Resume of business-project :

1. Resume of business-project: INOVATION TECHNOLOGIES INTRODUCTION IN WASTE MANAGEMENT AND SOLUTION OF PROBLEMS OF THEIR UTILIZATION IN SEVASTOPOL CITY Ukraine, Kiev - 2009

2. Waste management status analysis: • Almost 50 billion cubic meters of solid domestic waste (SDW) annually accumulates in Ukraine which makes up almost 11 million tons of waste buried at 4.5 thousand dumps and landfills with the total area of almost 7.6 thousand hectares • There are 248 overfilled landfills (5%), while 1 133 landfills (25%) do not meet the environmental safety requirements • Two landfills from 100 of most hazardous ecological objects of Ukraine are in Crimea – in Yalta and Sudak • Only 2.5% of SDW is burnt at two out of fourexisting incineration plants built during the Soviet times (Kiev, Dnepropetrovsk) • Due to the lack of a waste management system, about 16 thousand unauthorized dumps with the total area of 1.1 thousand ha appear in residential areas each year

3. Waste management services were found to be rendered by 1 172organizations out of which 281 (23%) are private companies, which is 5% more than in 2006. Most private companies are located in Kherson Oblast (32), Kirovograd Oblast (27) and Kharkov Oblast (23) • The average fee for waste management services is Euro 4,0/m3 which includesEuro 2,5 for collection and transportand Euro1,5 for burial. Such fees are much lower than the international fees; therefore, they do not ensure normal plant operation and make it impossible to introduce modern technologies at the plants • Over Euro 50 million was allocated for development and management of sanitation plants in 2007,which is 79% more than in 2006. Most financing was provided in Kiev (Euro 17 million), Donetsk Oblast (Euro 11,2 million),and Kharkov Oblast (Euro 2,8 million) • The average vehicle wear rate increased from 66% (2006) to 69% (2007). The least wear rate was found in Sevastopol (25%) and Kiev (47%)

4. As stipulated by the Law of Ukraine “On Local Self-Government in Ukraine” (Article 30), the waste management issues pertain to the competence of local executive bodies which are usually in no haste, and sometimes even too slow in introducing modern waste management techniques and technologies • The key reason of such a situation is noncompliance of the local authorities with the requirements of the Laws of Ukraine “On Housing and Utility Services” and “On Waste”as regards insufficient funding of development and management of facilities in this industry sector, establishment of economically feasible tariffs, and reasonable control over the waste management process (especially the use of dumps and landfills) • Actuality of problem solution of sanitary clearing system improvement in communities, particularly in cities of Crimea South coast and Sevastopol city, which caused current ecological problems, absence of efficient systems collection.

5. The project goal isto solve a problem of waste utilization with producing of alternative fuel and power via introduction of innovative waste management technologies in cities and regions AR of Crimea: • Improve sanitary and ecological state of cities and communities of Crimea peninsula and Sevastopol city, in particular, • decrease in the amount of buried household, construction, industrial and hazardous waste on landfills by at least5-8times , • considerable reduction in the pollution of water area of the Black Sea, atmosphere and underground water-bearing formations , • implementation of an action plan aimed at remediation of unauthorized dumps and existing landfills, thereby considerably increasing the operation life of the existing landfills and the standard volume of waste buried at the said landfills , • obtaining a considerable volume of waste energy to be reused in industrial production , • making use of the sorted-out waste residue, as alternative fuel, to obtain electric and thermal energy for production and local community needs.

6. We propose the following measures to achieve the set goal and improve the waste management system in Sevastopol city: Creation of transport and technological complexes on introduction of : • separate collection and utilization of waste produced by the network of recreation centers, crowded areas on Black Sea coast, in network of office and administration buildings, entertainment buildings in the city’s areas their agglomerations, using specialized vehicles and 7-35-m3 bulk bins with compactors • collection and utilization of construction waste, formed in process of repair and reconstruction of current and future building objects with production of secondary crushed stone for using in road construction and concrete production. • collection and utilization of medical waste and medicinal preparations • collection and utilization of plant-protecting agents, food and other supplements, products and other goods, with expired date At present the given market segment are not spread by operators and has an elemental character with using unspecialized equipment and need innovational technologies solution.

7. Creation of waste sorting and handling complexes at the existing landfills, and also waste transfer station in city regions will allow to optimize using of current park of waste collection equipment belongs to transporter-enterprises. Sorted waste (light combustible fraction) will be using as alternative fuel onenergy generating station in Bakhchisaray region, and secondary crushed stone formed in the process of construction waste utilization – in road construction and concrete production • Using as alternative fuel thesorted fraction of solid domestic waste and other waste, formed in region will give and opportunity reduce the volume (till 80 %) of waste due to the dumping on the landfill. • Projecting and construction of energy generating station for producing electric and heat energy from sorted waste (alternative fuel) based on using by specialists of “Ukrspetstechnologii” Corporation, in cooperation with E.O. Paton Electric welding Institute and Gas Institute of National Academy of Ukraine, the steam-plasma installations with producing synthetic gas - alternative to the natural gas. • Creation of regional center on ecological safety utilization of medical waste, medical product, plant-protecting agents, food and other supplements, products and other goods, with expired date • Development and implementation of state-of-the-art technology programs aimed at reclamation of unauthorized dumpsand both existing and closed landfills, which will mitigate the environmental impact and will ensure sanitary and epidemiological welfare of the population of Sevastopol city and all region

8. FINANCINGCOSTS Total cost of the Project 2,6 mln. Euro, including: • investors’ funds or borrowedfunds– 2,6 mln. Euro (100%), with 6% annual rate • drawdown– according schedule of financing • interest payment– every month from the beginning of financing • term of financing – four years • period of grace –one year • Investment payback period– three years • Profitability index– 2,30 • Gross profit margins– 89% • Operating profit margins– 53% • Net profit margins– 21%

10. Borrowed (credit) funds - 100%

22. Cumulative profile of project’s risks Pic 1. Cumulative index of event probability

23. Project sensibility to variable expenses changing Level of variable expenses, % to the planning

24. Project sensibility to product cost changing Cost service level

25. Project sensibility to the planning production volume changing Rendering service volume

26. System of collection and transportation of sorted domestic waste to be used as alternative fuel • Creation on existing landfills in Sevastopol city the waste sorting and waste loading complexes with the service in the city and region. • Fractions selection, which available as alternative fuel • Preparing of sorted SDW fractions for burning as alternative fuel • Transportation of prepared for waste fraction burning on special heavy-duty road train with trailer (waste capacity 300-350 cubic meters.)

27. The first link offered by corporation of an effective control system of a waste in Sevastopol is introduction of separate gathering in places of formation of a waste after city districts with use of press containers in volume of 20-30 m cubic Export of not pressed waste by bunkers and usual containers is unfairly expensive, as the enterprises frequently should pay for «air export». The press container, in comparison with the usual container, is capable, depending on type of a waste, to contain in tens times more. Such effect is provided with presence of the pressing mechanism which condenses a pressed material in the container with consolidation factor 1:5 or 1: 7, depending on structure of a waste. Thus there is no necessity at once to devastate the container, a waste remains in it before container filling on what automatically informs a sensor control of 100 % population. The filled container is taken out by the specialized car with system capture, and on its place is established new – empty.

28. We propose using two variants of press-containers: • Mobile press-containers, where pressure chamber inseparable connected with refuse receptacle • Optimum size– 20 cubic meters. • Forcing compaction 1:5