,250 8.5% 11,324,250 28.7%
Production premises constructed by Residents
93,829,500 70.4%
Total capital costs
133,259,094 100.0% 36,756,594 100.0%
The share of technical and common utilities infrastructure makes up 58.8% of capital costs. Administration
building with equipment and furniture makes up 8.2% of the costs, and capital costs for construction of
production premises make up 28.7% of total investment. Costs for development of studies, projects, etc.
makes up 4.3%. We estimate investments in production premises, warehouses, etc. up to 93.8 million MDL,
which are not included in the calculation models.


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5. Project feasibility analysis
5.1. Introduction
In order to determine the best way to implement the project of establishing the IP, it is necessary to carry
out a comparative assessment of two types of organization, provided that both cases have identical
specifications at output.
In the first case we consider that the Local Public Administration will implement this project through the
traditional mechanism of goods and services procurement. Wherever possible, we suppose that funding for
establishing of IP technical and production infrastructure will be achieved by allocating funds for this purpose
from the state budget and the budgets of administrative - territorial units (district and local). In addition, in
the first years LPA will incur IP management expenses, construction of administration buildings and their
equipping and furnishing. Local service providers will fund the construction outside the IP of water, gas,
sewerage pipes and electric power networks, within the IP the medium pressure gas pipeline, the processing
station and electric power supply network. Funding of IP access road outside the IP and funding of
construction of production premises for lease by BI Residents are supposed to be made from public foreign
sources. Through the Regional Development Agency we suppose to obtain from National Fund for Regional
Development (NFRD) funds for the construction of the aqueduct, sewerage, rainwater sewerage systems
within the IP and for the interior planning. Further we believe that IP administration will be carried out by the
Managing Company set up or selected through tender by LPA.
In the second case we suppose the funding of technical and production infrastructure with the co-
participation of the private investor. The LPA will involve a private partner with experience in the field
selected by tender, to which will delegate its functions and duties of managing IP. This project will be
implemented through public-private partnership contract. Private partner will fund (a) design works,
development of studies and grant applications, (b) construction of administration building and its equipping
and furnishing, (c) construction of water and sewerage systems, as well as rainfall sewerage system on IP
site, (d) will bear the cost of administration. The private partner being eligible for funding technical and
production infrastructure of IP on the expense of NFRD, will demand funding of interior development of the
IP. Costs for construction of gas and electric power networks inside and outside the IP will be made by local
suppliers. Like in the first case, funding of the construction of access road, water supply and sewage
networks outside the IP and construction of BI production premises is supposed to be realized from external
sources under the form of grants. We will analyse the feasibility of the project when production premises to
be leased and of the external access road will be constructed by the Private Partner. Upon completion of the
contract, public goods will be transferred in gratuitous use to public authority in good condition and free of
any charge or obligation, according to contractual terms.
Managers tasks are described in "IP Organization and Operation. The private partner recovers its
investment, its costs of management and maintenance of IP objects and obtains a reasonable income from
lease of land and production premises, from collection of administration fee, income from providing services
to the IP residents, payments and fees paid by participants in the tenders for obtaining of the right of
Residents and for registration as Residents, as well as from entrepreneurial activity that may be carried out
according to the IP law.
We will also study the financial feasibility of the project in case of establishing Hancesti IP based on principals
of public-private partnership, cost of technical and production infrastructure of the industrial park being
borne by the private investor, the public partner participating in the project of establishing the IP with the


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54
land plot that will be transferred to the Manager throughout the period of the Industrial Park (30 years)
activity.
We will develop new estimation models that will determine project cost borne by local governments for both
cases. Models comparison will allow local governments to evaluate public-private partnership in comparison
with the traditional implementation of the project (under own management) meets all criteria with the best
values. The three main criteria for evaluation relate to affordability, risk transfer and value of money. In
order to assess costs, in the first case we will use the Public Sector Comparator (hereafter referred to as the
PSC), and in the second case the reference model of Public-Private Partnership (hereinafter referred to as
PPP).
The aim of the financial analysis is to determine whether or to what extent a project is worthwhile from a
financial, public or social viewpoints. This can be expressed in several ways, the most meaningful and
accurate procedure is the use of performance indicators of investment projects, namely:
Internal rate of return (IRR);
Net present value of project (NPV);
Benefits/Costs Ratio (R
b/c
).
IRR is defined as interest rate bringing to zero the net present value of investment.
NPV calculates the net present value of investment or capital by using discount rate and a series of future
payments (positive values) and receipts (negative values).
Benefit / Costs Ratio is the ratio of the discounted flow of benefits and the discounted costs flow.
Both for the PSC model and for the PPP model, the results of financial analysis are interpreted taking into
account the following benchmark values:
IRR > r (5%)
NPV < 0
12
Project that worths to be funded
B/C Coefficient > 1
The results of the financial analysis are interpreted taking into account the best result, the lowest cost of the
project.
The key features of PSC and PPP models are as follows:
net present value (NPV) of the project cost calculated based on cash flow and applicable discount
rate applicable;
cash flow is determined as the difference between the amount of all project costs and projects
Income;
cost estimate based on most recent similar procurements in the field or based on best estimates;
identification of all possible Income related to the project;
depreciation and amortization is not included in calculations.

12
In case of PSC model and PPP model, condition of NPV <0 is determined by the fact that project cost in these models
= Costs - Revenues, so a negative net present value indicates that the present project costs are lower than updated
income related thereto.


55
55
|
.
|
\
|
=
100
1
u
i
G
V VR
For goods with a duration longer than the duration of the project, by the end of the projected duration a
residual value is taken into account to reflect their potential sales value or value for further use.
The residual value is calculated by the formula:
where,
VR = residual value; Vi = inventory value of asset;
Gu = wear rate of the asset estimated over the proposed time frame.
5.2. General work assumptions
Determination of costs of the IP project was performed according to the following basic assumptions:
1. Inflation rates for future periods can be estimated based on developments of previous periods or can
be used from official forecast sources. Then two approaches to inflation can be used. The first is
separate application of inflation to all types of costs and income. The second approach consists in
forecasting costs and income in constant prices. The assumption is that whatever the future rate of
inflation is, the influence will be proportional to both costs and income. For the construction of models
we will apply the second variant of pricing and establishing fees.
2. Discount rate. The standard discount rate taken into account in financial analysis is r = 5% (as
recommended by the European Commission).
3. Project currency. All estimates are calculated in constant MDL (project exchange rate of 1 EURO =
16.1775 MDL, 1 USD = 11.7997 MDL).
4. Estimated life of the project is equal to the period of granting the title of Industrial Park (30 years).
5. Because the duration of operation of computers is higher than the term of the project, we planned to
replace this group of assets before the end of the project.
6. Assumption of the worst case. We supposed that lease of land and production premises by Residents
at 100% will be reached in 2018, from the seventh project year. All costs were calculated at the
maximum and minimum income level.
5.3. Basic model of the Public Sector Comparator
The basic PSC model represents the full cost of the project for establishing Hancesti IP, used for the
implementation of the project with traditional public procurement methods. The basic model includes capital
costs, costs of labor force training, operating costs and project Income.
5.3.1. Cost estimation
Within the PSC model we will estimate capital costs, replacement costs, costs of labor force training and
operational costs of IP organized by LPA through the selected Manager.
Assumption of cost estimates. For PSC model building we supposed the following assumptions on
determination of costs for establishment and management of IP:


56
56
1. All necessary facilities will be built, purchased through procedures of purchasing goods and services by
the public sector. Constructed or acquired facilities are estimated based on the latest costs or based on
recent offers of construction companies.
2. During project implementation, we foresaw computers and equipment replacement of the
administration building. We plan to replace equipment it each 10 years.
3. Operational costs include maintenance costs of IP objects and administration fees.
Costs of Hancesti IP project costs of:
a) Capital costs,
b) Costs necessary for training labor force,
c) Working capital and
d) Replacement costs.
A. Capital cost of the project make up 36,757 mln MDL (see Table 17). Investments in common domestic and
foreign infrastructure of IP will be made by municipal suppliers, Residents and Manager from the sources of
LPA and/or state budget, NFRD, foreign grants as follows:
Table 17.Sources of financing capital costs of the IP established through traditional public procurement mechanisms
Categories of costs, funding sources
Amount of
investments,
MDL
LPA budget, state budget 3,231,704
Administration building and equipping 2,887,684
Computers, printers, etc. 214,600
Indoor furniture 77,652
Boiler room 51,768
Local providers 1,473,344
Infrastructure and common utilities outside the IP (electric power, water, gas,
sewer) 513,844
Infrastructure and common utilities within the IP within the IP (electric power, gas,
sewer) 959,500
External Grants 27,278,200
Feasibility Study 100,000
Infrastructure and common utilities outside the IP (road) 15,853,950
BI production premises 11,324,250
NRDF 4,773,346
Project, studies, IP funding applications 1,585,208
Common utilities within IP (water, sewerage, rainfall sewerage) 1,181,000
Interior development 2,007,138
Total 36,756,594


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57
Municipal suppliers will be responsible for:
Construction of average gas pressure network outside and inside the Park will be made by Joint
venture "Rotalin Gas Traiding LLC by the suppliers resources.
Electric power provider Joint Stock Company Enterprise with Foreign Capital RED Union Fenosa
builds the external transmission line, substation and internal supply network.
Water - Canal Hancesti" builds only external water and sewerage system.
Telephone networks will be built by Moldtelecom or another provider.
As of infrastructure and utilities, Residents shall be responsible for the follow:
Connection of IP to the electric power network will be made by the Resident based on a technical
project approved upon transfer of the parcel, the maximum distance from the street front of the
parcel being of 20 m. Installations on parcels will be connected underground to distribution networks.
The installed capacity (kW) will be determined depending on demand and area of the parcel. For larger
installed capacities Residents own investments are necessary. The control of consumption measuring
will be installed by the supplier only after payment of connection.
IP Residents connection to the natural gas network will be made based on technical projects approved
upon transfer of the parcel, the maximum distance from the street front of the parcel being of 20 m.
Installation of the connection point to pressure and meter, connections shall be performed by
Residents.
The connection of all buildings to centralized water supply network and sewage system (household,
technological) is compulsory. Connection to central water and sewerage system will be made by the
Resident on the basis of a technical project approved upon the transfer of the parcel, maximum
distance from the front street of the parcel makes up 20 m. Residents whose plots are located in the
western part of the IP will be connected to the sewerage system in the western part of the parcel. For
sewage disposal from the parcel, the Resident is required to obtain the Environment Agreement.
Connection shall be done by Residents.
Supply of industrial water will be ensured through drilling and capture from phreatic layer (within own
plot), based on approvals and agreements foreseen by law. If, because of the nature of conducted
activity, a greater amount of fire water is necessary than that provided by existing network, an
additional reservoir will be built on site by Resident.
Where wastewater discharge exceeds receipt indicators at the treatment plant, Residents are required
to equip the site with pre-treatment facilities.
Collection and disposal in the rainfall sewerage system results from all impervious surfaces (rooftops,
circulations, platforms). To capture and evacuate rainwater, Residents will have a separate technical
project, which will indicate the measures taken during works of parcel development. It is forbidden to
dispose rainwater in the basement of the parcel, as well as sewage leak on own adjacent land plots.
Connection of Residents to urban telephone networks shall be made at the expense of Residents and
shall be performed underground.
In order to organize selective solid waste collection, each Resident shall conclude a service agreement
with the local supplier.
Constructions made by residents will not be commissioned until they are not connected to utilities
networks: water supply, household and rainfall sewerage, electric power supply, gas supply and
telephony.


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58
The remaining utilities will be realized of public funds coming from the state budget, local budget, the
National Regional Development Fund or grants of donors.
B. The costs for training labor force were estimated at 1,845,000 MDL.
C. Working capital makes up 1,737,000 MDL. Working capital is designed for covering of cash shortfalls
during first years of activity.
Table 18. Distribution of costs for Hancesti IP project, thousand MDL
Costs 2011 2012 2013 2014 2015 2016 2017 Total
Capital costs 1,051 28,597 3,711 3,397 36,757
Cost of labor force
training
498 555 369 387 36 1,845
Working capital 57 878 802 1,737
Total project costs 1,108 29,476 5,010 3,952 369 387 36 40,338
D. Costs of replacement make up 214,600 MDL and represent the cost of computers, equipment of
administration building. It is supposed that they shall be updated every 10 years.
Maintenance costs are borne by the Manager and include facilities listed below in Table 19. The calculation
basis for these costs is capital costs.
Table 19. Maintenance cost assumptions
Facilities Description of assumptions Share
Administration building
Maintenance costs are determined
compared to capital costs
0.8%
Production premises of Business
Incubator
0.4%
Parking plots
0.4%
Green spaces, signs development
4%
Lighting Network
2%
Fence
0.5%
1%
Administration costs consist of staff remuneration, utility services, procurement services, office supplies,
travel expenses, equipment of SVSTO, local taxes, Property Tax and other expenses.

