JUSTIFICATION

FOR THE WORKS CONCESSION FOR

„CIVIL AIRPORT FOR PUBLIC USE PLOVDIV“-

PUBLIC STATE PROPERTY

1 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Content

I. ADVISABILITY OF THE CONCESSION ...... 5 II. LEGISLATION OF THE CONCESSION ...... 7 1. Main legal acts for Concession award ...... 7 2. Legal and factual grounds for Concession award ...... 8 3. Issues, related to the National security and Defence of the country, Environment, Protected areas, Zones and Sites, and the Public order ...... 9 III. SUBJECT MATTER AND OBJECT OF THE CONCESSION, CONCESSION TERRITORY AND APPURTENANCES OF THE OBJECT OF CONCESSION ...... 19 1. SUBJECT MATTER OF THE CONCESSION ...... 19 2. OBJECT OF THE CONCESSION ...... 21 3. LAND PLOTS BUILDINGS AND FACILITIES LOCATED IN THE CONCESSIONAL TERRITORY, WHICH ARE NOT INCLUDED IN THE CONCESSION OBJECT ...... 28 IV. MINIMUM REQUIREMENTS TO OFFERS ...... 31 1. MINIMUM REQUIREMENTS TO ECONOMIC OPERATORS ...... 31 2. MINIMUM REQUIREMENTS TO OFFERS ...... 35 V. ESTIMATED VALUE OF FINANCIAL AND ECONOMIC ELEMENTS OF THE CONCESSION ...... 37 1. ESTIMATED VALUE OF CONCESSION ...... 37 _Toc24031488 2. ECONOMIC BALANCE OF CONCESSION AND RISK ALLOCATION ...... 39 2.1. Economic balance of the concession ...... 39 2.2. Risk allocation of the concession ...... 42 3. CONCESSIONAIRE REVENUE ...... 44 4. PAYMENTS FROM THE GRANTOR ...... 45 5. CONCESSION FEE ...... 45 6. TERM OF CONCESSION ...... 46 VI. FORECAST LEGAL ARRANGEMENTS ...... 48 1. TYPE OF PROCEDURE ...... 48 2. LEGAL ARRANGEMENTS FOR BIDDERS IN THE PROCEDURE UPON CONCLUSION AND IMPLEMENTATION OF THE CONCESSION AGREEMENT ...... 48 3. CONDITIONS OF ENTRY INTO FORCE OF THE CONCESSION AGREEMENT, POSTPONING OR TERMINATION CONDITIONS ...... 51 4. USER RELATIONS, LIABILITY TO OTHER PERSONS IN THE PERFORMANCE OF CONSTRUCTION AND /OR SERVICES ...... 53 2 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

5. ACQUISITION AND TRANSFER OF OWNERSHIP OR RETURN OF THE CONCESSION OBJECT ...... 54 6. TERMS AND CONDITIONS FOR SETTLEMENT OF DISPUTES BETWEEN THE PARTIES …………………………………………………………………………………………………………………………………………………55 VII. OPPORTUNITY TO RECEIVE GRANT FINANCIAL SUPPORT FOR FINANCING CONCESSION COSTS THROUGH EUROPEAN STRUCTURAL AND INVESTMENT FUNDS 55

3 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

The present justification for the award of a works concession for “Civil Airport for Public Use Plovdiv” – public state property has been prepared as a result of the preparatory actions provided by the Minister of Transport, Information Technology and Communications in his capacity as a grantor, according to Art. 43b, para. 3 of the Civil Aviation Act (CAA) in connection with Art. 39, para. 1 of the Concessions Act (CA). In carrying out the preparatory actions, technical, financial, economic, environmental and legal analyzes have been prepared on the assignment of the grantor. According to Art. 58, para. 1 and 2 of the CA, the purpose of the justification for awarding a works concession is to justify the lawfulness and advisability of the concession, as well as of the decision for opening the procedure, and to define essential elements of the concession in preparation. Pursuant to Art. 58, para. 3 of the CA the justification is sent for coordination to the Ministry of Defense, the Ministry of Interior, the Ministry of Environment and Water, the Ministry of Culture and the State Agency for National Security. There is no reason to agree the justification of the concession with a managing authority.

4 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

I. ADVISABILITY OF THE CONCESSION

According to the Strategy for the Development of the Transport System of the Republic of Bulgaria until 2020, the transport sector of Bulgaria is of utmost importance for enhancing the competitiveness of the national economy and for serving the population. Among the main goals are the achievement of sustainable and balanced development of the different modes of transport, efficient use of the available resources, strengthening the competitiveness of the Bulgarian transport system. By awarding a work concession for “Civil Airport for Public Use Plovdiv” – public state property, in accordance with the approved by the National Strategy for Development of Concessions in the Republic of Bulgaria until 2027 and the Action Plan for State Concessions (2019-2020) aims to achieve the following government priorities: 1. Development of quality and accessible transport infrastructure and services of public interest through partnership between MTITC and an economic operator; 2. Meeting the public needs for the development of transport infrastructure by including private investment in the construction and provision and management of transport services and related service activities at the best value for money; 3. Cost-effectiveness in managing public property in defense of the interests of citizens and society; 4. Ensuring the accessibility and quality of the services provided; 5. Effective maintenance, modernization and development of the transport infrastructure; 6. Integration of the Bulgarian transport system into the European one; 7. Limiting the negative impact of transport on the environment and human health; 8. Achieving a high level of safety and security of transport; 9. Developing airport infrastructure and maintaining international standards in terms of flight safety and aviation security; 10. Creating prerequisites for the further development of the infrastructure with a view to serving modern long-haul aircraft at long distances, including direct intercontinental flights.

The main objective is to attract private investors in the process of development of the transport infrastructure sites to take the operational and construction risk in their construction and modernization, managing and maintaining them in order to achieve optimization of the provided transport services and provide stable financial resources, experts. knowledge and management skills for a relatively long period of time, in accordance with the subject of the concession and the conditions for its implementation.

Specific objectives of the concession The main specific objectives of the works concession for “Civil Airport for Public Use Plovdiv” are through the mechanisms of the awarded works concession and to attract a financially stable private investor in the management of the airport in order to achieve: 1. Development and modernization of airport infrastructure and maintenance of international standards in terms of flight safety and aviation security; 2. Creating prerequisites for the further development of the infrastructure with a view to servicing modern long-haul aircraft at long distances, including direct intercontinental flights; 3. Increasing the efficiency and competitiveness of the airport; 4. Improving the quality of passenger and aircraft service; 5. Modernization of airport security and safety systems.

5 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

The concession award aims to transfer to the designated concessionaire the operational and construction risk in the management and maintenance of the Plovdiv airport, with funding provided for its construction, rehabilitation of the existing infrastructure and the services provided, while the functions of the state remain regulatory and controlling, with retention of ownership of the assets provided - public state property and acquisition of property on the assets constructed by the concessionaire during the term of the concession.

The specific objectives derive from the three strategic objectives of the transport sector policy in the management program - achieving economic efficiency, developing a sustainable transport sector and improving regional and social development and cohesion. The award of the concession is appropriate in order to achieve the above objectives, and in addition a number of benefits will be realized for the state, users of the service and society:

1. For the state: direct economic benefits to the state through concession fees, from profit tax and from the concessionaire's investments in public state property;

2. For airlines and passengers: the concessionaire's investments in airport infrastructure, equipment and technology improvements and safety of work lead to reduced processing times, increase the efficiency and security of passengers, cargo and technological processes. Save time, better service and greater security are benefits for airlines and passengers.

3. Benefits of job creation: this is related to job creation both during the investment activity and during the operation of the concession object;

4. Business Benefits: Fast and quality airport services, good infrastructure, convenience and quality of service are among the significant benefits to businesses. The transformation of the airport as a result of the investments in the infrastructure into a modern technological object also implies the development of the area around the airport;

5. Social benefits: The concession will have an undeniable socio-economic positive effect on the region, such as increasing economic and commercial efficiency, improving business and regional infrastructure, multiplying the effects, such as increased budgetary opportunities for investment in other areas.

Attracting a private investor to improve the quality of the airport services offered, expand the business activities and increase their revenues, professional operational management of the airport transport infrastructure and facilities, increase of traffic and passenger traffic in the Plovdiv airport area, combined with the priorities of the Bulgarian Government, approved by the Strategy for the Development of the Transport System of the Republic of Bulgaria until 2020, determine the advisability of awarding the concession.

The advisability of the concession is also evidenced by the basic permits adopted when awarding it, including, but not limited to, the conditions for exclusion from participation, the requirements to bidders and the evaluation criteria.