Table 20. Assumptions of management costs
Indicators Description of assumptions
Remuneration of Manager
staff
The list of staff is presented in Annex 4.
Health and social
contributions
26.5% of calculated remuneration


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59
Indicators Description of assumptions
Utility services
Gas Tariff of 4,903 MDL/1000 m
3
,

estimated consumption of heating boiler
20,000 m
3
/year.
Electricity Tariff of 1.33 MDL/kW. Estimated consumption of administration office
15,000 kW, 81,760 kW street lighting, other 4800 kW. Consumption
of street lighting = number of pillars x 365 days x 10 hours x 0.04 kW
Water and sewerage Water tariff of 37 MDL/m
3
, sewerage tariff of 18 MDL/m
3
, consumption
estimated at 800 m
3
. Water consumption for cantina is paid by the
tenant.
Solid Waste Disposal Tariff of 83 MDL/m
3
, 80 m
3
/year of disposal
Procurement of services
Fixed, mobile telephony,
internet
Monthly consumption of 2,500 MDL
Banking Tariff of 1% for cash collection plus 2000 MDL order of payment
Transport 25,000 MDL/year
Insurance 1.0% of the remaining value (minus depreciation)
Advertising 80,000 MDL/year
Security Expenses Tariff of 1.5 MDL /month per 1 square meter
Office Supplies 10000 MDL/year
Travel Expenses 40000 MDL/year
Equipment of SVSTO 10,000 MDL/ year
Local Taxes 20 MDL per employee per quarter
Property Tax 0.1% of the residual value of buildings
Other Contingency 5% of total expenses
Annual costs of maintenance of IP objectives used by the Manager were estimated at 85.5 thousand MDL.
The total cost of management and maintenance of IP in 2014 makes up 1699 thousand MDL. The most
significant share of this category is presented by staff remuneration. The structure of Managers staff, as well
as remuneration costs is presented in Annex 4.
Table 21. Maintenance and administration costs, MDL
Articles 2011 2012 2013 2014 2015 2035 2041
Maintenance costs 76,959 85,520 85,520 85,520 85,520
Labor remuneration with
contributions
41,952 804,257 804,257 804,257 804,257 804,257 804,257
Lease of office spaces
Services (gas, electric power, water
supply, sewerage, waste disposal)
3,320 283,695 283,695 283,695 283,695 283,695
Services (communications,
banking, transport, insurance,
advertising)
2,108 8,558 303,167 300,160 297,214 249,360 238,427
Office Supplies 10,000 10,000 10,000 10,000 10,000
Travel Expenses 10,000 20,000 40,000 40,000 40,000 40,000 40,000
SVSTO equipping 5,000 10,000 10,000 10,000 10,000
Local Taxes 60 240 800 800 800 800 800
Property Tax 2,888 2,830 2,773 1,851 1,640


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60
Articles 2011 2012 2013 2014 2015 2035 2041
Fee
13
of leased BI production
premises
85,050 269,325 666,225 609,525
Other expenses 2,706 41,819 76,338 76,863 76,713 74,274 73,717
Total maintenance and
administration costs
56,826 878,194 1,603,104 1,699,175 1,880,297 2,225,982 2,157,581
Maintenance and administration costs are presented in details in Annex 5.
5.3.2. Income estimation
Project income coincides with the income of the Manager. They consist of income from leasing of land and
production premises, income from provision of administration services and income from consulting services.
As fees applied in case of BI Residents are lower, the differences between related expenses will be covered
by identified incubation programs or LPA.
Table 22.Assumptions on income from lease and services
Category of income Description of assumptions
1. Lease of land by
Residents
The area of land leased by Residents makes up 4.86 ha, the average area per
Resident makes up 4,860 sq. m. Applied free - 0.19 MDL / sq.m. / year. Land
productivity has 65 degrees; lease price of one degree of ha makes up
19,873.34 MDL; applied zone coefficient - 0.5%, discount rate of established
fees - 0.3%.
The occupancy rate of production subzone of Residents was estimated in the
first year at 30%, in the second year at 30%, third year 20%, etc. We suppose
that the maximum capacity will be met from the four year.
Production subzone of Residents 1 year 2 year 3 year 4 year
Occupancy rate 30.0% 60.0% 80.0% 100.0%
Number of Residents 3 3 2 2
Total number of Residents 3 6 8 10
2. Lease of
administration and
commercial premises
The area of premises to be leased makes up 252 sq.m., fee - 680 MDL / sq.m.
per year.
3. Lease of BI
production premises
Share of land occupied by BI - 10%, are of BI production premises - 0.54 ha.
Pre-incubation fee - 216.00 MDL (60% of the annual lease fee for production
premises), incubation fee - 270.00 MDL (75%), postincubation fee - 324.00 MDL
(90%). The occupancy rate of the land designed for BI was estimated in the first
year at 30%, 20% second year, 30% third year, etc. We suppose that from the
four year the BI subzone will be occupied to its maximum capacity.

13
Fee is a payment made periodically at fixed dates in the form of quota for the right to use another's
property for production purposes.
The fee will be paid in to Hancesti Town Hall in the amount of 70% of revenues obtained from lease of
production premises of BI, if BI will be built from public funds.


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61
Category of income Description of assumptions
BI subzone 1 year 2 year 3 year 4 year
Occupancy rate 30% 50% 80% 100%
Number of Residents 3 2 3 2
Total number of Residents 3 5 8 10
4. Unique payments
and fees paid for
participation in
tenders for obtaining
the right of Industrial
Park Resident and for
registration as
Resident
Fees for participation in the tender - 400 MDL / participant; registration of
Resident right - 20 MDL / sq.m., registration of BI Resident right - 10 MDL /
sq.m. (of land area)

5. Fee for annual
administration
40.00 MDL / sq.m. annually for IP Residents and 20.00 MDL / sq.m. annually for
BI Residents
Income from provision of consulting services. Consulting services are rendered by employees of the BI and
IP Development Service and Audit and Accounting Service. Services will provide the following categories of
services of IP Residents, including small and medium enterprises of BI:
- Services of Business Planning and Development;
- Project Development Services;
- Marketing and Recruitment Services;
- Services of Management and Knowledge Transfer;
- Audit and Accounting Services.
The BI enterprises will be offered assistance in developing business ideas, business plans, marketing plans,
feasibility studies, identification of funding sources and methods, assistance in equipment purchase,
assistance in launching production business, assistance in refining and implementation plans, building of
team, bookkeeping.
Residents will be offered by leafing protocol and conference hall.

Table 23. Prices for consulting services and lease of conference and protocol halls
Type of consulting services
Average fee,
euro/unit
Average fee,
MDL/unit
Estimated demand of
2014 (frequency)
Services of Business Planning and
Development
600 9.707 5
Project Development Services 1200 19.413 3
Marketing and Recruitment Services 900 14.560 3
Services of Management and Knowledge
Transfer
600 9.707 4
Audit and Accounting Services. 400 6.471 8


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62
Lease of protocol and conference halls
84 MDL/year
(6h)
120
Maximum income from consulting services and lease of rooms under conditions of occupation described
above are estimated at 350,700 MDL.
Table 24. Estimated income, MDL
Income categories 2013 2014 2015 2035 2041
Lease of land by Residents 2,770 5,540 7,387 9,234 9,234
Lease of production premises by Residents
with adjacent land

Lease of administration and commercial
premises
102,816 137,088 171,360 171,360
Lease of BI production premises 113,708 359,613 889,326 813,726
Payments and fees paid for participation
in tenders and for registration as Resident
294,000 312,600 208,400 12,400 18,600
Administration fee 583,200 1,198,800 1,609,200 2,052,000 2,052,000
Consulting services 147,402 217,961 283,573 350,710 350,710
Recovery of payments for investment in
road access
14

85,050 269,325 666,225 609,525
Income from recovery of losses from
exemptions from administration fees paid
by BI Residents
15

32,400 54,000 108,000 108,000
Income from recovery of losses from
exemptions from BI services
16

33,164 46,106 87,359 87,359
Total income 1,027,372 2,102,039 2,974,692 4,346,613 4,220,513
5.3.3. Results of the basis PSC model
Costs of basic PSC model is calculated according to the formula:
PSC basis = Costs Income
Table 25. Project costs and Income according to the basic PSC model, thousand MDL
Categories of cost and Income 2011 2012 2013 2014 2015 2035 2041
Capital costs
1,051 28,597 3,711 3,397

14
It will be performed within possible limits, in this case by transferring by of the Town Hall of fees received from BI
operation (created from external sources)
15
Administration fees are supposed for BI Residents at of payments made by IP Residents, fees for lease of BI
production premises are offered at discounted price. Price differences will be covered from the account of identified
Incubation Programs.

16
Consulting and administration services offered to BI Residents at discounted prices. The price difference will be
covered from the account of identified Incubation Programs. The Manager will record services provided to BI Residents.


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Labor force training
498 555 369
Working capital
57 878 802
Maintenance and administration
costs
57 878 1,614 1,710 1,891 2,233 2,164
Income
1,027 2,102 2,975 4,347 4,221
Cost - income 1,165 30,354 5,099 3,006 -1,084 -2,113 -2,057
In order to determine the NPV of the project of IP establishment, we calculated the residual value for goods
with a lifetime longer than the duration of the project. We established a useful lifetime of the administration
building for 50 years and 40 years for BI production premises. Thus the estimated residual value of objects at
the end of 2,041 will make up 3,477,677 MDL.
The present value of the project cost
17
has a positive value,
NPV (PSC model) = 10,910,013,
Which is negatively appreciated, showing a present value of investment in the amount of 10.9 mln MDL.
Analysis of cumulative cash flow on forecast period until 2041 shows that financial sustainability of the
project under condition when it is organized based on the method of LPA public procurement is not checked,
so investments will be recovered within the considered time. However, the project records a rate of return of
IRR = 2.4% and a benefit-cost ratio of R
b/c
= 0.85, showing that the financial benefits of the project within its
duration are 15% lower compared with the costs and expenses of the project.
The net present value of the PSC model presents the cost of the project under condition when it is organized
on the basis of LPA public procurement, without estimating the risk.
5.3.4. Risk-adjusted PSC model
The risk-adjusted model of Public Sector Comparator consists of the basic PSC model, plus the cost
assessment model for all risks associated with the project of establishment of the Industrial Park. It is
necessary to make these calculations to determine which is the total cost when the Local Public
Administration organizes traditional establishment of IP - through public procurement mechanisms. Further
we will assess the risks associated with the project.
Risk assessment. The risk is an uncertain event, but it may occur within the process of concrete activity,
which effects are damaging and irreversible (additional costs, reduction of Income and / or profits).
The task is to identify all risks and models of their management to reduce their impact. This process is
continuous throughout the project implementation and continuous throughout its course.
Within risk assessment process we made the following steps:
(i) Identification of project-related risks;

17
PSC (Public Sector Comparator ) = Costs Income


64
64
(ii) Determination of consequences of material risks (if possible to be materialized);
(iii) Establishment of the way to reduce risk probability and its impact and
(iv) Allocation of risk responsibility to other entities or to third party.
In order to ensure an effective management for each identified high risk, a mitigation plan will be developed.
There are five major responses to risk: acceptance, monitoring, avoidance, transfer and reduction.
Detailed description of risk is presented in the risk matrix in Annex 6. Each risk was characterized in terms if
impact and probability. Risk impact may be very low, low, medium, high and extra high
18
. The probability is
the following: extremely low, very low, low, medium, high and extra high
19
.
For a more accurate ranking of risks the following matrix can be used:
Impact
P
r
o
b
a
b
i
l
i
t
y

extremely
low
low medium high
extremely
high
very low 1-4 3-8 5-12 7-16 9-20
low 3-8 9-16 15-24 21-32 27-40
medium 5-12 15-24 25-36 35-48 45-60
high 7-16 21-32 35-48 49-64 63-80
very high 9-20 27-40 45-60 63-80 81-100
Risk category I II III IV

The matrix can be used for determining management strategy as follows:
- Risks of the first category (probability and impact are very or extremely small / both are small or
medium at most one) can be covered relatively easily. Techniques of risk retention are
recommended for this type;
- For the second category risks mitigation techniques, insurance and transfer are recommended,
because their establishment would have a very strong impact on the project;
- For the third category risks (very high probability, medium or high impact / extremely high impact,
medium or high probability), risk control techniques shall be applied in order to reduce the
frequency of occurrence. Control techniques will be combined with the techniques of transfer /
retention;

18
With 1 is marked the lowest and with 10 the maximum likelihood. We qualify the impact depending on notification as
follows: very low (1-2), low (3-4), medium (5-6), high (7-8) and very high (9-10)

19
With 1 is marked the lowest and with 10 the maximum impact. We qualify the impact depending on notification as
follows: very low (1-2), low (3-4), medium (5-6), high (7-8) and very high (9-10)


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65
- Risks of the latter category (with high and very high probability and external impact and very high
probability with high and extremely high impact) should be avoided and removal.
Risk assumptions were determined based on the expertise of the project team.
Table 26. Risks and assumptions
Category of risk Risk
Assumptions
Impact
Risk
Consequences,
%
Probability of
occurrence
Location Location risk Low 7.5% 7.5%
Designing and
construction
Designing risk Low 7.5% 7.5%
Risk of increased investment
costs
Low 7.5% 7.5%
Financial

Insolvency risk High 15.0% 2.5%
Risk of unavailable external co-
financing
High 15.0% 7.5%
Operational and
maintenance
Operational input risk Medium 12.5% 12.5%
Maintenance risks Medium 12.5% 12.5%
Market or demand Commercial risks High 15.0% 12.5%
Legal and regulatory Risk of changes in the legal
and regulatory framework
Medium 12.5% 12.5%
Major force Major force risks High 15.0% 2.5%
Calculation basis for determining risk values are initial values of PSC: design costs, construction costs,
operating and maintenance costs, administration costs, anticipated Income.
Value of risk. Value consequence (in cash) of the risk is the product of percentage consequence and basic
value (initial PSC) of the risk. Risk value is calculated as the product of the scenarios consequences and
probability of their occurence. Approach to project risk assessment was determined based on the frequency
(likelihood of occurrence of event) and the impact it can have on the project of concerned phenomenon
(severeness of consequences). In such case, risk assessment is subjective and relies on the expertise of the
project team. Project risk assessment is presented in Annex 7.
Foe the PSC model we calculated the net present value of the risk showed in Annex 8.
Summary of results of the risk-adjusted PSC model. Risk adjusted Public Sector Comparator is determined
according to the following formula:
Risk-adjusted PSC = basic PSC model + risk value
The present value of cost of the risk-adjusted project has a positive value, NPV (PSC model) = 13,203,290,
IRR = 1.8%, R
b/c
= 0.85. Values of project's financial performance indicators show that this is not a sustainable
project.


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66
Table 27.Project performance indicator realized according to the PSC model
Indicators NPV IRR R
b/c

Basic PSC model 10,910,013 2.4 0.85
Updated risks
2,296,227

Risk-adjusted PSC model 13,203,290 1.8 0.85
In order to compare these values with the case when LPA would establish a public-private partnership, we
will build a reference model of Public - Private Partnership (PPP).
5.4. Reference model of Public - Private Partnership
The project of Hancesti Industrial Park can be implemented both by the public administration (or LPA with
central authorities), and through a public private partnership. In the second case, LPA will initiate a public-
private partnership with a partner experienced in the project implementation area. The local administration
demands from a private partner a co-funding in order to build some IP facilities. Within the project LAP will
provide land for location of the Park, will facilitate the process of obtaining all authorizations, construction
approvals, will require financial support for creation of infrastructure and common utilities from external
sources. We will also study the financial feasibility of the project in case of establishing Hancesti IP upon
public-private partnership principles, cost of production and technical infrastructure of the industrial park
being covered by the private investor, the public partner will participate in the project of IP establishment
that will be transferred to the Managing Company for the term of Industrial Park activity (30 years).
5.4.1. Option of project implementation through PPP
The IP land is divided into three zones: administrative zone, zone of parcels to be leased by Residents and
zone occupied by infrastructure (roads, engineering networks, etc.).

Table 28. Structure of land of Hancesti Industrial Park
Purpose Area, ha Share, %
Area occupied by
buildings and
structures, ha
Land
share, %
Administrative zone 0.25 4% 0.07 28%
Zone of Residents 5.4 90% 3.25 60%
Land occupied by infrastructure 0.35 6% 0.35 100%
Total 6 100% 3.67 61%
The administrative zone will have administration building with annex for location of thermal station, parking,
green spaces, platform for selective waste collection in the zone, panel with Park scheme, indicators.


67
67
The administration building
20
has:
a conference and a protocol hall;
premises for public catering;
5 rooms for offices and 2 furnished spaces for lease services with a total area of about 122 sq.m.;
premises for banking services, primary health care;
premises intended for Manager assuring provision of its support services necessary for IP activity.
Purposes of administration building premises are presented in details in Annex 9.
List of services offered within the IP:
Category A:
1. Services included in IP administration fee:
Reception, info-Point;
Support for quick information of local public authorities on Residents wishes;
Inclusion of tenants within the IP promotion and PR program;
Consulting and information on issues related to IP activity in relationship with exterior;
Facilitation of relationship with Chambers of Industry and Trade;
Facilitation of organization of clearance procedure at home;
Maintenance of common green spaces and cleaning of public space;
Parking plot with 20 parking seat;
Access to utilities network of the Park: water, sewerage, gas, electric power, telephony networks;
Recording of water, gas , electric power consumption and their billing.
2. Services and facilities ensured by the Manager directly charged:
Event organization;
Lease of conference and protocol halls;
Lease of offices and of spaces for provision of support services;
Consulting services rendered by the Development Service of BI and IP and Audit and Accounting
Service;
Special investments
21
:
Services of support for technological transfer, staff recruiting;

20
Will be considered in case of options 1 and 2
21
Services will be classified on specific needs of Residents


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Consulting in local procurement;
Establishment of health care point, occupational medicine.
Category B:
Services expected to be provided by providing companies
22
:
Services of connection and operation of infrastructure utilities (water and sewerage, gas, electric
power, telephony, sanitation);
Design and construction services;
Specialized consulting: intermediation, marketing promotion, training;
Courier, mail, health care;
Banking services;
Services of public catering;
Other services significantly requested by Residents.
Technical infrastructure and common utilities of IP will have the following possibilities:
electric power supply at a capacity of 2,000 kVA;
natural gas supply at a capacity of 100 m
3
/h;
drinking water supply at a capacity of 31 m
3
/h;
discharge of wastewater into the sewerage system 29 m
3
/h.
Detailed description of the technical infrastructure, common utilities, land development inside and outside IP
are presented in Chapter 3.
Zone of Residents consists of: (i) subzone of production premises leased by BI Residents and (ii) subzone of
leased land parcels on which IP Resident builds on its own account necessary facilities.
Depending on the configuration of the zone and its associated infrastructure funding, we will further analyze
three options:
Option 1.Subzone of leased BI production premises occupies 10% of Residents land area. Construction of BI
production premises is supposed to be done from external grants, and access road to Hancesti IP is funded
by the private partner. The subzone of land parcels for IP Residents makes up 90%. Since this road will be a
public one and its construction is foreseen in the Urban General Plan of Hancesti, the local public
administration will have to recover the private partner investments in the road. As source of such annual
payments made to the private partner, could be the fee in the amount of 75% of income of the private
partner obtained from lease of BI production premises that the latter will pay to Hancesti LPA.

22
Services will be available depending on existing request of Residents


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69
Table 29. Structure of Industrial Park, option 1
Indicators
Subzone of
leased BI
production
premises
Subzone of land
parcels leased by
IP Residents
Total
Plot of the zone of Residents 10% 90% 100%
Land plot area, ha 0.54 4.86 5.40
Land plot designed for construction,
sq.m.
3500 29000 32500
Minimum area per Resident, ha 0.05 0.49
Minimum area for construction per
Resident, sq.m.
350 2900
Maximum number of Residents 10 10 20
Number of employees 90 730 820
Option 2. The zone of Residents has the same configuration as that of option 1, but in this case BI halls are
funded by the private partner and the access road is built at the expense of attracted foreign grants. On the
basis of the incubation program identified at the stage of BI set up, the private partner will be recovered
losses due to exemptions provided to BI Residents (lease fee for production premises and consulting services,
lower administration fees (see Table 22).
Option 3. The zone of Residents consists only of land parcels that will be leased to IP Residents (see Table
30).
Table 30. Structure of Industrial Park, option 3
Indicators
Subzone of land parcels leased
by IP Residents
Plot of the zone of Residents 100%
Land plot area, ha 5.40
Land plot designed for construction,
sq.m. 3,2500
Minimum area per Resident, ha 0.54
Minimum area for construction per
Resident, sq.m. 3,250
Maximum number of companies-
residents 10
Number of employees 810
In all three options the lease of land plots of an area greater than the established by Residents minimum is
allowed, by leasing more adjacent parcels.
5.4.2. Type and structure of PPP project
The solution of implementing a public-private partnership project on establishment of Hancesti IP consists in
authorization by the Town Council of a private partner, selected through tender according to the Law on
public-private partnership No. 179-XVI from February 10, 2008 for coordination and monitoring of designing
and construction of infrastructure, common utilities, BI production premises, designing and construction of


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administration office and of production premises at the request of Residents for administration and
maintenance of IP assets, including those transferred in use. According to the Law on industrial parks in case
of funding the establishment of technical and production infrastructure with the co-participation of the
private investor, functions and duties of Park administration shall be fulfilled by the private investor or by
commercial association set up. We support fulfilment of administration functions by the private investor.
The public-private partnership can be achieved by way of designing - construction - operation - transfer by
which the private partner, within its responsibility, designs, builds technical and production infrastructure
and operates it in accordance with contractual provisions, while at the end of the contractual term, the
private partner according to the contract will transfer to the public partner the assets specified in the
contract. Besides the assets that can be transmitted to LPA upon the termination of contract, common
utilities, BI production premises or other assets stipulated in the contract can be transferred as well.
It is also necessary to note that another form of designing - construction - transfer operation or a
combination thereof is possible. These assets are transferred in ownership of public partner under the form
of two facilities stipulated in the contract immediately after commissioning, and the public partner, in its
turn, partially transfers the private partner (Managing Company) this infrastructure
23
to be managed within
the IP.
The legal form of collaboration between public and private sector is the public-private partnership contract.
The term of PPP contract will be equal to the period of activity given to the Industrial Park for 30 years.
The public partner is responsible for (a) allocation of land, (b) obtaining all authorizations, approvals,
coordination and other permissive documents required by the law on IP, (c) gratuitous transfer of assets in
public ownership to the Manager for establishment and development of IP, (d) allocation, as appropriate, of
financial resources for creation of the technical and production infrastructure, (e) support of projects to
donors with the purpose to create technical and production infrastructure, creation of BI objects by the
Manager.
The private partner within this project undertake to coordinate processes of designing, construction,
commissioning, monitoring of transfer of finished objects to the public partner, receives objects in use,
constructs facilities on its own account, manages and maintains the IP activity.
5.4.3. Payment mechanisms
The private partner recovers its investment and covers its maintenance and administration costs, and obtains
a reasonable profit from the administration and provision of service within the IP.

23
After commissioning of the infrastructure, common utilities, BI halls, some assets, if required, will be transferred to
appropriate enterprises managing services (Rotalin Gaz Trading JSC, "Apa-Canal Hincesti" JSC, "RED Union Fenosa
JSC). Common utilities will be transferred prior the connection of Residents and the Manager, with the exception of the
sewerage system, which will be transferred from the line of demarcation of Residents and Manager plots with the
pumping station.


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71
In the case of option 1 and 2, IP Manager provides lower fees for BI Residents BI for provided IP services
(consulting services, administration fee), it will be recovered its losses incurred after provision of these
facilities to BI Residents on the account of Incubation Program previously identified or of Hancesti LPA.
However, in the case of option 1 when the Manger builds the access road at the Park (980m) and receives
under its management the BI constructed of external grants, the local public administration will have to
return to the private partner road-related investments. As source of such annual payments made to the
private partner, fee in the amount of 75% of Income of the private partner related to the lease of BI
production premises that the latter will pay to Hancesti LPA.
The main sources of income of the Manager are shown in Table 31.
Table 31. Sources of income for the IP Manager
Categories of income Option 1 Option 2 Option 3
Income from land lease + + +
Income from lease of BI production premises + + -
Income from lease of administration and commercial
buildings
+ + -
Unique payments and fees paid for participation in tenders
for obtaining the right of the Industrial Park Resident and
registration as Resident
+ + +
Income from provision of consulting services to IP and BI
Residents
+ + +
Income from collection of administration fees + + +
Income from recovery of losses by exemption from
consulting services provided to BI Residents
+ + -
Income from recovery of losses by exemption from fees for
lease of production premises provided to BI Residents
- + -
Income from recovery of losses by exemptions from
administration fees paid provided to BI Residents
+ + -
Recovery of payments for investments in access roads + - -
Income of entrepreneurial activity
24
+ + +
5.4.4. Cost estimate
Cost categories in the PPP reference model are the same as in the basic PSC model and namely capital costs,
costs of labor force training, working capital, replacement costs, and maintenance and administration costs.
Exceptions referred only to the costs of works on levelling areas, on which Residents will carry out their
activity, they will be borne by each Resident individually and are not included in calculations of the PPP

24
Income that can be obtained from carrying out the entrepreneurial activity will not be taken into account in the
calculation model.