6 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

II. LEGISLATION OF THE CONCESSION

1. Main legal acts for Concession award

The main legal acts applicable to the concession and relevant for various aspects of the object of concession, construction and services in the performance of the concession are acts of national legislation, as well as those of the European Union and international acts, such as: 1.1. Bulgarian legislation - first of all, these are the Concessions Act and the Civil Aviation Act (CAA), together with the normative acts for their implementation. An important group of normative acts are those related to design and construction, such as the Spatial Planning Act, the Cadastre and Property Register Act and other acts for their implementation. Environmental legislation is relevant, incl. Environmental Protection Act, Environmental Noise Protection Act, Protected Areas Act, etc. The provisions of the labor and social security legislation, including, but not limited to, Art. 123a of the Labor Code, the Health and Safety at Work Act, etc. et al. Various requirements and provisions of general laws, such as the State Property Act and its Implementing Regulations, the Law on Protection of Competition, the Commercial Law and others, as well as normative acts for the implementation of these and other laws are applicable. 1.2.Among the acts of EU law, the main ones which concern, on the one hand, the rules for the award of concessions and, on the other, the activities of civil airports for public use are: Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of Concession Agreements, OJ L 94, 28.3.2014, pp. 1-64, the requirements of which have been transposed into the existing CA; Commission Implementing Regulation (EU) 2015/1986 of 11 November 2015 establishing the standard forms for the publication of procurement notices and repealing Implementing Regulation (EU) No 842/2011, OJ L 296, 12.11 .2015, pp. 1–146; Regulation (EU) 2018/1139 of the European Parliament and of the Council of 4 July 2018 on common rules in the field of civil aviation and establishing a European Union Aviation Safety Agency and amending Regulations (EC) No 2111/2005, (EC) No 1008/2008, (EU) No 996/2010, (EU) No 376/2014 and Directives 2014/30 / EU and 2014/53 / EU of the European Parliament and of the Council and repealing Regulations (EC) ) No 552/2004 and (EC) No 216/2008 of the European Parliament and of the Council and Council Regulation (EEC) No 3922/91, OJ L 212, 22.8.2018, pp. 1-122, which is new a major act of EU law, with direct use and attitude to airport activities. The aforementioned regulation complies with the national legislation and the Act amending and supplementing the Civil Aviation Act (promulgated, SG No. 1/2019) adopts the corresponding amendments, motivated by this act, as explicitly stated in the reasons to the драфт лав. 1.3.Leading international treaties relating to various aspects of the management and operation of civilian airports, including safety, are: the Convention on International Civil Aviation, signed at Chicago on r 07.12.1944 (Chicago Convention), signed at Chicago on December 7, 1944, ratified by Decree No. 596 of 04.08.1966, of the Presidium of the National Assembly for Accession,

7 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

promulgated, SG, issue no. 62 of 1966. Amendments to its text, adopted by Protocol of 27.5.1947 (Art. 93bis), were adopted; Protocol of 14.05.1954 (Art. 45); Protocol of 14.06.1954 (Articles 48a, 49f and 61); Protocol of 21.06.1961 (Art. 50a); Protocol of 15.09.1962 (Art. 48a); Protocol of 12.03.1971 (Art. 50a); Protocol of 07.07.1971 (Article 56); Protocol of 16.10.1974 (Article 50a). The Republic of Bulgaria is a party to the said protocols; the Convention for the сuppression of unlawful seizure of aircraft in force for the Republic of Bulgaria of 14.10.1971 (The Hague Convention), ratified by Decree No. 564 of the Presidium of the National Assembly of 1.04.1971 - SG, issue 29 of 13.04.1971, promulgated, SG, issue 12 of 11.02.1972. The Convention for the suppression of unlawful acts against the safety of civil aviation, in force of 14.10.1971 in force for the Republic of Bulgaria of 24.03.1973 (Montreal Convention), ratified by Decree No. 15 of the State Council of 15.01.1973, promulgated SG, issue. 6 of 19.01.1973 and the State Gazette, issue no. 45 of 11.06.1974; Eurocontrol International Convention relating to cooperation for the Safety of Air Navigation of 13.12.1960, as amended by the Protocol of 12 February 1981, ratified by a law adopted by the 37th National Assembly on 30.01.1997, prom. SG, issue 13 of 1997, in force for the Republic of Bulgaria from 1.06.1997, issued by the Ministry of Transport, promulgated SG, issue 77 of 31.08.1999; The Agreement between the Republic of Bulgaria and the North Atlantic Treaty Organization regarding the Transit of NATO Forces and NATO Personnel, promulgated SG, issue 39 of 18.04.2001 (NATO Agreement) and others.

2. Legal and factual grounds for Concession award А) The legal grounds are the provisions of the Concessions Act and the Civil Aviation Act, which mainly determine the type and object of the concession, the competent authority and the type of procedure for determining a concessionaire. The grounds contained in the CA are as follows: (а) Art. 43b, para 1 of CAA – the special provision, which envisages that the civil airports for public use, which are state property, may be used by airport operators – traders, to whom a works concession or a service concession has been awarded according to the CA procedure; b) the concession is defined as a state works concession in accordance with Art. 1, para. 1 and Art. 6, para. 2, item 1 and para. 3 of the LC; (c) Art. 10, para 1 of CA – with this concession awarding works under Art. 7, para 2, it.1 of CA shall be effected, as well as providing services related to airport management and exploitation; d) according to the determined estimated value of the concession, the concession is of the type “concession with cross-border interest”, according to Art. 11, para. 1 of the CA; e) Art. 17, para 2 of CA and Art. 43b, para 3 of CAA – defining the competence of the Minister of Transport, Information Technology and Communications as a Grantor; f) thdefining the type of procedure, in accordance with what is accepted for the present concession, an open procedure will be conducted for designation of a concessionaire in accordance with Art. 54, para. 2 of the CA; g) the requirement of Art. 71, para 1 of CA – as a ground for the decision of the Grantor, following approval by the Council of Ministers (CoM) for opening the concession procedure;

B) Factual grounds. Regarding Plovdiv Airport, the prerequisites for it to be a object of concession are present, as per Art. 15 of CA and Art. 43b, Para 1 of CAA, in connection with §3, item 13 of

8 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property the Additional provisions of CAA, the main ones of which are: 1) Plovdiv Airport has the status of a civil airport for public use, designated as such by the Council of Ministers, which also serves international traffic, in accordance with Council of Ministers Decision No 390 of 1992; 2) The subject of the concession shall be a concession territory with specified land properties and the buildings, facilities and equipment located on them - predominantly public state property, through which the activities of a civil airport for public use are carried out and which will be provided for the construction and services; 3) At present, the management and operation of Plovdiv Airport is carried out by the airport operator Plovdiv Airport EAD - a trading company in which the state is the sole owner of the capital, on the grounds of Art. 43b, para. 1, sentence two and art. 43e of the CAA by virtue of a contract. Plovdiv Airport EAD holds valid licenses and certificates, including an airport operator license, ground handling licenses (ground administration and surveillance; passenger service; baggage handling; cargo and mail handling; aircraft apron servicing; aircraft servicing means; servicing aircraft with oils and fuels; flight operations and crew administration; ground transportation), assigned with the functions of airport administration, etc. necessary to carry out its specialized functions and other economic activities; 4) A certificate of operational suitability was issued for Plovdiv airport at airport No 4/12.12.2016 by Directorate General “Civil Aviation Administration” pursuant to Art. 44, para. 2 of the PGI and Art. 16 of Ordinance No. 20/2006, which certifies that the Plovdiv Airport meets the requirements of the civil aviation regulations in the Republic of Bulgaria and is fit for aircraft operation code "D" according to the ICAO classification as an airport for public use. international and domestic passenger and freight services, certified for 2018; 5) The Plovdiv Airport has been issued with a certificate by the DG CAA for the operational suitability of ground handling systems and facilities related to passenger handling, servicing and provision of aircraft, loading and unloading of luggage and cargo No 4U dated 12.12.2016, certified for 2018. 6) The Plovdiv Airport also has Certificate No BGLBPD-001 issued in accordance with the requirements of Regulation No 216/2008 of the European Parliament and of the Council and Commission Regulation (EU) No 139/2014. 7) A Master Plan for the Development of Plovdiv Airport has been adopted since 2008 and others. The above justifies the existence of legal and factual grounds for the award of concession at Plovdiv Airport..

3. Issues, related to the National security and Defence of the country, Environment, Protected areas, Zones and Sites, and the Public order The clarification of issues related to national security and defense of the country, the environment, protected areas, zones and sites, as well as the public order, is essential both for the opening of the procedure for designating a concessionaire and for the purposes of concluding and executing the concession agreement. The imperative provision of Art. 24 of the CA, which excludes the award of concessions at risk for constitutionally recognized categories of higher order protection, such

9 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property as national security and defense of the country, life and health of citizens, environment, protected areas, zones and sites and public order, to which other statutory cases may be added. In the following points they are discussed separately with a view to agreeing the justification, which is carried out in accordance with Art. 58, para. 3 of the CA with the Ministry of Defense, the Ministry of the Interior, the Ministry of Environment and Water, the Ministry of Culture and the State Agency for National Security (SANS). 3.1. National security Plovdiv Airport has been designated as a strategic site relevant for national security and explicitly included in the list - Annex 1 to Decree No 181 of 20 July 2009 of the Council of Ministers on the definition of strategic areas and activities relevant for national security, promulgated, SG, issue 59 of 2009, as subsequently amended. According to Art. 1 of the same, strategic areas and activities relevant to the national security of the country are part of the critical infrastructure. As shown in Annex 1 to the Decree, Section VII for the Transport sector in the strategic activities under item 1.3 is indicated "Air transport”, and item 2, sub- item 2.8 indicated " Airports - Sofia, Varna, Burgas and Plovdiv". The legal definition of the term "strategic objects" is contained in § 1, para. 1, item 8 of the Supplementary Provisions of the Rules for the Implementation of the State Agency for National Security Act (RISANSA), namely, these are administrative, industrial, transport or communication objects, on whose normal functioning depends the activity of the state administration bodies and the work of the main branches of the economy of the country. As defined in § 1 of the Supplementary Provisions of the aforementioned Regulation, critical infrastructure is defined as “a system or parts thereof that are essential for the maintenance of vital public functions, health, safety, security, economic or social well-being of the population and whose breach or destruction would have significant negative consequences for the Republic of Bulgaria as a result of the inability to retain these functions. "; critical infrastructure is "an organizationally and / or economically distinct part of a critical infrastructure that is key to its normal functioning, continuity and integrity." Persons who own or operate a critical infrastructure are responsible for the investment or for the normal operation, continuity and integrity of a particular system or part of it, established as critical infrastructure in the Republic of Bulgaria. As can be seen from the quoted Decree 181 of the Council of Ministers of 2009, strategic areas and activities relevant to national security identified in the list - annex thereto are considered critical infrastructures identified. The competence for their protection and the regimes to be observed in their operation are of the Ministry of Interior and SANS, respectively, regulated by the Ministry of Interior Act (MoIA), the State Agency for National Security Act (SANSA) and the by-laws for their implementation. The control over the implementation of the above protection measures is carried out through routine or incidental inspections by SANS officials. The inspections shall be subject to the mandatory security measures of strategic areas, the regime of access to strategic areas and zones related to the implementation of strategic activities, and the mandatory security measures of the communication and information systems and assets of strategic areas, and of persons carrying out strategic activities. When carrying out the inspections, SANS employees have the right to access the sites, premises, communication and information systems and assets in the inspected strategic object, to the documents related to the organization of physical and information protection of the inspected strategic object, and to request explanations from the managers and employees of the inspected strategic site. The Agency is the body that issues work permits or performs a specific task in the strategic areas of strategic areas and areas related to the implementation of strategic activities (Article 40, paragraph 1,