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reference model. The real difference in costs is expected to come from potential private partners in the
proposed bids.
Assumptions of cost estimates are the same as of the basic PSC model except for management of this project
by a private partner, selected through tender and a PPP contract.
Capital costs. According to the options defined above, capital costs of the PPP project make up 36,757,000
MDL in case of options 1 and 2, respectively 21,772 mln MDL in case of option 3.
Table 32. Capital costs of the project for the 3 options, MDL thousands
Capital cost categories Option 1 Option 2 Option 3
Feasibility Study 100 100 100
Projects, studies, funding applications 1,585 1,585 1,395
Technical Infrastructure and utilities common outside the IP
Access to the road network outside the IP 15,854 15,854 15,854
Common utilities outside the IP 514 514 514
Technical infrastructure and common utilities within the IP
Common utilities within the IP 2,141 2,141 2,141
Interior development of the IP 2,007 2,007 1,710
Administration building, equipment and furniture 3,232 3,232 59
Production premises of the BI 11,324 11,324 0
Total capital costs 36,757 36,757 21,772
Funding of project for the establishment of Hancesti IP is shared by the private partner, local utility
providers, public partners, as well as external grants. If the LPA fails to attract planned external resources,
the Public Administration will have to cover them on its own expense. Their contribution is shown in Table
33.
Table 33. Sources of funding IP project for the 3 options, thousands MDL
Co participation of the private partner 22,182 17,652 2,964
Projects, studies, funding applications 1,585 1,585 1,395
Land preparation 330 330 330
Common utilities outside the IP (access road) 15,854
Common utilities within the IP (water, sewerage,
rainwater sewerage system)
1,181 1,181 1,181
Administration building, equipment and furniture 3,232 3,232 59
Production premises of the BI 11,324
Subzone of production premises of the Manager
Local Providers 1,113 1,113 1,113
Common utilities outside the IP (electricity, gas) 153 153 153
Common utilities within the IP (gas, electricity) 960 960 960


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External Grants 12,082 16,611 16,314
Feasibility Study 100 100 100
Common utilities outside the IP (access road, water,
sewerage)
361 16,214 16,214
Preparation of BI land 297 297
Production premises of the BI 11,324
FNDR 1,380 1,380 1,380
Public utilities within the IP
Interior development without land preparation 1,380 1,380 1,380
Total capital costs 36,757 36,757 21,772
Detailed diagrams of funding for each option are presented in Annexes 10, 11 and 12.
Replacement costs make up 58,600 MDL and represent the cost of computers, equipment of the
administration building. We suppose to replace them each 10 years.
The working capital makes up 1,736,570 MDL.
Costs of labor force training were estimated at 1,845,000 MDL.
Table 34. Investment costs of the project of Hancesti IP implemented through PPP contract, thousands MDL
Capital costs 36,757 36,757 21,772
Costs of labor force training 1,845 1,845 1,824
Working capital 1,737 1,737 721
Total costs 40,338 40,338 24,317
Maintenance and administration costs in case of option 1 of PPP model are identical to the maintenance
and administration costs of the PSC model.
The lowest costs are recorded for option 3, due to the lack of buildings and production premises, small
number of staff. In the case of this option, it is supposed to lease spaces for Managers staff.
Costs of option 1 and 2 when the Manager manages the commissioned BI and built on their own sources are
distinguished by paid fees.
Small differences between options are recorded due to changes in the calculation base of Property Tax.
5.4.5. Income estimation
Supposed income from land, production premises leased by BI Residents and income from services in PPP
model are the same as for the PSC model. Changes occur only on calculation basis. In the case of PPP
contract, Managers income in the case of option 1 coincides with the income from the basic PSC model.
They consist of income from land and production premises lease, income from administration and consulting
services. As we already mentioned, the income realized within the PPP contract is that one from recovery of


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74
losses from services provided by BI Residents services at discounted fees. This income will be paid from
sources of some clearly defined incubation programs or by Hancesti LPA.
Income from the project implemented through PPP partnership for options 2 and 3 are different from
income of option 1 by the following:
- Income from land lease for option 3 increases compared with options 1 and 2 due to extension of the
subzone of land parcels area from 90% to 100%;
- Income from lease of BI production premises and administration and commercial premises is omitted
from option 3;
- In the case of option 3 income from payments and fees paid for participation in tenders for obtaining
the right of Resident and for registration as Resident are reduced;
- In the case of options 1 and 2 income from administration fees are reduced compared to option 3,
these reductions are due to reductions for BI Residents;
- Income from consulting services in case of option 3 is omitted, they are the same in the case of
option 1 and 2;
- Income from recovery of losses from services provided by BI Residents in case of option 2 is larger. In
the case of option 3 they lack;
- Income from recovery of payments for investment in access road relates only to option 1.
Estimation of income in the case of options 2 and 3 are presented in Annexes 14 and 15.
5.4.6. Results of the PPP reference model
Calculation of project cost based on PPP reference model is made according to the formula:
PPP reference model = Costs Income
Net present value of the reference model gives us the cost of the project in the option when it is organized
by a public-private partnership contract.
Table 35. Performance indicators of the PPP reference model
Indicators Option 1 Option 2 Option 3 Reference
values
Net present value (NPV) 10 910 013 7 640 033 452 999 <0
Internal Rate of Return (IRR) 2,4% 3,2% 4,8% >5%
Benefit / Cost Ration (R
b/c
) 0,85 0,89 1,01 >1
Results of Hancesti IP project if it is implemented through a public-private partnership with expected
amounts of payments, show that the project has a positive cost and is not financially sustainable in any
option in the analysis. From a financial standpoint, the project has the best results in option 3 when the zone
of Residents shall consist only of land plots that are leased by Residents, with an return of investment of


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75
4.8% and a benefits / costs ratio of 1.01, which means that benefits will exceed the project presents benefits
will a little exceed related costs.
The project is sustainable in option 3 with an administration fee of 41 MDL / sq.m.
5.4.7. Risk-adjusted PPP reference model
PPP reference model does not include risks associated with the project of IP establishment. We will build the
risk-adjusted PPP reference model, which includes the PPP reference model and the model of assessment of
retained risks associated with the project.
Project-related risks were determined and evaluated in case of PSC model. According to the classification of
risks, they are divided according to the way of their control in retained risks and transferable risks. Risks are
allocated to the party that better controls the risk. Risks controlled by the Local Public Administration and
Town Hall are retained risks and are automatically included in the risk-adjusted reference model.
Transferable risks that are completely controlled by the private partner and are not included in risk-adjusted
reference model.
Table 36. Risk Allocation
Risk Transferable risks Retained risks
Location risk 0% 100%
Designing risk 80% 20%
Risk of increased investment costs 100%
Insolvency risk 100%
Risk of unavailable external co-financing 100%
Operational input risk 100%
Maintenance risks 100%
Commercial risks 90% 10%
Risk of changes in the legal and regulatory
framework
51% 49%
Major force risks 100%
Assessment of retained when the Manager makes investments in administration building and road accessing
the IP plot is reflected in the Table below.
Table 37. Risks retained, calculated for PPP reference model, option 1, MDL
Risk Categories 2011 2012 2013 2014 2015 2035 2041
Location risk 1,070 713
Designing risk 1,070 713
Commercial risks 1,926 3,941 5 578 8 150 7 913
Risk of changes in the legal and
regulatory framework
2 4,500 10,086 15 108 22 536 21 957
Total of retained risk
2,140 1,429 6,426 14,027 20 685 30 686 29 871
Present value of risk 377,881
Calculation of risks in case of options 2 and 3 are presented in Annexes 15 and 16.


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The risk-adjusted PPP reference model is determined by the following formula:
Risk-adjusted PPP reference model = PPP reference model + Value of retained risks
A project is considered sustainable as well as profitable, when its present value is negative (i.e. present costs
are lower than present income), the rate of return is higher than the discount rate considered in the
calculations, and the benefit-cost ratio is improper, indicating benefits higher than the costs associated with
them. Table 38 presents performance indicators for establishment of Hancesti Industrial Park through a
public-private partnership.
Table 38. Performance indicators of the risk-adjusted PPP reference model
Indicators Option 1 Option 2 Option 3 Reference
values
NPV PPP reference model
10,910,013 7,640,033 452,999
NPV Retained risks 377,881 394,683 484,843
NPV risk-adjusted PPP
reference model
11,161,002 8,034,716 937,842 <0
IRR 2.3% 3.1% 4.6% >5%
R
b/c
0.852 0.889 1.007 >1
Conclusion. In case of establishing Hancesti IP through public-private partnership, the financial results of
the project, taking into account related risks, prove that the project has greater benefits than when it is
implemented by LPA. Since the amount of retained risk is low, the financial results have suffered big
changes, option 3 remains to have the lower cost and greater benefit.


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6. Economic and financial forecast of Managing Company activity
In order to create technical and production infrastructure of Hancesti IP we suppose the co-participation of
the private investor in project funding through public-private partnership. LPA will involve a private partner
except for the field selected through tender, which will delegate to its functions and duties of IP managing.
This project will be implemented through a public-private partnership contract. The private partner will fund
(a) design works, development of studies and grant applications, (b) construction of administration building
and its equipping and furnishing, (c) construction of water and sewerage systems, as well as rainfall sewerage
system on IP site, (d) will bear the cost of administration. In the case of the first two options we propose to
construct an administration building for the Manager, and in the third it will lease premises for staff in the
town. In the case of the first option we will propose a greater involvement of the private partner by building
external access road (because of current lack of public sources) and vice versa in the case of third option less
involvement of the private partner in financial terms. We will also consider the options of building
production premises for the BI. In case of the first option, we suppose that BI production premises would be
constructed with external attracted sources, in case of second option on the account of the private partner.
Within the project we supposed that funding will be made by LPA or local and regional suppliers outside and
within IP of electric power networks and gas pipeline. From external sources funding of water and external
sewerage pipes, IP development will be requested. The last would be realized on the expense of NFRD, the
private partner being eligible for financing of technical and production infrastructure of IP.
Managers tasks are described in "IP Organization and Operation. The private partner recovers its
investment, covers its costs of management and maintenance of IP objects and obtains a reasonable income
from lease of land and production premises, from collection of administration fee, income from providing
services to the IP residents, payments and fees paid by participants in the tenders and Residents. The
Manager will recover losses from exemption from administration fees and exemption from services provided
to BI Residents from the account of incubation programs or LPA.
We will also study the financial feasibility of the project in case of establishing Hancesti IP based on principals
of public-private partnership, cost of technical and production infrastructure of the industrial park being
borne by the private investor, the public partner participating in the project of establishing the IP with the
land plot that will be transferred to the Manager throughout the period of the Industrial Park (30 years)
activity. In this case we supposed that the recovery of investments will be increased compared to the case of
co-financing by the private partner through increase in the administration fee.
We considered a solution of partners involvement in case of the first option. We supposed funding of
construction of BI production premises from external sources. From the lease fee charged by the Manager,
75% is paid as fee to the Town Hall, so that it repay to the private partner invested funds for construction of
access road, in case of the public road of Hancesti IP.
Advantageous of PPP contract for the project of establishing an IP in Hancesti are the followings:
- the private sector undertakes:(a) to coordinate, monitor and carry out designing and construction
works of technical and production infrastructure of IP, (b) to monitor the transfer of assets
25
created

25
Public utilities


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78
as ownership of the private partner immediately after completion of the construction, (c) to design
and construct administration office, (d) to administrate and to maintain IP assets, including those
received for use;
- the private partner participates in project funding;
- risk transfer to the private partner;
- brings innovation and efficiency to the management of the private sector financial efficiency;
- ensures improvement of quality of services operation and maintenance.
We will prove the viability of the project in financial terms for the private partner. We concluded that the
most optimal variant is the implementation of the project through the PPP contract.
To recover investment of the private partner, provides services of land, production premises and premises of
administration building lease, provides services to Residents including them in the administration fee and
direct payment.
The results of the financial analysis for the managing Company are presented in Tables 39-42.
Table 39. Present value of flows of the private partner according to option 1, MDL
Indicators 2011 2012 2013 2014 2015 2025 2041
Investment costs
951,125 21,065,737 165,000
Working capital
56,826 878,194 801,552
Maintenance and
56,826 878,194 1,603,104 1,699,175 1,880,297 2,248,979 2,157,581
Income
1,028,101 2,103,578 2,976,771 4,349,313 4,223,213
Cash flow
646,285
-
27,046,011
-1,581,534 573,332 1,396,898 2,100,334 2,065,632
NPV 1,935,772
IRR 5,6%

R
b/c
1,03
Indicators 2011 2012 2013 2014 2015 2025 2041
Investment costs
951,125 9,741,487 3,562,275 3,397,275
Working capital 56,826 878,194 801,552
Maintenance and
56,826 878,194 1,603,104 1,614,125 1,610,972 1,582,754 1,548,056
Income
1,028,101 2,094,128 2,852,346 3,928,788 3,871,988
Cash flow
646,285 -13,456,911 -5,658,264 -3,427,798 1,541,798 2,346,034 2,323,932
NPV 10,049,888

IRR 8,9%
R
b/c
1,22


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79
Indicators 2011 2012 2013 2014 2015 2025 2041
Investment costs
836,893 1,962,529 165,000
Working capital
47,615 389,409 283,812
Maintenance and
47,615 389,409 567,624 576,966 576,798 575,329 573,630
Income
978,288 1,630,176 1,955,968 2,172,960 2,172,960
Cash flow
573,414 -3,138,543 81,734 1,327,752 1,550,192 1,597,631 1,599,330
NPV 18,181,568
IRR
46,6%
R
b/c
1,80
Table 42. Results of financial analysis
Indicators
Reference
values
PPP Contract,
option 1
PPP Contract,
option 2
PPP Contract,
option 3
NPV
> 0 1 935 772 10 049 888 18 181 568
IRR
> 5% 5,6% 8,9% 46,6%
R
b/c
> 1 1,03 1,22 1,80
Conclusion. In case of all options, the private partner provides maintenance and administration costs. It
recovers its investment and covers maintenance and administration costs, and achieves a reasonable profit
from the administration and provision of IP services. From a financial standpoint, option 3 of the project
through PPP contract has better indicators, and thus shows self sustainability and hence viability of the
Manager business. We believe that for the future Residents only in this case the amount of administration
fees is tolerable and makes up 14.28 MDL / sq.m. for an internal rate of 5% or 16.74 MDL / sq.m. for the
internal rate of 10%.
If we consider funding by the private partner of access road construction important, then the priority may be
given to option 1. Provided an increased administration fee compared to option 3, it makes up 48.24 MDL /
sq.m. for an internal rate of 5% or 51.43 MDL / sq.m. for the internal rate of 10%.

Table 43. Amount of administration fee, MDL/sq.m. of land
Indicators
Reference
values
PPP Contract ,
option 1
PPP Contract ,
option 2
PPP Contract ,
option 3
Manager Indicator
IRR 5% 38.48 32.7 14.28
IRR 10% 51.43 42.0 16.74
PPP project indicator IRR 5% 48.24 45.24 40.60
Conclusion 51.43 45.24 40.60
If the requirement to IP project profitability is key one, we see that administration fees are very high. In this
case the only solution may be exclusion of access road construction from calculation of this project and its
inclusion in another project.


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6.1. Sensitivity analysis of the Managing Company
The sensitivity analysis assesses the impact of changes of input variables on the profitability of the project.
Methodological approach is based on:
Identification of critical variables
26
of projects parameters
calculation of expected value of return of the Managing Company
develop measures to reduce project risk
Indicators considered for sensitivity analysis are:
Internal Rate of Return (IRR);
Net Present Value (NPV).
In principle, the analysis involves calculating, for each variable of the following indicators:
Sensitivity Index (SI), using the formula:

where, P = studied parameter (NPV or IRR), V = variable, Index 1 = changed values, Index 0 = initial values.
The sensitivity index is actually an elasticity coefficient which shows the percentages of change of parameter
studied in case if change by a percentage of the variable. If this index is greater than 1, the respective
variable is risk-bearing.
Critical Index (switching value) - SV. This index reflects how we should modify a variable that NPV
takes 0 value (i.e. so that the project becomes unviable).
A small value of SV for a given variable indicates a risk related to that variable: a small deviation from the
medium value threatens investment profitability. The greater the critical index is, lower risks are.
Identification of critical variables
For this analysis the following variables were taken into account:
Degree of land and premises occupancy of the zone of Residents
Amount of lease and administration fee
Amount of investment

26
Critical variables are considered those parameters for which a 1% variation causes an increase by 1% of internal rate
of return or a net present value of 5%
0
0 1
0
0 1
V
V V
P
P P
IS
=


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Income from consulting services
Maintenance and administration costs.
Buildings assumptions on input variables deviations related to likely values
For each of these variables the assumption of a reasonable deviation from the medium value was
considered being established in the previous sections (financial analysis), deviations expressed in percents:
For the Degree of occupancy of land and production premises in the zone of Residents, a decrease
by 10%, 20% and 30% was estimated compared to the estimated occupancy rate;
For the Lease and administration fee, a decrease by 5 %, 10% and 15% was estimated compared to
the forecast value;
For the Investment amount, an increase by 10%, 20% and 30% was estimated compared to the
forecast level in the Investment Budget;
For the Income from consulting services a decrease by 20% and 40%, was estimated as a result of
the lack of interest for some development services provided by BI and IP, compared to forecast value
100%;
For Maintenance and administration costs, an increase by 10% and 20% was estimated compared
to the expected level of expenditure.
Recalculation of the values of performance in the assumption of realization of forecast deviations
Evolution of indicators depending on variables changes is presented in Annexes 17-21.
The following conclusions are made from the analysis of separated influence on key performance indicators:
The project presents a high sensitivity to decrease the degree of occupancy of the land and
production premises of the zone of Residents. Sensitivity index in the case of options has values
greater than 1. The critical index in the absolute values for the NPV values has the lowest value of
16.5% for Option 1. This implies that with a decrease of the forecast degree of occupancy by 16.5% in
the case of Option 1, the project becomes invalid. Critical index values in the case of Option 2 and
Option 3 are greater compared to option 2 and show that due to the decrease of occupancy rate by
25.6% and respectively by 74.5%m these projects become financially unprofitable;
The project shows a high sensitivity upon reduction of the lease and of administration fees, less
high than the degree of occupancy. The absolute critical index has the lowest value in the case of
option 1 - 3.8%. This implies that a forecast decrease in lease and administration fees by 3.8% in the
case of option 1 is no longer financially profitable. Option 1 is the most sensitive both to reduction of
administration fees and payments, as well as to decrease in degree of occupancy of the IP land;


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The project has a high sensitivity to increase in investment amount, in the case of Option 1.
However the project also has a low sensitivity to increase in the amount of investment for Option 3.
Critical indices in absolute value suppose that upon doubling of investment amount, projects will be
financially feasible. We examined in the case of Option 2 the return of the project related to the
amount of the private investor with the necessary amount to construct the external access road.
Based on calculations it can be stated that the project will be feasible, if the administration fee
increases by 70% at a return level of 10%. If the private partner follows a profitability of 12%, an
increase in administration fees by 95% would be necessary meaning a doubling of the fee.
The project has a high sensitivity to decrease in Income from consulting services in the case of
option 1 and a low sensitivity to their decrease in the case of option 2. In the case of option 3 no
provision of consultancy services is foreseen;
The project has a high sensitivity to increase in maintenance and administration costs in case of
option 1 and option 2. In case of option 3 increase in Costs of maintenance and administration has
an extremely low sensitivity.
Conclusion. The option of operation carried out by the Manager of only land parcels is appropriate
provided that the public partner obtains external funding or includes construction of access roads in
another project.


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7. Plan of IP implementation
7.1. Institutional forms of IP establishment
Hancesti local public administration under the Law on industrial parks No. 182 of July 15, 2010 launches a
project to establish an Industrial Park in the locality. In order to operatively initiate production activities and
service provision, to minimize costs related to launching the IP activities, they will be provided with technical
and production infrastructure. We will classify technical and production infrastructure previously used.
In order to implement the project in this study we proposed to consider several options on possible finding
features in order to build technical and production infrastructure of IP:
1. Full from Hancesti town and district budgets, from state budget and the National Fund for Regional
Development (NFRD), but only for the groups (a)
27
, (b), partially (c).
2. Combined. With funding from external sources in the form of grants for groups (a) and (e), for goods
of groups (b) and (c), according to the option indicated in p.1.
No.
State Budget and Hancesti
district and town budget
External sources,
including grants
NFRD Local Suppliers IP Residents
2.1 Covers IP maintenance (a) and (e)
(b) and
(c)
Partially (a) and
(b)
(f)
3. Based on the principal of public-private partnership according to the following schemes
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:
No. Private Partner
External
sources,
including grants
Local Suppliers NFRD IP Residents
3.1
Covers IP maintenance and
administration, group (a) access
Of group (a)
aqueduct and
Of groups (a)
and (b)
(c) (f)

25
Classification of groups of objects:
a) infrastructure and common utilities outside the Park,
b) infrastructure and common utilities within the Park,
c) interior development,
d) premises necessary to the manager and for provision of services supporting production activities, optional,
e) production premises and facilities for production activities falling within the profile of Park activity, designed for
Residents of BI and IP, optional,
f) production premises and facilities for production activities falling within the profile of Park activity, built by
Residents.
28
In both options the private partner will bear the costs of IP activity administration in the first years of their own
sources that will ensure full means for working capital.


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No. Private Partner
External
sources,
including grants
Local Suppliers NFRD IP Residents
road, group (b), water, sewerage,
rainwater sewage systems and (d)
sewerage, (e) electricity and
gas networks
3.2
administration expenses, group (b)
water, sewerage, rainwater
sewerage systems, (d) and (e)
Of (a) access
road, aqueduct
and sewerage
Of groups (a)
and (b)
electricity and
gas networks
(c) (f)
3.3
administration expenses, group (b)
water, sewerage, rainwater
sewerage systems
Of (a) access
road, aqueduct
and sewerage
Of groups (a)
and (b)
electricity and
gas networks
(c) (f)

In the case of options 1 and 2 the Industrial Park is run by the Manager established or selected through
tender by the local public authority. LPA may select an enterprise as Manager, but these services shall be
paid. If we suppose that funding of the technical and common utilities infrastructure will be included in the
state and district budget, partially funded from the account of NFRD, project administration and
management is hard to fund during the period of launch until covering costs of management and
maintenances by the income obtained from IP administration. The LPA budget is austere, with minimum
sources for covering current expenditure. It is difficult to obtain a loan because the LPA has no credit history.
Difficult is provision of a collateral for the loan. Furthermore, LPA can not afford risks, which would lead to
suspension of provision of services by local suppliers or to considerable increase of fees in the locality.
Another disadvantageous is that if the Managing Company does not participate in direct funding of the
project, it does not participate to covering project risks as well. In such case the Manager may at any time
abandon the project, which would lead to delays in operating terms.
Possible sources of the district and regional budget are also unlikely because these budgets have specific
purpose, they do not cover this project. NFRD can make only a partial contribution, however, as applications
received from the site are considered and approved depending on established priorities, project scope, its
impact on the community, being in direct tender with other communities in the country.
As of the participation in various programs with funding in the form of grants, there are different
possibilities, but projects shall be drawn up in written form and tenders shall be won. Hancesti Town Hall
does not have enough experience in attracting investments by projects application. Attracting foreign
specialists is questionable, because Town Hall does not have financial resources for this purpose. So these
options make almost impossible project funding.
The analysis presented in the previous chapters shows that option 3 is the most likely solution for
implementation of this project. Hancesti Town Council will select through tender under the conditions of the
Law on public-private partnership No. 179-XVI from February 10, 2008 a private partner as Manager. Virtually
all functions of IP establishment, funding and operation will be assigned to the private partner.
The public-private partnership can be realized through the method of designing - construction - operation -
transfer on which basis the private partner within its responsibilities designs, builds technical and production
infrastructure and operates it in accordance with contractual provisions, and at the end of the contractual


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term the private partner under the contract provision will transfer to the public partner the assets specified
in the contract. Goods that can be transmitted to LPA upon contract completion can be the access road, BI
production premises (if built with public funds) and other common utilities stipulated in the contract. Within
the second form, facilities stipulated in the contract are transferred in the ownership of the public partner
immediately after commissioning, and the public partner, in its turn, partially transfers the private partner
(Managing Company) this infrastructure
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to be managed within the IP.
The legal form of collaboration between public and private sector is the public-private partnership contract.
The term of PPP contract will be equal to the period of activity given to the Industrial Park for 30 years.
The private partner within this project undertake to coordinate processes of designing, construction,
commissioning, monitoring of transfer of finished objects to the public partner, receives facilities for use,
constructs facilities on its own account, manages and maintains the IP activity.
The public partner (LPA) is responsible for: (a) allocation of land, (b) obtaining all authorizations, approvals,
coordination and other permissive documents required by the law on IP, (c) gratuitous transfer of assets in
public ownership to the Manager for establishment and development of IP, (d) allocation, as appropriate, of
financial resources for building technical and production infrastructure, (e) support of projects to donors with
the purpose to build technical and production infrastructure, set up of BI objects by the Manager.
The advantageous of this PP modality are: the private partner undertakes to coordinate designing and
construction of the technical and production infrastructure of the IP and to monitor the transfer of created
assets in the ownership immediately after completion of the construction, as appropriate; the transfer of
risks related to designing and construction to the private partner; public assets are transferred to the private
partner to be operated within a determined term; transfer of operation-related risks brings innovations and
efficiency to the management from the private sector and financial efficiency and ensures attracting
businesses to the IP, improvement of quality of operation and maintenance of utilities and provision of
quality IP services.
The private partner recovers its investment and covers operating and maintenance costs, and obtains a
reasonable profit from the administration and provision of services in the IP.
7.2. Stages of IP establishment
We will divide activities of establishing and launching the IP in three main stages: stage of preparation and
launch, stage of selecting and launching Residents activities and the stage of IP activity.
Table 44. Main steps of establishing of Hancesti Industrial Park
No. Main stages Period
1 Stage of preparation and launch 2011

29
After commissioning of the infrastructure, common utilities, BI production premises, some assets will be transferred,
if appropriate, to companies that manage services (Rotalin Gaz Traiding, Apa-Canal Hancesti", "Union Fenosa JSC).
Common utilities will be transferred prior to connection of Residents and Manager, except for sewage network that will
be transmitted from the line of demarcation of lands of the Manager and of Residents with the pumping station.