10 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property item 2 of the RISANSA). These permits provide access to strategic areas of the strategic site or to areas related to the execution of the strategic activity (do not apply for one-time visits to the strategic areas of the strategic areas and in the areas related to the execution of strategic activities when the visitor is accompanied by an employee with such permission). Permits to work or to perform a specific task in strategic areas of strategic areas or in areas related to the execution of strategic activities shall be valid for the duration of the respective position or for the period of completion of the specific task, but for no more than 3 years . Strategic site managers and contracting entities shall provide SANS with a list of positions that require access to the strategic areas of the strategic site and the areas related to the implementation of strategic activities and when making a change in the list, they are obliged to notify SANS immediately. With regard to strategic areas and critical infrastructure, a number of conditions and requirements apply, which will be mandatory for compliance with the concession for such site. The concessionaire, as the airport operator at Plovdiv Airport, must be responsible for the implementation of the airport security measures, includingto secure their financing. It must provide access to competent authorities for on-the-spot checks and other controls to ensure that these measures are implemented. The concessionaire and its employees will also be subject to other requirements, including the designation of positions and persons with access to strategic areas and more. in accordance with the regulations in force and the requirements of the competent authorities. At the same time, there is no prohibition for the strategic object Plovdiv Airport to be granted on concession, in view of which it is permissible to conduct the concession procedure and if a concessionaire is awarded - a concession awarded, the concession agreement explicitly including the necessary conditions for compliance by the concessionaire with the relevant requirements. and rules for which both the grantor and the competent authorities will exercise control over the entire duration of the concession.

3.2. Defense of the country The first aspect of consideration of this issue is related to the regulation of the Republic of Bulgaria Defense and the Armed Forces Act1 (RBDAFA), in implementation of which the Ministry of Defense has a legal and direct relation to strategic areas and critical infrastructure. According to Art. 35, para. 3 and 4 of the Law on the Ministry of the Interior, the bodies of the Ministry of the Interior, individually or jointly with the bodies of the Ministry of Defense, the structures of direct subordination of the Minister of Defense, the Bulgarian Army and other specialized bodies provide protection of strategic activities for the country and sites, as well as of the declared critical infrastructure. The interaction between the two agencies for the implementation of the activities assigned to them under this law and for carrying out the extinguishing and rescue activities is carried out according to instructions issued jointly by the two Ministers. The Armed Forces are also envisaged to carry out tasks for the protection of strategic and critical infrastructure areas, for which a contract is concluded with the interested parties (without specifying what those persons may be), as well as conducting special operations to counter terrorism and overcoming the consequences of terrorism (Art. 57, para. 1, Item 2 of the RBDAFA), and when declaring a state of war, martial law or a state of emergency state authorities and the armed forces control the sites of critical infrastructure of the country (Art. 123 item 8 RBDAFA).

1LDAFRB is in force since 12.05.2009, prom. SG, issue 35 of 2009, as subsequently amended 11 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Arrangements for the protection and defense on the territory of the country of strategic and critical infrastructure sites, including the control of aviation in the airspace of the Republic of Bulgaria, are contained in Chapter Six of Art. 130-132 of the RBDAFA. The term “critical infrastructure” is a term also defined in § 1, item 18 of the Supplementary Provisions of the RBDAFA as a “system of facilities, services and information systems whose disruption, malfunctioning or destruction would have a serious negative impact on the health and safety of population, environment, the national economy or the effective functioning of government.” This order remains fully applicable to the specific strategic area and critical infrastructure area of Plovdiv Airport, including no exceptions or special rules for cases where a concession or other rights for exploitation, use, etc. are granted to third parties. This law does not introduce a prohibition on awarding a concession or granting other rights to use such an area. The second aspect follows from Art. 43, para. 6 of the CAA, according to which civil airports for public use and military airports can be used jointly. The terms and procedure for joint use shall be determined by the Minister of Transport, Information Technology and Communications and the Minister of Defense. Point 3 of the Decision of the Council of Ministers No 15 of 15 January 2008 on free allocation for management of state-owned property, to the Ministry of Transport for the needs of the General Directorate of Civil Aviation Administration, states "the Ministry of Defense to use the airport to perform its functions", without specifying further the conditions and procedures for such use by the MoD. The grounds for adoption of the decision are specified under Art. 15, para. 2 and Art. 17 of the State Property Act, Art. 43, para. 6 and Art. 43b, para. 1 of the Civil Aviation Act and Art. 6, para. 1 of the Regulations for the application of the State Property Act, with respect to the use of the object by the MoD, there is Art. 43, para. 6 of the Civil Aviation Act, creating such a legal opportunity as already indicated. In the preparation of the concession no document was found, joint or in the form of counter documents of the two Ministers - of the Defense and of the Transport, InformationTtechnology and Communications, or by persons authorized by them, by virtue of which Art. 43, para. 6 of the Civil Aviation Act to determine the terms and conditions for joint use of the Plovdiv airport. A contract on interaction in the conditions of joint use of Plovdiv Airport was signed, signed on 30.08.2017 between the present Airport Operator Plovdiv Airport EAD and Military Formation 32040. The subject of the contract is to refer to the Decision of the Council of Ministers № 15 of 2008 and it is defined "for the joint use of a civil airport for public use Plovdiv defines the obligations and responsibilities of the airport operators". The General section of the contract indicates its purpose and scope and retrospectively presents some facts from 1961 to 2012. Areas of responsibility have been identified, with the military formation having an area of responsibility within the territory of 24 airbases starting "150 m southwest of the centerline of PIC12/30" and for the aerodrome operator is the rest of the airport complex. As a joint area of responsibility for the emergency rescue groups on both sides is an area with a radius of 5 km from the airport CT. A Committee on Joint Base Issues has been designated to be responsible for the implementation of the contract and, if necessary, to propose amendments and the way in which it is to be operated (point 6 of the contract). The term of the contract is defined in item 8 in fact as indefinite, valid until the conclusion of a new contract, with the possibility of updating for 5 years. Several sections deal with various issues related to: emergency and fire protection operations (section II); airport operations (Section III); environmental protection (Section IV); facilities, repairs, construction works (section V); reimbursement (Section VI); security (section VII); military aircraft (Section VIII). In the reimbursement section it is agreed that 12 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property the military formation "reserves the right to calculate the cost of the requested services" provided by the airport operator, which formulation, as well as the other points in this section, are clearly too vague. The existence of item 4, which exempts military formation from costs from and for other military formations, is an example of the fact that the agreement is indeed bilateral between the particular military formation and the current aerodrome operator, but cannot replace a broader settlement and and committing to the relations of use, as provided by law to be made between the two ministers. The said agreement is definitely useful for creating order in the relationship of joint use and enhances the coordination, rights and obligations of the airport operator and the military establishment, but it cannot have direct effect on the concessionaire (if the latter determines, it may conclude new agreement, including under new conditions, if agreed).

3.3. Life and health if citizens The protection of the life and health of citizens is a central concern of the State through its bodies and institutions, including a priority in the operation of airports, whether operated by concessionaires or other airport operators. This is mainly reflected in the numerous and strict safety requirements and rules, which have been created at different levels - both at the level of law and regulations, through issued administrative acts - certificates, licenses, etc., as well as through the various internal documents - manuals, regulations, etc., which the airport operator creates and which they comply with in the course of their business, regardless of the reason on which they are granted the right to operate a civil airport. One of the conditions for an airport operator's license to be issued is that the organization, equipment and technologies ensure compliance with the established standards and procedures for ensuring the safety and security of the flights at the respective airport (Article 48d, Paragraph 2, Item 4 of the CAA). There is a similar condition for the issuance of a groundhandling license in accordance with Art. 48e, para. 2, item 3 of the CAA. The concept of flight safety is defined in § 1, item 3 of the Supplementary Provisions of the Civil Aviation Act as “the property of the aircraft system to ensure the smooth conduct and operation of the flights, preserving the life and health of the participants in them, as well as the integrity of the cargo and the aircraft." It is important to point out that ensuring the safety of flights and the servicing of persons is not only the responsibility of the aerodrome operator, but all institutions and persons involved in the operation of flight management, aviation operators, aircraft crews have the power to do so, including explicitly such a function has the Air Traffic Services Authorities /ATSA/ (Article 53, paragraph 2, item 1 of the Civil Aviation Act) in its field of activity includes “air traffic management for achieving safety, efficiency and regularity of flights in the served civil airspace" and DG of CAA, which has the right to revoke licenses of air operators and airport operators in case of established safety threat. Pursuant to Art. 16f, para. 5 of the Civil Aviation Act, DG of CAA has the power, in case of established violations of the safety and security requirements and other obligations established by law, by the person to whom the act (license) was issued, to: restrict the rights under the issued act to remove the violation and fulfillment of the mandatory requirements given, if the performance of the restricted activity will not endanger the safety and security of aviation and will not create a risk of harm or endanger the life and health of people; temporary suspends the rights under the issued act pending the elimination of the violation and the fulfillment of the given mandatory prescriptions, if the performance of the activity will endanger the safety and security of aviation and and will create a risk of harm or endanger the lives and health of persons. 13 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