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No. Main stages Period
2 Stage of building infrastructure and common
utilities of IP, Manager facilities
2012
3 Stage of selection and launch of Residents
activities
2012, quarter II - 2015
4 Stage of IP activity 2012, quarter II - 2041
Activities and schedules within the project of IP establishment are shown in Annex 22.
Stage of preparation and launch covers the period of 2011. This stage includes selection of the IP Managing
Company, obtaining the IP title, designing of technical and production infrastructure.
Given the fact that Hancesti IP is a greenfield one, this stage consists in the fulfilment of several steps, and
namely:
Step 1: Selection of private partner as IP Manager, (a part of activities is already in progress (or was carried
out)):
i. First LPA presented the initiative of establishing IP and held consultations with central and regional
authorities;
ii. Local public authority identified the land on which it wants to establish the IP;
iii. A feasibility study was developed in order to analyse the opportunity to establish IP, on which basis it
will be able to decide on further steps, form and the conditions of realization;
iv. If a decision is taken to establish IP through PPP, the requirements of law on PPP will be taken into
account. For this purpose: (a) it will be included by the decision of the Local Council in the list of
projects to be implemented through the PPP, PPP objectives and conditions, as well as general
requirements for selection of the private partner will be approved; (b) the Local Council will establish
a commission for selection of the private partner, will authorize the executive authority for
transmission of the feasibility study to the Public Property Agency (PPA) and will approve documents
required for tender organization; (c) after obtaining the approval of the PPA, an information release
will be published on the tender; (d) the commission will consider received bids and will select the
winner; (e) will prepare the draft contract with the winning partner on IP establishment and will
submit it to the Council for approval and appointment of the person who will sign it;
Step 2: Obtaining of IP title:
i. The Private Company Manager will submit an application to obtain the title of Industrial Park. It
should be noted that obtaining of IP title under the contractual terms (which obviously will comply
with the Law on IP) can be a condition for becoming into force of the PPP contract. This is natural
because the IP title depends on the LPA IP and is the basis for PPP contract though facilities provided
by the IP title. In other words, the lack of this title may lead to failure to fulfil contractual obligations
of both partners,
ii. Town Council empowers the executive body of LPA to form the Commission to grant technical, legal,
consulting support in order to fulfil legal requirements on obtaining the IP title: change of land
purpose, obtaining of decision of local public administration on the purpose of land, permits,


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approvals, coordination and other permissive documents required under the law for the
establishment of the industrial park, infrastructure and buildings of the Park, performance of other
administrative procedures necessary to establish the industrial park, launch and conduct of its
Residents business.
iii. After preparing all necessary documents to obtain the IP title, the applicant files a request to the
Ministry of Economy by attaching all documents required under the IP law (documents of
incorporation of the Managing Company, copies of documents confirming the right of use the land
for at least 30 years, layout of land for IP, land owner's declaration on fulfilment of conditions
foreseen by the art. 5 let. a) and b) of the Law on IP, approvals of holders of public utilities networks,
cadastral records on change of land purpose or approval for the construction of the facility, the
consent of the local council under which jurisdiction the land for industrial park falls, the feasibility
study on establishing the IP);
iv. Examination by the Ministry of Economy of the application of the IP title and preparation of the draft
Government Decision;
v. Approval by Government Decision of granting the IP title.
Step 3: Designing of technical and production infrastructure:
Designing of internal and external utilities and infrastructure, of other facilities necessary to start
construction and IP activities will be carried out.
Stage of construction of infrastructure and common utilities outside and inside the Park, and of facilities of
the Managing Company:
Works to prepare the ground will carry out, including stripping of the layer of black earth, preparatory works
for starting construction. Some of these works can be carried out along with other previous works. Utility
networks, roads and other facilities inside and outside IP will be constructed, objectives related to IP,
buildings and other facilities will be developed necessary to launch IP activity by the Manager.
Stage of Residents activities selection and launch. The stage of Residents selection comprises the period
from 2012, quarter II until 2015, the stage of launching Residents activities starts in 2013 and finishes in
2018. Selection of Residents lasts 3.5 years, the duration of launching Residents projects makes up 3 years
from the date of signing contracts on carrying out business within the IP.
The stage of activity of the IP is the period in which Residents and the Manager will operate within the IP
under a regime of specific facilities.


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8. Industrial Park impact over the zone
The project will have a strong socio-economic impact as a result of newly created direct and indirect jobs, of
increase in local economy competitiveness and locally attraction of a direct amount of investment.
Furthermore, the project has little impact on the environment, contributing at the same time, to landscaping
improvement of the area.
8.1. Economic impact
Establishment of the Industrial Park in Hancesti District will have numerous positive effects on the economy
locally, regionally and nationally.

Based on performed analysis and current reality, we estimate the following quantifiable economic benefits
of the project:
Extension of industrial production areas, around 32.500 sq.m.;
Increase of the rate of enterprises survival (SMEs) by the year 2041 in BI of IP 26 companies will be
incubated;
Increase of the level and diversification of consulting services in the region;
Further increase of investments by 163.4 mln MDL or 10 mln EURO (1.38 mln MDL are supposed
through NFRD), including:

technical and production infrastructure 22.2 mln MDL;
administration building - 3.2 mln MDL;
production facilities 104.8 mln MDL;
production equipment 33.2 mln MDL.
Creation of job:
920 direct jobs, including - 820 production jobs, 10 administration jobs within 2012 2017, through
business incubation - 90 production jobs until 2041;
55 - 100 indirect jobs (usable common services, public catering, etc.);
150 - 200 temporary jobs within construction period 2012-2017.
Unquantifiable benefits are presented as follows:
Provision of qualitative specialized services;
Increase in the amount of additional investment at local level;
Through IP, a local image vector able to act as an promotion anchor for attracting investments to town
and district will be created;
Growth of local economy as a result of income obtained both by the Manager and by tenant
companies. These revenues will have an indirect contribution to local GDP growth, which will result in
increased competitiveness of local economy compared to economies of other territorial units;
Increase in the value of real estate and of land in the area after project implementation following the
development of the respective zone;


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8.2. Social impact
The project will have a positive social impact on the population within 20 km from the Industrial Park. It will
be manifested as follows:
- Some jobs will be filled by employees of region companies, but unemployed people will be hired too,
and many people who will return from abroad as well;
- We suppose that up to 10% of people working abroad will return to the town and neighbouring
villages;
- The labor remuneration fund will increase by about 57.9 mln MDL annually;
- Water, electric power, natural gas supply, sewerage, telecommunications services will be improved;
- The local community will also benefit from infrastructure development;
- Local, Property Taxes etc. will also be increased.
8.3. Environment impact
One of the primary objectives of IP is protection of existing environmental conditions. Commissioning of
lands and facilities if IP to the Manager and subsequently to Residents is determined by compliance with
legal environmental requirements. The authorizations issued by local territorial environmental bodies for
Environmental Protection shall be observed for each building separately. The Manager and the residents will
sign a joint declaration regarding environmental issues as part of the lease agreement.
Location of facilities and operation of economic unities will be done by applying all norms in force on
protection of environmental factors. Economic activities likely to pollute air, water and soil will be forbidden
in the area. All activities will take place in an enclosed sites, none of them will produce noise or vibrations
noticeable from outside, within the site limit. Description of the environment factors and of some
environmental protection measures in Annex 24.
Residents will be required to comply with legal conditions (materials with special regime, safe operating
conditions, environmental protection, labor protection, fire protection, etc.). Production will be done
according to standards of ISO 9001-2000 and ISO 14001-2000 environmental standards.
Throughout the entire term of the lease contract Residents will be required to take all necessary and
compulsory measures in order to protect the environment under conditions provided by law in force related
to environmental protection. For sewage disposal on the site of the Park, Residents will obtain the
Environmental permit.

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Annex 1 Basic economic indices of the companies that may be located in Hancesti Industrial Park
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No. Type of activity
Necessary
investmen
ts, mln.
MDL
Volume of net
sales, mln. MDL
Number of
job,
persons
Added
value,
mln. MDL
Labor
remunerati
on fund,
mln. MDL
Profit,
mln.
MDL
Required
area , ha
1. Production of telecommunications devices 120 280 370 80 25.6 28 1.7
2. Production of digital measuring devices 80 195 200 65 17.3 20 1.1
3. Developing, testing and production of solar and
wind power stations
110 350 250 60 15 30 2.9
Total 310 825 820 205 57.9 78 5.7

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Businesses listed in this Annex is just one of the possible configurations of Hancesti IP Residents were considered to assess the utility needs of the IP.

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Annex 2 Capital costs of the project , MDL
Cost Categories Description of assumptions
Indicators,
parameters,
consumption
Unit of
measurement
Number
of units
Price,
MDL /
units
Amount,
MDL

Feasibility Study
On IP establishment Unit 1 100,000 100,000
Design studies, IP funding applications
6% of capital costs, excluding residents 6% Unit 1 1,585,208 1,585,208
Infrastructure and common utilities
outside IP

Access to the road network outside
IP

access road to M14road
Roads of IV class IV of a width of 6 m length m 980 16,178 15,853,950
Public utilities IP outside
electric power 6 kV Line length m 100 400 40,000
gas connection of D 75 mm polyethylene
pipeline to town system
length m 515 220 113,300
water connection of D 110 mm polyethylene
length m 472 300 141,600
sewerage connection of D 200 mm polyethylene
length m 472 252 118,944

pumping station with building 12 sq.m.
Capacity - 70 cubic
meters per hour,
height - 27 meters
unit 1 100,000 100,000
Public utilities within IP
electric power power transmission line of a voltage of
0.4 kV, underground cable, 120 mm
section.
length m 560 800 448,000
1 TM-1000/10 transformer capacity kVA 1 165,500 165,500


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Indicators,
parameters,
consumption
Unit of
measurement
Number
of units
Price,
MDL /
units
Amount,
MDL
installation works, line connection
10kw
10% of the cost of
transformers
35,500
gas D 75 mm polyethylene pipeline length m 500 220 110,000
connections 11,000
water D 110 mm polyethylene pipeline length m 500 300 150,000
connections 15,000
sewerage D 200 mm polyethylene pipeline length m 500 800 400,000
road rainwater sewerage m 500/300 1,100 616,000
Interior development
Preparation of land c.m. 60000 55 3,300,000
Green spaces development area sq.m. 1000 50 50,000
Parking 20 car parking plots of 18 sq.m. Parking area sq.m. 60 9,707 582,390
Installation of indicators billboard, 3 X 6 at a height of 4.5 m Units unit 3 20,000 60,000
Installation of park scheme, indicators completely unit 1 20,000 20,000
Platform of waste disposal Area sq.m. 10 500 5,000
Street litter bins at 35 m unit 16 300 4,800
Interior road lighting
Electric power transmission line 0.4
kW
with pillars (8 m, 2 m soil)
40 m distance
between pillars
m.l. 560 206 115,360
LED lamps 3 year warranty, 50,000 hours consumption 40 W unit 14 2,000 28,000
Perimeter fencing - fence Galvanized mesh, installed on poles length m.l. 1249 412 514,588
Administration building and equipping
Designed for IP administration,
services, office leasing (2 floors)
Area of rooms sq.m. 595 4,853 2,887,684
Computers, printers, etc.
Computers unit 15 10,000 150,000
Printers, Copiers unit 11 3,600 39,600
Copier-printer unit 1 15,000 15,000
Projector unit 1 10,000 10,000
Indoor furniture Rooms 16 4,853 77,652
Boiler Power kW 160 324 51,768


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Indicators,
parameters,
consumption
Unit of
measurement
Number
of units
Price,
MDL /
units
Amount,
MDL
Zone of BI production premises Construction of production premises,
warehouses, etc.
Area sq.m. 3,500 3,236 11,324,250
Production Equipment Created jobs employees 110 0 0
Total Capital costs 39,429,594
Annex 3 Distribution of project capital costs, thousand MDL
Capital costs 2011 2012 2013 2014 2015 2016 2017 Total

Feasibility Study
100 100
Design studies, IP funding applications 951 634 1,585
Infrastructure and common utilities outside IP
Access to the road network outside IP 15,854 15,854
Public utilities outside IP 514 514
Infrastructure and common public utilities within
IP

Public utilities within IP 2,141 2,141
Interior development within IP 3,030 1,650 4,680
Administration building, equipment and furniture 3,232 3,232
Subzone of BI production premises 4,530 3,397 3,397 11,324
Subzone of production premises built by residents 93,830
Total capital costs 1,051 29,934 5,047 3,397 39,430
Share of capital costs 3% 76% 13% 9% 0% 0% 0% 100%

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Annex 4 List of IP Manager Staff
No. Position / Function
Number
of staff
Average
gross
salary,
MDL
Remuneration
expenses,
MDL
Average
gross
salary,
EURO
Remuneration
expenses,
EURO
Annual
remuneration
expenses,
Euro
2011 2013 2011 2012
Administrative Staff 3.5 20,626 1,275 15,300 3 1 2,050 15,300
1 IP Directory 1 8,089 8,089 500 500 6,000 1 1,000 6,000
2 Assistant Receptionist 1 4,044 4,044 250 250 3,000 1 0 3,000
3 Lawyer 0.5 5,662 2,831 350 175 2,100 1 350 2,100
4 Accountant 1 5,662 5,662 350 350 4,200 1 700 4,200
Maintenance Staff 1.5 4,044 250 3,000 0 2 0 3,000
5 Service staff 1 2,022 2,022 125 125 1,500 1 1,500
6 IT responsible 0.5 4,044 2,022 250 125 1,500 1 1,500
Operational Staff 5 28,310 1,750 21,000 0 5 0 21,000

BI and IP Development
Services

7
Business Development
Consultant
1 5,662 5,662 350 350 4,200 1 4,200
8
Project Development
Consultant
1 5,662 5,662 350 350 4,200 1 4,200
9
Marketing t and staff
recruitment Consultant
1 5,662 5,662 350 350 4,200 1 4,200
10
Management and
Knowledge Transfer
Consultant
1 5,662 5,662 350 350 4,200 1 4,200

Auditing and Accounting
Service

11
Accounting Consultant -
Taxation
1 5,662 5,662 350 350 4,200 1 4,200
TOTAL 10 52,980 3,275 39,300 3 8 2,050 39,300

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Annex 5 Maintenance and administration costs, MDL
Articles 2011 2012 2013 2014 2015 2020 2025 2030 2035 2041
Maintenance costs

Administration building 23,101 23,101 23,101 23,101 23,101 23,101 23,101 23,101
BI Production premises 45,297 45,297 45,297 45,297 45,297 45,297 45,297 45,297
Parking plot 1,165 2,330 2,330 2,330 2,330 2,330 2,330 2,330
Green spaces development, indicators 1,596 3,192 3,192 3,192 3,192 3,192 3,192 3,192
Lighting Network
1,434 2,867 2,867 2,867 2,867 2,867 2,867 2,867
Rainwater sewerage system 3,080 6,160 6,160 6,160 6,160 6,160 6,160 6,160
Site Fencing 1,287 2,573 2,573 2,573 2,573 2,573 2,573 2,573
Remuneration
basic salary 33,164 635,776 635,776 635,776 635,776 635,776 635,776 635,776 635,776 635,776
health and social contributions
8,788 168,481 168,481 168,481 168,481 168,481 168,481 168,481 168,481 168,481
Lease of office premises
0 0 0 0 0 0 0 0 0
Public services

Gas
98,060 98,060 98,060 98,060 98,060 98,060 98,060 98,060
Electric power
134,995 134,995 134,995 134,995 134,995 134,995 134,995 134,995
Water and sewerage
44,000 44,000 44,000 44,000 44,000 44,000 44,000 44,000
Solid Waste Disposal
3,320 6,640 6,640 6,640 6,640 6,640 6,640 6,640 6,640
Procurement of services

Fixed, mobile telephony, internet 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000
Banking 2,108 8,558 8,758 8,758 8,758 8,758 8,758 8,758 8,758 8,758
Transport
25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000
Insurance 148,699 145,692 142,746 128,888 116,379 105,087 94,892 83,959
Advertising
80,000 80,000 80,000 80,000 80,000 80,000 80,000 80,000
Security Expenditure
10,710 10,710 10,710 10,710 10,710 10,710 10,710 10,710
Office Supplies 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Travel Expenses 10,000 20,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000 40,000
SVSTO equipping 5,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000
Local Taxes 60 240 800 800 800 800 800 800 800 800
Property Tax
2,888 2,830 2,773 2,507 2,266 2,048 1,851 1,640
Lease fee for production premises
0 0 0 85,050 269,325 666,225 666,225 666,225 666,225 609,525
Other expenses
2,706 41,819 76,338 76,863 76,713 76,007 75,369 74,794 74,274 73,717
TOTAL COSTS
56,826 878,194 1,603,104 1,699,175 1,880,297 2,262,367 2,248,979 2,236,894 2,225,982 2,157,581

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Annex 6 Matrix of Risks
No. Risk Category Description Consequences Attenuation Impact Probability Risk Allocation
1 Location
1.1 Location Risk
The risk of conditions
unforeseen by IP
location. IP location in
the immediate vicinity of
the locality.

Additional costs of
authorization and
partial delay of some IP
activities, leading to
partial reduction of
income.

LPA and district institutions verify
compliance of IP location with the
regulations in force. Determining
the type of IP activities, so that
they do not pollute the
environment and produce noise,
forbidding certain types of
activities within the IP.
Low Low
Risk retain by the
public partner
2 Designing, construction
2.1 Designing Risk
The designing-related
risk consists in failure to
observe some technical
standards, designing
delay.
Increased costs and /
or delay of designing
Quality of designing can be
ensured through experience of a
designing institution. If the project
complies with the TOR, the
consequences are minor.
Low Low
Manager-Private
partner
2.2.
Risk of increasing
investment costs
The risk of events that
occur during
construction, leading to
failure to comply with
schedule of
commissioning of
facilities and/or to
increase in costs.

Increase in investment
costs, decrease in
income.
This risk can be avoided through a
coherent planning of resources for
execution of works, by
implementing a system of
forecasting and verification of
costs incurred and realized in
future. Manager is responsible,
construction works will be
transferred to an experienced
contractor, so as to satisfy
contractual obligations.
Low Low
Manager-Private
partner


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3 Funding
3.1 Insolvency Risk
The risk that the
Managing Company
becomes insolvent or
later it turns out to be
unsuitable for IP
administration.

Withdrawal of IP title,
additional costs
The private partner will provide
bank guarantee of good
experience, which is automatically
transfer to LPA and losses amounts
already invested in case of
incompleteness. LPA will launch a
new procedure for obtaining the IP
title.

High Very low
Manager-Private
partner
3.2
Risk of external,
unavailable co-
funding
The risk that external
funding and that of
NFRD will delay or will
become ineligible.
Failure to observe
deadlines of
commissioning of IP
utilities, additional
costs for submission of
applications, increase
in the amount of the
working capital.

External funding, mainly intended
for external infrastructure,
construction of BI production
premises may be realized of
several sources and can be
implemented through co-funding
of external partners. Managers
commitment regarding the
construction of production
premises for Residents of own
sources will be achieved only under
specific contract signed with each
Resident. Managers funding by
NFRD depends on its experience. In
terms of future integration into or
association with the EU, the
possibilities of attracting external
resources will increase.

High Low Private partner
4 Operational and maintenance


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4.1
Risk of operational
input
The risk that the
necessary inputs cost
more than anticipated.
Establishing the cost of
administration.
The manager can apply within its
contractual relations with
suppliers long-term commitments.

Medium Medium
To the private
partner
4.2 Maintenance Risks
The risk that
maintenance costs will
increase compared to
what is expected.

Establishing the cost of
maintenance.
Manager signs long-term contracts
with suppliers of materials and
services.

Medium Medium
To the private
partner
5
Market or
demand

5.1 Commercial Risks
Low level of applications
or capacities of reduced
payments - below
foreseen limits.

Decrease in income
Experienced Manager selected
through tender that uses:
advertising, methods to attract
customers and cost reduction,
planning and control.
High Medium
Public and private
partner
6 Legal and regulatory
6.1
Risk of change of
the legal and
regulatory
framework
The risk of changes in
legislation and / or in the
regulations, which can
not be expected upon
signing contract,
determining a reduction
of income and / or cost

Reduction of income
and / or costs

Amount of fees on facilities
constructed of external resources
and at the request of LPA and
external at the request of LPA will
be controlled by district and local
LPA. Adjustment of fees will be
requested with arguments
(sufficiently important) and
quantifiable.
Medium Medium
Public and private
partner
7 Force majore


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7.1
Risks of Major
Force
The risk of incapacity to
provide the service
caused by a force
majeure
Loss or damage of
assets, service
(including failure to
provide services), loss
of the possibility to
obtain income, or delay
of income.

BI Manager takes measures to
ensure assets and monitors the
repair or replacement as soon as
possible. LPA and regional
suppliers ensure continuation of
provision of services with IP
utilities through alternative
measures.
High Very low
Private partner,
regional service
providers. The
private partner
assumes the risk of
loss, damage of
assets.


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Annex 7. Risk value in case of establishing IP through the traditional mechanism of goods and services procurement
Risk Name 2011 2012 2013 2014 2015 2025 2041
Location Risk

Calculation basis (20% of the cost of designing)
190,225 126,817
Consequences of risks, MDL
14,267 9,511
Value of risk, MDL
1,070 713
Designing Risk

Calculation basis
951,125 634,083
71,334 47,556
Value of risk, MDL
5,350 3,567
Risk of increasing investment costs

Calculation basis
27,963,336 3,710,775 3,397,275
2,097,250 278,308 254,796
Value of risk, MDL
157,294 20,873 19,110
Risk of Insolvency

Calculation basis (5% of the cost of designing)
47,556 31,704
7,133 4,756
Value of risk, MDL
178 119
Risk of unavailable external co-funding

Calculation basis (10% of the cost of designing+
Working capital)
151,938 941,602 801,552
22,791 141,240 120,233
Value of risk, MDL
1,709 10,593 9,017
Risk of operational input

Calculation basis
44,060 816,135 1,406,119 1,408,112 1,405,166 1,378,799 1,346,379
5,508 102,017 175,765 176,014 175,646 172,350 168,297


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Risk Name 2011 2012 2013 2014 2015 2025 2041
Value of risk, MDL
688 12,752 21,971 22,002 21,956 21,544 21,037
Maintenance Risks

Calculation Base
76,959 85,520 85,520 85,520 85,520
Risk Consequences , MDL
9,620 10,690 10,690 10,690 10,690
Risk Value , MDL
1,202 1,336 1,336 1,336 1,336
Commercial Risks
Calculation Base
1,027,372 2,102,039 2,974,692 4,346,613 4,220,513
154,106 315,306 446,204 651,992 633,077
Risk Value , MDL
19,263 39,413 55,775 81,499 79,135
Risk of change of the legal and regulatory framework

Calculation Base
60 240 600,982 1,332,776 1,990,649 2,962,512 2,883,832
8 30 75,123 166,597 248,831 370,314 360,479
Risk Value , MDL
1 4 9,390 20,825 31,104 46,289 45,060
Force Major Risks
Calculation Base
1,027,372 2,102,039 2,974,692 4,346,613 4,220,513
154,106 315,306 446,204 651,992 633,077
Risk Value , MDL
3,853 7,883 11,155 16,300 15,827
Risk Value
8,997 185,042 85,570 110,568 121,326 166,968 162,395

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Annex 8. Present value of in case of establishing IP through the traditional mechanism of goods and services procurement, MDL

Risk Name 2011 2012 2013 2014 2015 2025 2041
Location Risk 1,070 713
Designing Risk 5,350 3,567
Risk of increasing investment costs 157,294 20,873 19,110
Risk of Insolvency 178 119
Risk of unavailable external co-funding 1,709 10,593 9,017
Risk of operational input 688 12,752 21,971 22,002 21,956 21,544 21,037
Maintenance Risks 1,202 1,336 1,336 1,336 1,336
Commercial Risks 19,263 39,413 55,775 81,499 79,135
Risk of change of the legal and regulatory
framework
1 4 9,390 20,825 31,104 46,289 45,060
Force Major Risks 3,853 7,883 11,155 16,300 15,827
Risk Value 8,997 185,042 85,570 110,568 121,326 166,968 162,395
Present value of risk
2,296,227

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Annex 9 Structure and equipment of the administration building
Name of space Area, sq.m.
R
o
o
m
s

F
u
r
n
i
t
u
r
e

C
o
m
p
u
t
e
r
s

P
r
i
n
t
e
r
s

C
o
p
i
e
r
-
p
r
i
n
t
e
r

P
r
o
j
e
c
t
o
r

L
e
a
s
e

Area of rooms
designed to
leasing
1st Floor

Main Hall
30 1
Manager
20 1 1 1 1
Secretariat
16 1 1 1 1 1
Accounting
20 1 1 1 1
Consulting Services
20 1 1 5 1
Public Catering
100 1 1
Health Care Service
14 1 1
Banking
16 1 1
Telephony and IT Services
10 1 1
Hygiene and toilet rooms
20 2 1
Corridor
28
Total 1
st
floor
294 11 6 8 4 1 0 3 130
2nd Floor

Hall
40 1
Support Services 1
16 1 1 1 1 1
Support Services 2
16 1 1 1 1 1
Furnished Office 1
18 1 1 1 1 1
Furnished Office 2
18 1 1 1 1 1
Furnished Office 3
18 1 1 1 1 1
Furnished Office 4
18 1 1 1 1 1
Furnished Office 5
18 1 1 1 1 1
Conference Hall
60 1 1 1
Protocol Hall
24 1 1
Hygiene and toilet rooms
16 1 1
Corridor
39
Total 2
nd
floor
301 11 10 7 7 0 1 7 122
Occupied area
361