The Civil Aviation Act also provides for administrative and penal provisions providing for pecuniary sanctions in various formulations related to safety issues. Detailed rules related to airport security are also contained in the by-laws on the implementation of the Civil Aviation Act, such as: а) The Ordinance No. 14 of October 15, 2012 on aerodromes and airport security stipulates that upon submission of an application for issuance of an airport Certificate of operational serviceability, a management and operation manual covering all location-related information shall be submitted for approval. at the airport, facilities, services, equipment, operational procedures, organization and management, including a Safety Management System. The same ordinance has a section on "Safety Management" with detailed rules, including the preparation by DG CAA of a safety program in implementation of which airports holding a Certificate of operational serviceability that implement a safety management system approved by DG CAA, which meet the requirements for ensuring the maintenance of safety in accordance with Annex 4 to the Regulation, etc .; б) In Ordinance No. 20 of 2006 on the isuance of a Certificate of operational serviceability of a civil airport, one of the required documents is a permit issued pursuant to Art. 82, para. 4 and 5 of the Eenvironmental Protection Act (EPA). A purposeful Guide to emergencyand rescue services at the airport and in the area of liability under Ordinance No. 3 of 1996 on emergency rescue of flights at civil airports (revoked) is being prepared, which includes a plan for action in case of a major industrial accident in terminals and in the area of the airport, including in the case of burst environmental pollution, with a description of facilities, equipment, personnel and procedures for notification and conduct of operations (as required by the Airport Management and Operation Manual - Annex № 3 to Art. 18, para. 2, item 3 of the Ordinance and others. In Art. 425 of the aforementioned Ordinance No. 3 of 2009, the envisaged emergency response plan at the airport should ensure the coordination of actions taken in the event of an emergency at or near the aerodrome. в) Ordinance No. 3 of May 25, 2009 on the Emergency and Rescue Security of Civil Airports, issued by the Minister of Transport (promulgated SG No. 44/2009, amended and supplemented No. 51 of 2015) contains a number of rules applicable to Plovdiv Airport, both currently and under the terms of the concession awarded. Examples of emergencies listed are: aircraft emergencies, sabotage, including bomb threats, unlawful interventions in civil aviation, accidents and incidents involving dangerous goods, fires and prerequisites for their occurrence, natural disasters, emergencies, threats to public health and other safety-related events in civil aviation. Examples of public health threats cited are: the increased risk of internationally transmitted and transmitted by passengers or cargo serious contagious disease through air transport and a severe epidemic of communicable diseases that could potentially affect a large proportion of airport staff. This shows that the requirements for the protection of life and health apply to both passengers and persons using the airport services, as well as to the workers and employees of the airport complex. In conclusion, all safety rules and requirements for the protection of the health and life of citizens are addressed to those carrying out the relevant activities, including will be fully applicable to the activity of the concessionaire as an airport operator, ground handling operator and others, related to the provision of services and ensuring the required operational fitness and safety at Plovdiv Airport. 3.4. Environment and protected areas, zones and sites In addition to the specific environmental legislation, rules in this regard are contained in the CAA. Thus, according to Art. 46 of the CAA a condition for the coordination of the

14 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property projects for construction, extension or reconstruction of civil airports is the fulfillment of the procedures under the Environmental Protection Act. Respectively, and under the conditions of the granted concession, the concessionaire shall be obliged to comply with the said requirement when undertaking actions for the extension or reconstruction of the Plovdiv Airport. The by-laws on the implementation of the CAA contain requirements for airports related to environmental protection, the concessionaire being obliged to comply with them by virtue of the legal rules themselves, including: а) In Ordinance No. 14 of October 15, 2012 on Airports and Airport Security, Art. 1, para. 1, item 9 part of its object is to limit the airport impact on environment; according to Art. 13 when designing airports, the regulatory acts in the field of spatial planning and environmental protection are complied with; furthermore, there are numerous rules related to environmental protection, e.g. for noise, for the treatment with de-icing fluid in the treatment of aircraft not to contaminate groundwater, etc. requires the construction of a drainage system, the use of chemicals in the technical maintenance of the airport, etc. Chapter six of the Ordinance (Art. 686 et seq.) contains an explicit framework for limiting the airport impact on environment. The airport administration prepares a plan and takes measures to limit the the airport impact on environment by developing a plan that covers limiting the impact of major factors such as: aviation noise created by flying and landing aircraft; noise made when testing aircraft engines on the ground; ambient air purity; waste, incl. toxic waste; groundwater and surface water pollution and mass pollution in emergencies; radioactive radiation, incl. in an emergency. It is the duty of the airport administration to establish a system for constant monitoring of the factors under Art. 686, para. 2 of the ordinance. b) Ordinance No. 20 of 2006 provides that one of the documents for the issue of a Certificate of operational serviceability at a civil airport is a permit issued pursuant to Art. 82, para. 4 and 5 of the EPA; The Airport Management and Operation Manual at the airport and in the area of responsibility shall also include a plan of action in a major industrial accident at terminals and at the airport area, including volatile environmental pollution, with a description of facilities, equipment, personnel and procedures for notification and conduct of operations, as well as the section "Environmental protection", etc. Regarding the protected territories, zones and sites detailed information is contained in the ecological analysis and it should be noted here that in the immediate vicinity of the Plovdiv Airport a protected area is the Chaya river with code (BG 0000194). The protected area is created for the purpose of: а) Conservation of the area of natural habitats and the habitats of species and their populations subject to conservation within the protected area; b) Conservation of the natural state of natural habitats and the habitats of species subject to conservation within the protected area, including the species' natural composition, characteristic species and environmental conditions of those habitats; c) Restoration, if necessary, of the area and natural state of priority natural habitats and habitats of species, as well as of populations of species subject to conservation within the protected area. When predicting the expansions and reconstructions of Plovdiv Airport, the direct or indirect impacts of their implementation on the Chaya river protected area should be evaluated, incl. fragmentation of habitats, drying up, alteration of the species composition of 15 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property plant and animal species in it, mortality of individuals, waste pollution, damage to existing vegetation, etc.П Specific obligations related to environmental protection, protected areas, zones and sites are the subject of environmental analysis. Again, similarly to other obstacles, and in relation to environmental protection, protected areas, territories and sites, it must be summarized that the many requirements are fully applicable to a future aerodrome operator, groundhandling operator and performing the functions of an airport administration. to ensure compliance with environmental protection requirements. No provisions and prerequisites are identified which, as a condition for the protection of the environment or its individual elements and factors, have the effect of preventing the award of a concession.

3.5. Public order Public order, including as a power to protect it, is one of the main functions of the Ministry of Interior, respectively, the Minister of the Interior is the body that implements the state policy on prevention, counteraction to crime, protection of public order, protection of national security, protection of rights and citizens' freedoms, etc. by developing policies, planning activities and controlling their implementation. The security activity carried out by the bodies of the Ministry of Interior is an activity for the preservation of public order, according to Art. 14 of the Ministry of the Interior. For the prevention and termination of the violations related to the fulfillment of the obligations under the Ministry of the Interior, as well as for elimination of the negative consequences thereof, the Minister of Interior or his authorized officials may stop the construction, commissioning and use of sites, installations, appliances. and facilities, as well as to halt other activities that pose a threat to national security and public order, to the occurrence of fires and industrial accidents (Art. 255 of the MoI Act). In Art. 92, para. 2 of the Ministry of Interior Act is provided, that the Ministry of Interior provides security by police bodies, including security and other equipment, at the sites listed in Annex 1, among which is Sofia Airport. The security of these sites is regulated as an obligation of the Ministry of Interior, for which it receives no remuneration, and the costs for the implementation of the security are reported to the budget of the Ministry of Interior (Article 92, paragraph 9). Therefore, the concessionaire should not owe any remuneration for the mandatory security of the Plovdiv Airport as the object of critical infrastructure of the country.

3.6. Other cases specified by law No other statutory cases preventing the award of concession for “Civil Airport for Public Use Plovdiv” have been identified. Without being defined in this way, but given the specialized activity performed in the operation of a civilian airport for the servicing of international and domestic passenger and cargo services, it is indisputable to take into account the imperative requirements of the CAA and the by-laws of its implementation, related to ensuring the safety and security of the flights at the airport, compliance with the standards and requirements for safe and quality maintenance of the operational fitness of the airport, emergency rescue, fire safety, etc. 3.7. Implementation of the requirements related to the national security and defense of the country, life and health of citizens, environment, protected territories, 16 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property zones and sites and public order, when conducting the concession procedure, concluding the Concession Agreement and carrying out the concession In pursuance of the imperative provision of Art. 73, para. 2, item 3 of the CA as a condition of the concession are included the requirements related to the national security and defense of the country, life and health of citizens, environment, protected territories, zones and sites and public order. Among the obstacles to the award of the concession, as regards the eligibility of economic operators in the concession procedure, are the circumstances, the existence of which justifies the exclusion (removal from the procedure for determining the concessionaire). Thus, in Art. 60, para. 2 and 3 of the CA set out the grounds for exclusion, which should not be available for the applicant/bidder, as well as for the subcontractors and third parties indicated by them (where applicable). The grounds include those related to national security, public order and environmental protection, namely: а) Under Art. 60, para. 2, item 1 of the СА, when a sentence has entered into force of a participant or a member of its management or supervisory body, or any person who has the powers of representation, decision or control therein, has been convicted of a criminal offense of terrorism under Art. 108a of the Criminal Code, trafficking in human beings under Art. 159a-159d of the Criminal Code, formation or management of an organized criminal group in some of the hypotheses under Art. 321 of the Criminal Code; b) Under Art. 60, para. 2, item 4, b. "b" of the CA, where by an administrative or judicial act entered into force it is established that the participant has failed to fulfill obligations in the field of environmental law, laid down in national legislation, EU law or with international environmental conventions under Annex No. 5. In establishing such a circumstance, when the condition under Art. 60, para. 4 of the CA is not applicable for them, the respective participant is not allowed to further participate in the concession procedure. Next, the concession agreement (as provided for in its project) contains the rights and obligations of the parties, including applicable obligations related to national security and defense of the country, to the life and health of citizens, to the environment, to protected territories, zones and territories. sites and public order, where applicable (Article 122, paragraph 2, item 15 of the CA). In this case, given the nature and status of Plovdiv Airport as a strategic national security site and in relation to the requirements for the activities carried out in its operation and provision of services, such conditions and / or obligations should definitely be included. The Concessionaire will need to practically carry out specific activities, comply with and apply certain restrictions to third parties. The consequence of possible non-compliance or breach of obligations under the contract is the imposition of the contractual penalties provided for in it, including its early termination under the terms of Art. 146, para. 1 of the CA, separately from the other types of liability that is borne in accordance with the applicable legislation. It is an important fact that the law explicitly defines as a reason for the violation of the economic balance the occurrence of a threat to national security and defense of the country, to the life and health of citizens, to the environment, to protected territories, zones and sites and to public order (Art. 123, para 2, item 4 of the LC). The occurrence of such a danger gives rise to the right of each of the parties to the concession agreement to request its amendment to restore the economic balance, if the amendment is provided for by a review clause. Again, in view of the designation of the airport as a strategic object of importance for the national security of the country and critical infrastructure, a revision clause should be

17 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property included in the draft concession agreement in the event of such a circumstance. A significant consequence in the event of a circumstance mentioned above is the right of the grantor to unilaterally terminate the Concession Agreement, unless there is a ground for amendment of the contract (Article 146, paragraph 1 of the CA).

3.8. Availability of classified/sensitive information Regarding the information related to the subject of the concession, there is no need for the procedure to be such containing classified information within the meaning of the Classified Information Procedures Act (CIPA), which justifies it as a classified information concession. In the event that the availability of classified information is further established, and when such information is subsequently available in connection with the performance of the Concession Agreement, its access (access) and protection requirements are set out in the CIPA and its Implementing Regulations, and will be fully applicable to the concessionaire, respectively to any person authorized by them (subcontractor, staff, etc.) which requires access to classified information. At the same time, part of the information and documents related to the concession have the character of sensitive information within the meaning of Art. 78, para. 6 of the CA, which necessitates a restriction of free access to it when it is part of the concession documentation. Such information will be provided in a certain order and to certain persons who have undertaken to disclose it and use it only for the concession. The law provided for the possibility of classifying information as sensitive and, accordingly, its protection. Art. 78, para. 6 of the CA states that the publication of the concession documentation in the National Concession Register (NCR) deletes the legally protected information, as well as the commercial or other information, which for extraordinary security or technical reasons or due to a sensitive nature requires a specific level of protection defined as sensitive information, stating the reason for that. There is no other definition of this term, but it is clear from the cited provision that sensitive information is defined as such as is protected by law and specifically defined information which may be commercial or of other nature due to technical or security-related reasons, or sensitive. The law also provides for the reflection of this particular order of access to sensitive information on certain deadlines set for economic operators, insofar as it may take longer than the general order of free access. The concession documentation provides the procedure and rules for acquaintance of economic operators with sensitive information until the deadline for submission of applications and offers expires, such as certain documents containing information related to the activity of Plovdiv Airport EAD: а) The existing contracts of Plovdiv Airport EAD; b) List of pending court proceedings to which Plovdiv Airport EAD is a party; c) List of Plovdiv Airport EAD staff by positions; d) Copy of insurance policies on the insurances made; e) Other sensitive information, including in connection with the joint use of Plovdiv airport for defense purposes.

3.9. Use of the Plovdiv Airport by NATO forces and personnel

18 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

The use of the airport by NATO forces and personnel, including aircraft, is provided for in the NATO Agreement. It is concluded for a period of 5 years and will be automatically extended for a further period of 5 years unless either party notifies the other party of its intention to terminate it. Under the NATO Agreement, NATO forces, NATO personnel and NATO contractors use airports in the Republic of Bulgaria without paying the appropriate fees, levies, duties, receivables or customs debts, but with the obligation to pay a reasonable price for the requested and the provided services. However, operations, movement and access cannot be hindered due to outstanding payments for these services (Art. 12, item 2). Under the same conditions, at the request of NATO, the Republic of Bulgaria is required to provide NATO and NATO forces and NATO personnel in emergency or disaster situations with access to the most appropriate airport under the control of the Bulgarian authorities. Article 11 of the Agreement provides that transit or situated in the territory NATO aircraft, NATO forces and NATO contractors are not subject to the licensing and registration requirements in the Republic of Bulgaria. From the above provisions of the NATO Agreement follows that for the concessionaire may occur obligation to provide NATO aircraft with access to Sofia airport without payment of airport charges.

III. SUBJECT MATTER AND OBJECT OF CONCESSION, CONCESSION TERRITORY AND APPURTENANCES OF THE OBJECT OF CONCESSION

1. Type of Concession. The CA determines the types of concessions on the basis of two main criteria: (a) according to the subject matter: a works concession, services concession and concession for use (Article 6, paragraph 2 of the CA); and (b) according to the authority that assigns them: state, municipal or joint (Article 6, paragraphs 3 and 4 of the CA). 1) A works concession shall be a “public-private partnership whereupon a public authority entrusts the execution of works to an economic operator, in exchange for which the public authority grants the economic operator the right to exploit the construction work while assuming the operating risk” (Art.7, paragraph 1 of the CA), as under Art.7, paragraph 4 of the CA “the right of the economic operator to exploit the construction work shall include deriving revenue from services provided using the construction work and/or from the performance of another economic activity involving the construction work.” The terms “building” and “erection” are defined in Art.7, paragraph 2 and paragraph 3 of the CA. A services concession is defined as “a public-private partnership whereupon a public authority entrusts the provision and the management of one or more services other than works to an economic operator, in exchange for which the public authority grants the economic operator the right to derive revenue from the operation of the said services while assuming the operating risk, hereinafter referred to as "exploitation of the services" (Art.8, para 1 of the CA). Article 11 of the LC makes a further distinction between the following two categories of concessions: concessions with cross-border interest and concessions without cross-border interest. Concessions of cross-border interest are any works concession and a service concession whereof the value exceeds or is equal to the BGN equivalent of the threshold established by a regulation of the European Commission adopted pursuant to Art. 9 of the

19 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Concessions Directive. This threshold is currently EUR 5,350,0002. In the Official Journal of the European Union on 31.10.2019 was published Delegated Regulation (EU) 2019/1827 of the COMMISSION of 30 October 2019 amending Directive 2014/23/EU of the European Parliament and of the Council as regards the concession thresholds and the Commission Communication on the corresponding threshold values referred to in Directives 2014/23 / EU, 2014/24/EU, 2014/25/EU and 2009/81/EC of the European Parliament and of the Council (2019/C370/015350000), according to which the threshold is from 1 January 2020, becomes BGN 10 463 960,50 or 5 350 000 EUR. Any works concession or services concession whereof the value does not exceed the threshold, as well as any use concession shall be a concession without cross-border interest (Article 11, paragraph 2 of the CA). Article 20 of the Concessions Directive governs the so- called “mixed contracts” by establishing rules for determining the applicable provisions, mainly related to the determination of the principal subject of the contract or the estimated value. A slightly different approach was adopted in the CA, as Art. 10 explicitly defines some possible mixed cases as one or the other type of concession: (a) when the subject of the award is the performance of building under Art. 7, para. 2, item 1 or 2, as well as the provision and management of services, the concession is defined as a works concession; (b) where the contract is the subject of both the execution of building and/or the provision and management of services and the provision of use on a public state or public municipal property, the concession shall be defined as: (1) a works concession, where works was assigned under Art. 7, para. 2, item 1 or 2; or (2) services concession - in other cases. This concession is designated as a state works concession with cross-border interest because: 1.1. Shall be entrusted by the Minister of Transport, Information Technology and Communications - a state body, (central sole body of the executive authority with special competence - Article 25 of the Law on Administration);с 1.2. In view of the findings made in the concession analyzes (in particular in the technical and financial and economic analyzes) related to the traffic increase forecasts, the Plovdiv Airport concession should be defined as a works concession. On this basis and in view of the formal compliance with Art. 10 para. 1 of the CA, it will have to be awarded as a works concession and will include the execution of works under Art. 7, para. 2, item 1 of the Concessions Act, as well as the provision and management of services - the services are defined in accordance with the Civil Aviation Act and its implementing acts - it is envisaged that the concessionaire be entrusted with the functions of an airport administration, obtain a license for an airport operator , as well as a ground handling operator for the activities under Art. 48e, para. 3, items 2-7 of the Civil Aviation Act; 1.3. The value exceeds the BGN equivalent of the threshold established by a regulation of the European Commission adopted pursuant to Art. 9 of the Concessions Directive. This threshold is currently EUR 5,350,000. The value of this concession is EUR 100 646 260. 2. Subject matter of Concession. Pursuant to Art. 10, para. 1 of the Concessions Act, the Plovdiv Airport concession will be defined as a works concession, the subject matter of which includes: 2.1. execution of works under art. 7, para. 2 of the Concessions Act,

2 Established by Commission Delegated Regulation (EU) 2015/2172 of 24 November 2015 amending Directive 2014/23 / EU of the European Parliament and of the Council as regards the applicable thresholds for procurement procedures (OECD L 307/9, 11/25/2015). 20 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

2.2. provision of services related to the operation of an airport in order to ensure its use by air carriers, in accordance with Art. 8, para. 1 and para. 2 of the Concessions Act in conjunction with item 4 of Appendix No. 2 to the Concessions Act. Due to the legal grounds, the Concessionaire will be entrusted with: (а) execution of the construction and related right to operate the construction, assuming the operational and construction risk, including the right to receive the proceeds from the services provided through the construction and / or from other commercial activity with the construction; and (b) provision of services related to the management and operation of the Airport, together with the right to operate those services, including the right to receive revenue from the provision of such services, assuming operational risk.