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Annex 10. Schedule of funding IP establishment, option 1, MDL
Cost Categories 2011 2012 2013 2014 2015 Total
Private partner 951,125 21,065,737 165, 000 22,181,862
Project, studies, IP funding applications 951,125 634,083 1,585,208
Preparation of land 165,000 165,000 330,000
Common utilities outside IP (access road) 15,853,950 15,853,950
Common utilities within IP (water, sewerage, rainwater
sewerage) 1,181,000 1,181,000
Administration building and equipping 2,887,684 2,887,684
Computers, printers, etc. 214,600 214,600
Interior furniture 77,652 77,652
Boiler room 51,768 51,768
BI production premises
Production premises for Residents
Local Providers 1,112,800 1,112,800
Infrastructure and common utilities outside IP (electric
power, gas) 153,300 153,300
Infrastructure and common utilities within IP (gas, electric
power) 959,500 959,500
External Grants 100,000 5,038,744 3,545,775 3,397,275 12,081,794
Feasibility Study 100,000 100,000
Infrastructure and common utilities outside IP (access road,
water, sewerage) 360,544 360,544
BI land preparation 148,500 148,500 297,000
BI Production premises 4,529,700 3,397,275 3,397,275 11,324,250
FNDR 1,380,138 1,380,138
Infrastructure and common utilities within IP
Interior development without land preparation 1,380,138 1 380 138
Total Capital Costs 1,051,125 28,597,419 3,710,775 3,397,275 36,756,594


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Annex 11 Schedule of funding IP establishment, option 2, MDL
Private partner 951,125 9,741,487 3,562,275 3,397,275 17,652,162
Common utilities outside IP (access road)
sewerage) 1,181,000 1,181,000
Administration building and equipping 2,887,684 2,887,684
Interior furniture 77,652 77,652
Boiler room 51,768 51,768
BI Production premises 4,529,700 3 397 275 3 397 275 11,324,250
power, gas) 153,300 153,300
power) 959,500 959,500
External Grants 100,000 16,362,994 148,500 16,611,494
water, sewerage) 16,214,494 16,214,494
BI land preparation 148,500 148,500 297,000
BI Production premises
FNDR 1,380,138 1,380,138
Interior development without land preparation 1,380,138 1,380,138
Total Capital Costs 1,051,125 28,597,419 3,710,775 3,397,275 36,756,594


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Annex 12. Schedule of funding IP establishment, option 3, MDL
Private partner 836,893 1,962,529 165,000 2,964,422
Common utilities outside IP (access road)
sewerage) 1,181,000 1,181,000
Administration building and equipping
Interior furniture
Boiler room
power, gas) 153,300 153,300
power) 959,500 959,500
External Grants 100,000 16,214,494 16,314,494
water, sewerage) 16,214,494 16,214,494
BI land preparation
FNDR 1,380,138 1,380,138


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Interior development without land preparation 1,380,138 1,380,138
Total Capital Costs 936,893 20,669,961 165,000 21,771,854
Annex 12 Estimated income from the PPP reference model, option 2, MDL
Income Categories 2013 2014 2015 2020 2025 2030 2035 2041
Lease of Residents lands 2,770 5,540 7,387 9,234 9,234 9,234 9,234 9,234
Lease of administration and commercial premises 102,816 137,088 171,360 171,360 171,360 171,360 171,360
Lease of BI premises 113,708 359,613 889,326 889,326 889,326 889,326 813,726
Payments and fees paid for participation in tenders
and for registration as Resident
294,000 312,600 208,400 12,400 12,400 12,400 12,400 18,600
Administration fee 583,200 1,198,800 1,609,200 2,052,000 2,052,000 2,052,000 2,052,000 2,052,000
Consulting services for BI and IP Residents 147,402 217,961 283,573 350,710 350,710 350,710 350,710 350,710
Income from recovery of losses from exception from
administration fees of IP Residents
108,000 198,900 353,700 353,700 353,700 353,700 366,300
Income from recovery of losses generated by
provision of services for BI Residents
33,164 46,106 87,359 87,359 87,359 87,359 87,359
Total Income 1,027,372 2,092,589 2,850,267 3,926,088 3,926,088 3,926,088 3,926,088 3,869,288
Annex 13 Estimated income from the PPP reference model, option 3, MDL
Income Categories 2013 2014 2015 2020 2025 2030 2035 2041
Lease of Residents lands 3,078 6,156 8,208 10,260 10,260 10,260 10,260 10,260
Lease of administration and commercial premises

Lease of BI production premises
Payments and fees paid for participation in tenders
and for registration as Resident
326,400 326,400 217,600
Administration fee 648,000 1,296,000 1,728,000 2,160,000 2,160,000 2,160,000 2,160,000 2,160,000
Consulting services for BI and IP Residents
Income from recovery of losses from exception from
administration fees of IP Residents


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Income from recovery of losses generated by
provision of services for BI Residents
Total Income 977,478 1,628,556 1,953,808 2,170,260 2,170,260 2,170,260 2,170,260 2,170,260

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Annex 14 Calculated retained risks for the PPP reference model, option 2, MDL
Risk Categories 2011 2012 2013 2014 2015 2025 2035 2041
Location Risk 1,070 713
Designing Risks 1,070 713
Commercial Risks 1,926 3,924 5,344 7,361 7,361 7,255
Risk of change of the legal and
2 4,908 11,001 16,479 24,585 24,582 23,951
Total retained risks 2,141 1,429 6,834 14,925 21,823 31,947 31,943 31,206
Annex 15. Calculated retained risks for the PPP reference model, option 3, MDL
Risk Categories 2011 2012 2013 2014 2015 2025 2035 2041
Location Risk 942 628
Designing Risks 942 628
Commercial Risks 1,833 3,054 3,663 4,069 4,069 4,069
Risk of change of the legal and
1 4 10,179 20,352 27,134 33,916 33,916 33,916
Total retained risks 1,884 1,259 12,011 23,405 30,797 37,985 37,985 37,985

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Annex 16 Analysis of sensitivity in terms of degree of occupancy of land and production premises from the zone of Residents
Change
(%)
Option 1. Option 2. Option 3.
NPV IRR (%)
IS for
NPV
SV (%) NPV IRR (%)
IS for
NPV
SV (%) NPV IRR (%)
IS for
NPV

70% -14,421,978 -0.7% 28.2 -7,378,556 1.5% 5.8 6,970,342 23.0% 2.1
80% -6,736,872 2.7% 22.4 805,713 5.3% 4.6 12,204,423 31.7% 1.6
90% 1,718,628 5.6% 1.1 16.5% 9,834,321 8.8% 0.2 25.6% 15,209,085 37.5% 1.6 74.5%
100% 1,935,772 5.6% 10,049,888 8.9% 18,181,568 46.6%
70% -14,421,978 -0.7% 28.2 -7,378,556 1.5% 5.8 6,970,342 23.0% 2.1

Annex 17. Analysis of sensitivity in terms of lease and administration fee
Change
(%)
NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV

85% -5,567,208 3.1% 25.8 1,736,597 5.7% 5.5 13,948,501 37.5% 1.6
90% -3,106,694 3.9% 26.0 4,449,124 6.8% 5.6 15,359,523 40.5% 1.6
95% -606,282 4.8% 26.3 3.8% 7,219,267 7.9% 5.6 18.3% 16,770,546 43.6% 1.6 64.3%
100% 1,935,772 5.6% 10,049,888 8.9% 18,181,568 46.6%


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Annex 18. Analysis of sensitivity in terms of amount of investments
Change
(%)
NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV

130% -5,242,406 3.6% -12.4 4,461,738 6.5% -1.9 17,707,019 40.6% -0.1
120% -2,831,002 4.2% -12.3 6,337,098 7.2% -1.8 17,865,782 42.4% -0.1
110% -439,082 4.9% -12.3 8.2% 8,199,444 8.0% -1.8 53.5% 18,023,677 44.4% -0.1 986.1%
100% 1,935,772 5.6% 10,049,888 8.9% 18,181,568 46.6%

Annex 19. Analysis of sensitivity in terms of income from consulting services
Change
(%)
NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV

0% -3,697,805 3.7% 2.9 4,453,021 6.8% 0.6 18,181,568 46.6% 0.0
60% -313,246 4.9% 2.9 7,814,030 8.1% 0.6 18,181,568 46.6% 0.0
80% 812,087 5.3% 2.9 34.4% 8,932,958 8.5% 0.6 18,181,568 46.6% 0.0
100% 1,935,772 5.6% 10,049,888 8.9% 18,181,568 46.6%


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Annex 20. Analysis of sensitivity in terms of costs of maintenance and administration
Change
(%)
NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV
SV (%) NPV IRR (%)
SI for
NPV
SV (%)
120% -6,344,443 2.8% -21.4 3,278,129 6.3% -3.4 15,855,210 39.3% -0.6
110% -2,114,455 4.3% -20.9 4.8% 6,754,159 7.7% -3.3 29.0% 17,045,253 42.9% -0.6 125.7%
100% 1,935,772 5.6% 10,049,888 8.9% 18,181,568 46.6%

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Annex 21 Schedule of activities within the project of IP establishment
Name of stages, activities
2011 2012 2013 2014 2015 2016 2017 2018
I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV
Stage of preparation and
launch
Identification of land necessary
for IP establishment
Establishment of the committee
to support the establishment
and operation of the IP
Obtaining the consent of the
Local Council to use that land to
establish the IP
Development of the feasibility
study on establishing IP
Confirmation of opportunity to
establish the IP
Preparation and approval of
specifications
Publication of press release
Organization and conducting of
the tender to select the private
partner
Signing the PPP contract with
the winner of tender
Preparation and submission of
the application and of set of
documents to obtain the IP title
Employment of Managing
Company staff
Program of labor force training
Organisation of advertising
company
Development of IP Regulations
Development of projects within
IP
Obtaining permits, approvals,
coordination, etc. necessary for


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establishment of IP
infrastructure and facilities
Development and submission of
applications for funding the
establishment of infrastructure,
facilities of external sources
Organization of training and
retraining courses
Preparation of land

Construction of infrastructure
facilities
Construction of administration
building, etc.
Construction of production
premises of the Manager
Adoption of amount of
payments to the Manager by
LPA
Stage of selection and launch of
Residents businesses
Organization of tenders for the
selection of investors - future
Residents
Signing contracts on running
business within the IP
premises of the BI
premises of Residents
Official ceremony of opening
the IP and BI
Launch of Residents businesses

Organization of a job fair

Monitoring of IP activities

Stage of IP activities
1 2 3 4 5 6 7

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Annex 22 Some measures that will be included in the IP Regulations on Environmental Protection

The unique plan coordinating all distribution networks. The coordination plan will be completed with
all types of networks (connections), and with any type of work that changes or completes the overall
infrastructure that will be leased during IP.
Approval made by state institutions of the following:
- Street lighting within IP (roads, parking plots, etc.).
- Lighting within facilities sites.
- Day and night lighting of the industrial park.
- Day and night lighting of constructions within facilities.
- Technologies susceptible to emit noxious fumes during operation, hence electromagnetic
waves, or disruptive to air traffic control system
The Park Manager will continually monitor all running works (constructions, public utilities, etc.),
starting with laying out sites, during works, but also during operation, in accordance with all kinds of
approved documentation (urbanism, technical designs and details of execution), as well as in
accordance with IP Operation Regulations.
Applications of potential residents must contain a report-commitment on the technological process
necessary to run the business in terms of used technologies used and the how they comply with
national and European environmental protection norms. The report-commitment will be reviewed
upon assessment of bids by the evaluation committee.

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Annex 23 Description of the environmental factors and of some measures of environmental
protection
ENVIRONMENTAL FACTORS
Protection of existing environmental conditions is one of the primary objectives of the IP. IP will be
developed to the extent that it does not interfere with the property of those who own land plots in their
zone, or those who have already leased land and carry out industrial, commercial activities. Lease of land
plots by residents implies fulfilment of environmental legal requirements.
Environmental Factors Measures for environmental protection
Wastewater
Industrial waste water produced by the Manager and Residents must be
sewaged in full compliance with the conditions specified in the environmental
permit, which requires wastewater sewage (sewerage system of the IP);
Disposal of substances resulting in the process of operation, maintenance,
treatment or purification, is prohibited.
Waste
Waste will not be removed by burning with open fire.
All residual wastes and products will be collected and stored selectively in a
particular developed area for each Resident and Manager.
Waste must be collected for recycling or re-use where possible and feasible.
Waste that can not be re-used, will be managed by the Municipal Company in
contract with the Manager and Residents.
All chemicals and toxic waste will be disposed in accordance with EU Regulations
on toxic and hazardous waste. Documents which record the type, quantity, time
and manner. in which wastes were removed, will be kept.
Waste disposal will be carried out according to the requirements of sanitary
authorities.
Air Emissions
Foul odors from activities carried out within the IP must not be detectable
outside the IP boundaries.
Concentration of suspended impurities (in air) in buildings must be kept below
allowed limits.
Emissions in air of any kind, which may affect visibility in the zone, shall be
approved by the competent authority. The established conditions will be
included in environmental permits.
Conditions set out in environmental permits on air emissions shall be observed.
Provisions of national norms and regulations on air pollution shall be observed.
Deposits
Area for storing chemicals / oil and / or solvents will be sealed or protected so
that surface and underground water is not contaminated by leak, according to
national rules relating to storage.
Noise
Provisions of national Regulations on produced noise and EU Regulations
concerning noise protection of the staff shall be observed.
Electromagnetic
waves
Use of materials or equipment that generates electromagnetic waves will be
forbidden. If, however, electromagnetic waves are produced, measured will be
taken to reduce, mitigate or eliminate them completely.


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