3. Object of Concession.

3.1. General representation of the object of concession The object of this concession is a civil airport for public use Plovdiv - owned by the Bulgarian state. The object of concession is with a concession territory of 2 376 517 sq.m. according to the areas of the land plots specified in the issued acts for public state ownership, respectively 2 376 464 sq.m. according to the areas of the land plots specified in the issued sketches and includes land properties and the buildings and facilities built on them, as indicated below. Airport codes according to Table 1 of Ordinance No. 14 on Airports and Airport Security are 4D. The announced geographical coordinates of the airport checkpoint are: 42 04 04 N 024 51 03 E. ICAO International Four Letter Code at Plovdiv Airport is LBPD, and the IATA code is PDV. Plovdiv Airport has a Certificate of operational serviceability - Certificate of operational serviceability of Airport No. 4 dated 12.12.2016, issued by the Directorate General Civil Aviation Administration to MTITC (DG CAA) of Plovdiv Airport EAD, pursuant to Art. 44, paragraph 2 of the Civil Aviation Act, certifying that the Plovdiv Airport meets the requirements of the civil aviation regulations in the Republic of Bulgaria and is fit for aircraft operation code "D" according to the ICAO classification as an airport for public use of international and domestic passenger and freight carriage. The certificate of operational suitability certifies that the Plovdiv airport corresponds to the category of airport according to item 1 of Annex 2 to Art. 6 of Ordinance No. 20 of 2006, namely the same is an airport for public use for the servicing of international and domestic passenger and cargo services. Plovdiv Airport also has Certificate No BGLBPD-001 issued in accordance with the requirements of Regulation No 216/2008 of the European Parliament and of the Council and Commission Regulation (EU) No 139/2014. Certificate of operational serviceability for ground handling related systems and facilities for passenger servicing, servicing and securing aircraft, loading and unloading of luggage and cargo No 4U dated 12.12.2016 by DG CAA was issued for compliance with the requirements of Art. 30, para. 2 of Ordinance No. 20 of 2006 of Plovdiv Airport EAD. In 2008, a Master Plan for the Development of a Civil Airport for Public Use 21 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Plovdiv was adopted. Depending on the investment intentions of the future concessionaire and their views on the development of the airport, they will both implement the plans set out in this Master Plan and will have the opportunity to take action to amend and supplement them, respectively, to prepare a new Master Plan that will comply with applicable regulatory requirements and conditions. At the moment of opening of the concession procedure Plovdiv Airport EAD, UIC 115007069, a commercial company with sole owner of the capital the Bulgarian state, is an airport operator that manages and operates Plovdiv airport, which is an operator of groundhandling services for seven groundhandling activities. performs the activities of an airport administration. 3.2. Description of the object of Concession The object of Concession includes a concession territory of 2 376 517 sq. m. according to the area of the land plot specified in the issued acts for public state property, respectively 2 376 464 square meters according to the area of the land plot, indicated in the issued sketches and the buildings and facilities on them, as follows: 2.2.1. Description of land plots and buildings – public state and private state property: The object of Cconcession includes land plots - property of the Bulgarian state, located in the territory of the Municipality of Rodopi, Sadovo Municipality and Asenovgrad Municipality, referred to in Reference No. 1 to Annex No. 1, with identifiers on the cadastral map and cadastral registers of Plovdiv. and the town of Asenovgrad, and individualized data as follows: 2.2.1.1. Plot of land (PL) with identifier 87240.250.262, located in the land of Yagodovo village, Iztochen Baker locality, Rhodopi municipality, Plovdiv district, with an area of 1 223 sq.m., registered with Public State Property Deed No 6834 of 16.07.2008, issued by the Regional Governor of the District of Plovdiv and in accordance with Sketch No 15- 761072-20.08.2019, issued by the Geodesy, Cartography and Cadastre Office - Plovdiv; 2.2.1.2. Plot of land (PL) with identifier 40004.250.185, located in the land of Krumovo village, Kapsidata locality, Rodopi municipality, Plovdiv district, with an area on Public State Property Deed 2 000 806 square meters and a sketch area of 2 000 756 square meters, ., registered with Public State Property Deed No. 6835 of July 16, 2008, issued by the Regional Governor of the District of Plovdiv and according with Sketch No. 15-761067- 20.08.2019, issued by the Geodesy, Cartography and Cadastre Office - Plovdiv, together with the constructed on property buildings as follows: 2.2.1.2.1. Building new passenger terminal with cadastral register identifier No. 40004.250.185.26, massive, on one floor, with a built-up area of 5170 sq.m. (according to the technical passport the built-up area is 5200 sq.m.), year of construction 2009; the building is designated as Terminal 2 on LBPD AD2-19 map, AIP of the Republic of Bulgaria. For the building was prepared Public State Property Deed No. 92277 dated 28.06.2013; 2.2.1.2.2. Building with identifier 40004.250.185.27 – of transport (BCP), semi- massive, on one floor, built-up area of 32 sq.m., 2008 year of construction. For the building was prepared Public State Property Deed № 92277 dated 28.06.2013; 2.2.1.2.3. Building with identifier 40004.250.185.28 – of transport (CI), semi- massive, on one floor, built-up area of 143 sq.m, 2009 year of construction. For the building was prepared Public State Property Deed № 92277 dated 28.06.2013; - Building with identifier 40004.250.185.29 – of transport (complex transformer post), semi-massive, on one floor, built-up area of 41 sq.m, 2009 year of construction. For the building was prepared Public State Property Deed № 92277 dated 28.06.2013. 2.2.1.3. Plot of land (PL) with identifier № 40004.250.184, located on the land of

22 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Krumovo village, Kapsidata locality, Rodopi municipality, Plovdiv district, with an area of 72 097 square meters on Public State Property Deed and of 72 095 square meters on sketch. The land plot was registered with Public State Property Deed No. 6836 of 16.07.2008, issued by the Regional Governor of Plovdiv District and for it has been issued a Sketch No. 15-761065- 20.08.2019 by the Geodesy, Cartography and Cadastre Office - Plovdiv. The following buildings have been built on the land plot: 2.2.1.3.1. Building with identifier 40004.250.184.1, with designation: Agricultural buiding on one floor, with a built-up area of 899 square meters; 2.2.1.3.2. Building with identifier 40004.250.184.2, with designation: Agricultural buiding, with a built-up area of 31 square meters; 2.2.1.3.3. Building with identifier 40004.250.184.3, with designation: Building for water supply and/or sewerage, with a built-up area of 81 square meters; 2.2.1.3.4. Building with identifier 40004.250.184.4, with designation: Catering building with built up area of 199 square meters; 2.2.1.3.5. Building with identifier 40004.250.184.5, with designation: Building with special designation, with a built-up area of 15 square meters; 2.2.1.3.6. Building with identifier 40004.250.184.6, with designation: Transport building with a built-up area of 191 square meters; 2.2.1.3.7. Building with identifier 40004.250.184.7, with designation: Another type of residential building with a built-up area of 189 square meters; 2.2.1.3.8. Building with identifier 40004.250.184.8, with designation: Warehouse, with a built-up area of 210 square meters; 2.2.1.3.9. Building with identifier 40004.250.184.9, with designation: Building for household services with a built-up area of 109 square meters; 2.2.1.3.10. Building with identifier 40004.250.184.10, with designation: Agricultural building, with a built-up area of 189 square meters; 2.2.1.3.11. Building with identifier 40004.250.184.11, with designation: Agricultural building, with a built-up area of 197 square meters; 2.2.1.4. Land plot with number 000381 (identifier № 36676.250.381), located in the land of Katunitsa village, Kantona locality, Sadovo municipality, Plovdiv district, with an area of 793 sq.m, registred with Public State Property Deed No. 6837 of 16.07.2008, issued by the Regional Governor of Plovdiv District and according to Sketch No. K17225/ 16.08.2019, issued by the Municipal Agriculture Service - Sadovo Municipality; 2.2.1.5. Land plot with number 000382 (identifier № 36676.250.382), located in the land of Katunitsa village, Orehite locality, Sadovo municipality, Plovdiv district, with an area of 900 sq.m, registred with Public State Property Deed № 6838 of 16.07.2008, issued by the Regional Governor of Plovdiv District and according to Sketch № К17224/16.08.2019, issued by the Municipal Agriculture Service - Sadovo Municipality; 2.2.1.6. Land plot with number 000391 (identifier № 36676.250.391), located in the land of Katunitsa village, Beyond the river locality, Sadovo municipality, , Plovdiv district, with an area of 627 sq.m, registred with Public State Property Deed № 6839 of 16.07.2008, issued by the Regional Governor of Plovdiv District and according to Sketch № К17222/16.08.2019, issued by the Municipal Agriculture Service - Sadovo Municipality; 2.2.1.7. Land plot with number 000395 (identifier № 36676.250.395), located in the land of Katunitsa village, Beyond the river locality, Sadovo municipality, Plovdiv district, with an area of 6 415 sq.m, registred with Public State Property Deed № 6840 of 16.07.2008, issued by the Regional Governor of Plovdiv District and according to Sketch № К17223/16.08.2019, issued by the Municipal Agriculture Service - Sadovo Municipality; 2.2.1.8. Land plot with indentifier № 99088.1.132, located in Dolni Voden district (сецтион), Chaykara locality, Asenovgrad municipality, Plovdiv district, with an area of 89

23 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

481 sq.m, registred with Public State Property Deed № 9165 of 30.05.2016, issued by the Regional Governor of Plovdiv District and according to Sketch № 15-761074-20.08.2019, issued by the Geodesy, Cartography and Cadastre Office - Plovdiv; 2.2.1.9. Land plot with indentifier 40004.250.7 (№ according to previous plan 000186), located on the land of Krumovo village, Kapsidata locality, Rodopi municipality, Plovdiv district, with an area of 204 175 sq.m, registered with Public State Property Deed No. 9168 of 06.06.2016 for the land and 14 buildings built on it, issued by the Regional Governor of Plovdiv District and according to Sketch № 15-761069-20.08.2019, issued by the Geodesy, Cartography and Cadastre Office - Plovdiv, along with the buildings constructed on the property, as follows: 2.2.1.9.1.Buildings built on land plot with identifier 40004.250.7 (according to previous plan No. 000186), registred with Public State Property Deed 9168 of 2016 (14 buildings out of 38 pieces) and indicated in Sketch No 15-761069-20.08.2019, issued by the Geodesy, Cartography and Cadastre Office - Plovdiv: 2.2.1.9.1.1.Building 01 with identifier 40004.250.7.1 – Checkpoint and little shop, with a built-up area of 79 sq.m, on one floor, massive construction, built in 1962; 2.2.1.9.1.2.Buidling 02 with identifier 40004.250.7.2 – building with special designation (headquarters) with a built-ip area of 152 sq.m, one floor, massive construction, built in 1962; 2.2.1.9.1.3.Buidling 03 with identifier 40004.250.7.3 – building with special designation (Checkpoint-2) with a built-ip area of 28 sq.m, one floor, massive construction, built in 1963; 2.2.1.9.1.4.Buidling 05 with identifier 40004.250.7.5 – building with special designation (kitchen and dining room) with a built-ip area of 320 sq.m, one floor, massive construction, built in 1963; 2.2.1.9.1.5.Buidling 06 with identifier 40004.250.7.6 – building with special designation (bedrooms) with a built-ip area of 346 sq.m, one floor, massive construction, built in 1962; 2.2.1.9.1.6.Buidling 07 with identifier 40004.250.7.7 – building with special designation (cabinets and movie theater) with a built-ip area of 261 sq.m, two floors, massive construction, built in 1971; 2.2.1.9.1.7. Buidling 08 with identifier 40004.250.7.8 – building with special designation (bath-laundry complex) with a built-ip area of 170 sq.m, one floor, massive construction, built in 1962; 2.2.1.9.1.8.Buidling 09 with identifier 40004.250.7.9 – building with special designation (a meeting room) with a built-ip area of 70 sq.m, one floor, massive construction, built in 1980; 2.2.1.9.1.9.Buidling 10 with identifier 40004.250.7.10 – building with special designation (warehouse) with a built-ip area of 418 sq.m, one floor, massive construction, built in 1974; 2.2.1.9.1.10.Buidling 19 with identifier 40004.250.7.19 – building with special designation (garages) with a built-ip area of 1737 sq.m, one floor, metal construction, built in1976; 2.2.1.9.1.11.Buidling 20 with identifier 40004.250.7.20 – – building with special designation (garages) with a built-ip area of 417 sq.m, one floor, metal construction, built in 1974; 2.2.1.9.1.12.Buidling 21 with identifier 40004.250.7.21 – building with special designation (garages) with a built-ip area of 1321 sq.m, one floor, metal construction, built in 1976; 2.2.1.9.1.13.Buidling 29 with identifier 40004.250.7.29 with identifier 40004.250.7.4

24 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

– building with special designation (repair hall and cabinets) with a built-ip area of 1647 sq.m, one floor, massive construction, built in 1977; 2.2.1.9.1.14.Buidling 33 with identifier 40004.250.7.33 – building with special designation (repair hall) with a built-ip area of 233 sq.m, one floor, massive construction, built in 1978. 2.2.1.9.2. Buildings private state property, registred with Private State Property Act № 9222 of 15.09.2016 by the Regional Governor of Plovdiv District, built on land plot with identifier 40004.250.7 (24 buildings of 38 total), indicated in Sketch № 15-761069- 20.08.2019, issued by the Geodesy, Cartography and Cadastre Office - Plovdiv: 2.2.1.9.2.1.Building 04 with identifier 40004.250.7.4 – building with special designation (offices) with a built-ip area of 422 sq.m, one floor, massive construction, built in 1963; 2.2.1.9.2.2.Building 11 with identifier 40004.250.7.11 – building with special designation (carpentry) with a built-ip area of 43 sq.m, one floor, massive construction, built in 1969; 2.2.1.9.2.3.Buidling 12 with identifier 40004.250.7.12 – building with special designation (warehouse) with a built-ip area of 293 sq.m, one floor, massive construction, built in 1972; 2.2.1.9.2.4.Buidling 13 with identifier 40004.250.7.13 – building with special designation (warehouse) with a built-ip area of 120 sq.m, one floor, massive construction, built in 1972; 2.2.1.9.2.5.Buidling 14 with identifier 40004.250.7.14 – building with special designation (warehouse) with a built-ip area of 43 sq.m, one floor, massive construction, built in 1972; 2.2.1.9.2.6.Buidling 15 with identifier 40004.250.7.15 – building with special designation (warehouse) with a built-ip area of 41 sq.m, one floor, massive construction, built in 1974; 2.2.1.9.2.7.Building 16 with identifier 40004.250.7.16 – building with special designation (shed-fuels) with a built-ip area of 98 sq.m, one floor, metal construction, built in 1978; 2.2.1.9.2.8.Building 17 with identifier 40004.250.7.17 – building with special designation (warehouse) with a built-ip area of 39 sq.m, one floor, massive construction, built in 1971; 2.2.1.9.2.9.Building 18 with identifier 40004.250.7.18 – building with special designation (warehouse-medical) with a built-ip area of 38 sq.m, one floor, massive construction, built in 1972; 2.2.1.9.2.10.Building 22 with identifier 40004.250.7.22 – building with special designation (garages) with a built-ip area of 533 sq.m, one floor, metal construction, built in 1979; 2.2.1.9.2.11. Building 23 with identifier 40004.250.7.23 – building with special designation (refueling статион for fuel and lubricants) with a built-ip area of 14 sq.m, one floor, massive construction, built in 1984; 2.2.1.9.2.12.Building 24 with identifier 40004.250.7.24 – building with special designation (garage with workshop) with a built-ip area of 666 sq.m, one floor, massive construction, built in 1971; 2.2.1.9.2.13.Buidling 25 with identifier 40004.250.7.25 – building with special designation (warehouse) with a built-ip area of 61 sq.m, one floor, massive construction, built in 1968; 2.2.1.9.2.14.Building 26 with identifier 40004.250.7.26 – building with special designation (steam central plant) with a built-ip area of 181 sq.m, one floor, massive

25 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property construction, built in 1973; 2.2.1.9.2.15.Building 27 with identifier 40004.250.7.27 – building with special designation (warehouse) with a built-ip area of 76 sq.m., one floor, massive construction, built in 1980; 2.2.1.9.2.16.Building 28 with identifier 40004.250.7.28 – building with special designation (chemical laboratory) with a built-ip area of 60 sq.m, one floor, massive construction, built in 1975; 2.2.1.9.2.17.Buisling 30 with identifier 40004.250.7.30 – building with special designation (warehouse) with a built-ip area of 76 sq.m., one floor, massive construction, built in 1981; 2.2.1.9.2.18.Building 31 with identifier 40004.250.7.31 – building with special designation (warehouse) with a built-ip area of 25 sq.m, one floor, massive construction, built in 1981; 2.2.1.9.2.19. Building 32 with identifier 40004.250.7.32 – building with special designation (warehouse) with a built-ip area of 37 sq.m, one floor, massive construction, built in 1981; 2.2.1.9.2.20.Building 34 with identifier 40004.250.7.34 – building with special designation (warehouse) with a built-ip area of 161 sq.m, one floor, massive construction, built in 1978; 2.2.1.9.2.21.Building 35 with identifier 40004.250.7.35 – building with special designation (warehouse-unfinished) with a built-ip area of 84 sq.m, one floor, massive construction, built in 1986; 2.2.1.9.2.22.Building 36 with identifier 40004.250.7.36 – building with special designation (toilets) with a built-ip area of 17 sq.m, one floor, massive construction, built in 1963; 2.2.1.9.2.23.Buidling 37 with identifier 40004.250.7.37 – building with special designation (warehouse) with a built-ip area of 25 sq.m, one floor, massive construction, built in 1981; 2.2.1.9.2.24.Buidling 38 with identifier 40004.250.7.38 – – building with special designation (power substation) with a built-ip area of 9 sq.m, one floor, massive construction, built in 1964; 2.3. Facilities and equipment located on the concession area and constituting the adjacent infrastructure specified in the Concession Documentation; The facilities and equipment of the airport infrastructure included in the concession object are specified in Reference No. 3 to Annex No. 1.

The following airport infrastructure is constructed on land plots from the concession territory and is included in the object of the concession: 2.3.1. Писта за излитане и кацане The airport operates one runway with dimensions: length - 2500 m and width - 45 m. The runway has two safety sidebars with a width of 3.7 m each and two end stops with a length of 60 m each. Light approaches in both directions of the runway use the ALPAATA system with appropriate lengths: at runway 12 it is 420 m and at runway 30 it is 900 m. There are no axial lights installed in the landing area. Glidepath visual indication system PAPI with a slope of 3 degrees is installed in both Runway directions. There are tail lights installed (red) on both thresholds and side lights over 60m, 1900m white and 600m yellow. 2.3.2. Taxiway – 6 pcs: 2.3.2.1. Taxiway „А” – 22,5 m, concrete flooring; 2.3.2.2. Taxiway „B” – 22,3 m, concrete flooring; 2.3.2.3 Taxiway „С” – 22,8 m, concrete flooring; 26 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

2.3.2.4. Taxiway „D” – 22,4 m, concrete flooring; 2.3.2.5. Taxiway „Е” – 23.0 m, concrete flooring; 2.3.2.6. Taxiway “F” – 30.0 m, concrete flooring.

2.3.3. Apron On the concession territory is a property - the “Apron” facility, permanently attached to the terrain, built in land plot with indentifier 4000.250.185. The concession object includes a part of the “Apron” facility ("new part"), with an area of 47 420 sq.m, measuring 258/160 m, concrete flooring (described on the basis of forensic expertise as cement concrete, cement stabilizing base and anti-freezing layer in Plovdiv Regional Court Decision 482 of 24.04.2017), with 6 aircraft stands with numbers: 10A, 10B, 11A, 11B, 12A and 12B, according to the apron marking announced in the AIP of the Republic of Bulgaria, LBPD AD2- 19 map used by Plovdiv Airport. This part of the apron was repaired in 2009 on the basis of Building Permit No 465/ 23.10.2008, issued to MTITC - DG CAA and made with DG CAA funds repair, extension and reconstruction of part of the existing apron, in respect of which there is a legal dispute. Note: The “Apron” facility consists of: 1. "Old" part (not included in the concession object) covering aircraft stands numbered from 1 to 9 according to the apron marking announced in the AIP of the Republic of Bulgaria, map LBPD AD2-19, with an area of 61 752 square meters (exact area cannot be claimed, since different documents indicate different areas, some with significant differences - for example, from expertise in a court case, there is a certain area of 61 762 square meters, upon the 2004 geodetic survey for the purposes of the final notarial deed the area is 72 381 sq. m., contribution in kind, approved by the Minutes of the Plovdiv Regional Court meeting of 13.01.1995. the area is 111 440 square meters). The "old part" was built in 1982 by the Ministry of National Defense. This part is described as "construction of concrete, sand and ballast layers" in Plovdiv Regional Court Decision 482 of 24.04.2017. The same part is an element of contribution in kind made by Plovdiv Airport EOOD (this legal form is before the conversion in EAD) in the capital newly established in 1995 Plovdiv Airport, in respect of which and for the property right over which there has been a long-standing litigation; 2. "New" part (included in the concession object) - with an area of 47 420 square meters, measuring 258/160 m, concrete flooring (described on the basis of forensic expertise as cement concrete, cement stabilizing base and anti-freezing layer in Plovdiv Regional Court Decision 482 dated 24.04.2017), with 6 aircraft stands with numbers: 10A, 10B, 11A, 11B, 12A and 12B, according to the apon marking announced in the AIP of the Republic of Bulgaria, LBPD AD2-19 map. This part of the apron was repaired in 2009 on the basis of Building Permit No 465/23.10.2008, issued to MTITC - DG CAA and made with DG CAA funds repair, extension and reconstruction of part of the existing apron. There is a legal dispute regarding the "new" part of the apron. The airport is currently using the "new" section of the apron with six new aircraft stands numbered 10A, 10B, 11A, 11B, 12A and 12B, according to the apron marking announced in the AIP of the Republic of Bulgaria, LBPD AD2-19 map.

2.3.4. Passenger terminal The passenger terminal for domestic and international arrivals and departures was built in 2008, with identifier 40004.250.185.26, designated as Terminal 2 on LBPD AD2-19 map, AIP of the Republic of Bulgaria. The building is presented in Reference № 2 for the buildings - public state property under № 1.2.1. 2.3.5. Other service facilities

27 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

2.3.5.1. vehicle road access to the pre-airport square at passenger Terminal 2 with two lanes, 3.5 m each; 2.3.5.2. public parking and road connections in front of passenger Terminal 2; 2.3.5.3. apron lighting and more.перон

2.4. Appurtenances of the object of Concession: The object of concession shall include the facilities of the adjoining technical infrastructure, namely: the elements of the technical infrastructure, which represent independent items located in the concession area, as well as those of the buildings included in the concession object, such as: 2.4.1. water supply and sewerage, including off-site drinking-fire-fighting water supply, on-site drinking-fire-fighting water supply, on-site household sewerage, on-site rain sewerage; 2.4.2. power supply, including main switchgear and complete transformer post, 20kV external cable power supply, low voltage cable paths, etc.; 2.4.3. electronic communications, internal roads, power supply, electronic communications. 3. Inclusion of additional land plots, buildings and facilities in the Concession Object 3.1. The Concession Object shall include the buildings, facilities and equipment, which will be constructed and/or installed by the Concessionaire, at their own risk and with his means, in connection with the implementation of the Concession Agreement and under the conditions stipulated therein. 3.2. The Concession Object may include additional land plots, buildings and facilities – public state property, necessary for the expansion of the Concession Object when provided for in accordance with an approved Master Plan for the development of the Airport and related to the implementation of the Concessionaire's investment program. , under the conditions and in the manner provided in the Concession Agreement. 3.3. With an additional agreement to the concession agreement, after the completion of the proceedings in case No. 398 on the Supreme Court of Cassation's 2019 inventory, and if the court ruling decrees the state as the owner of the said facility, aircraft stands will be included as part of the concession object. with numbers from 1 to 9, according to the apron marking announced in the AIP of the Republic of Bulgaria, LBPD AD2-19 map, which are part of the “Apron” facility ("Old" part), with an area of about 61 752 square meters (the exact area cannot be claimed as much as in different documents there are indications of different areas, some with quite significant differences - for example, from court expertise there is a specified area of 61 762 sq.m., upon the 2004 geodetic survey for the purposes of the final notarial deed the area is 72 381 sq. m., upon contribution in kind, approved by the Minutes of the Plovdiv Regional Court meeting of 13.01.1995 the area is 111 440 square meters) including aircraft stands from 1 to 9. .

4. LAND PLOTS BUILDINGS AND FACILITIES LOCATED IN THE CONCESSIONAL TERRITORY, WHICH ARE NOT INCLUDED IN THE CONCESSION OBJECT

4.1. Properties – public state property, provided to Air Traffic Services Authorities (ATSA), which are not included in the Concession object. The concession object does not include the following three buildings, built on land plot with indentifier 40004.250.185, which have been provided for management of the Air Traffic 28 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Services Authorities (ATSA) for performing its functions as an air navigation service provider at Plovdiv Airport, namely: 4.1.1. Buildng with identifier № 40004.250.185.2, with designation: administrative, office building with a built-up area of 464 sq.m; 4.1.2. Buildng with identifier № 40004.250.185.12, with designation: warehouse, with a built-up area of 508 sq.m; and -4.1.3. Buildng with identifier № 40004.250.185.16, with designation: warehouse, storage, with a built-up area of 474 sq.m.

4.2. Properties – property of Plovdiv Airport EAD, which are not included in the Concession object. Plovdiv Airport EAD owns a total of 22 buildings, which are located in land plot with indentifier 40004.250.185, within the boundaries of the concession territory, and are not included in the object of the concession since they are not state property. Buildings –private property, which are not included in the Concession object. № in Area Floor Building name and designation Indentifier upon order (sq.m) (pc) Cadastral map and

cadastral registers 1 Transport building 40004.250.185.1 2249 1 2 Administrative office building 40004.250.185.3 328 1 3 Administrative office building 40004.250.185.4 80 1 4 Transport building 40004.250.185.5 265 1 5 Warehouse 40004.250.185.6 433 1 6 Warehouse 40004.250.185.7 68 1 7 Warehouse 40004.250.185.8 335 1 8 Warehouse 40004.250.185.9 337 1 9 Warehouse 40004.250.185.10 338 1 10 Warehouse 40004.250.185.11 338 1 11 Building for household services 40004.250.185.13 99 1 12 Another type of production, 40004.250.185.14 63 1 warehouse infrastructure building 13 Another type of production, 40004.250.185.15 76 1 warehouse infrastructure building 14 Another type of production, 40004.250.185.17 19 1 warehouse infrastructure building 15 Warehouse 40004.250.185.18 31 1 16 Transport building 40004.250.185.19 34 1 17 Transport building 40004.250.185.20 98 1 18 Warehouse 40004.250.185.21 34 1 19 Warehouse 40004.250.185.22 52 1 20 Warehouse 40004.250.185.23 62 1 21 Warehouse 40004.250.185.24 124 1

29 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

22 Transport building 40004.250.185.25 44 1

4.3. “Apron” facility with aircraft stands from 1 to 9, which is not included in the Concession object. Part of the airport apron, comprising aircraft stands with numbers from 1 to 9 according to the apron marking, announced in the AIP of the Republic of Bulgaria, LBPD AD2-19 map, is a subject of litigation. As indicated in 3.3. above, if the state is recognized as the owner, the designated parts of the apron will be included in the Concession Object. With respect to the land plots, buildings and facilities listed in item 4 above, which are located in the area of the airport but are not included in the concession object, the concessionaire will be obliged to tolerate the exercise of the right of passage of their owners as well as of their employees and persons designated by them. In the event that the realization of the concession and the execution of the Concession Agreement is hindered or impeded by the rights of these persons, under the Concession Agreement the concessionaire shall have the right to take the respective legal and factual actions independently to reach an agreement with these persons, giving prior notice to the grantor .

4.4. from land plot with identifier 40004.250.184 with an area of 72 097 sq. m is excluded and is not part of the object of concession an area of 300 sq. m. for a kennel for service dogs of the Ministry of the Interior with coordinates of the border points specified in Reference No. 5 to Annex No. 2 to the Concession Documentation.

5. Movable property The bidder in the procedure assigned for concessionaire will have the opportunity to purchase and/or rent the movable property owned by Plovdiv Airport EAD, which they deem necessary for carrying out the activities within the scope of the concession.

30 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

IV. MINIMUM REQUIREMENTS TO OFFERS Art. 59 of the CA stipulates the conditions under which the concession is awarded, including the conditions for participation in the procedure, which the bidders must meet, as well as the fulfillment of the minimum requirements to offers, namely: 1) there is no reason to exclude the participant and its subcontractors and third parties; 2) the participant is eligible to participate in the procedure; 3) the offer of the participant meets the minimum requirements for the offers; 4) the Grantor has applied the award criteria as set out in the Concession Documentation. The law requires that minimum requirements be set for both economic operators and the offers of bidders in the concession procedure.

1. MINIMUM REQUIREMENTS TO ECONOMIC OPERATORS

The purpose of setting minimum requirements to economic operators is to ensure, on the one hand, the involvement of serious economic operators with the necessary competitive advantages, including the financial and professional prerequisites for successful concession, and, second, to carry out the procedure in accordance with the principles of the proportionality law, equal treatment and non-discrimination against economic operators.

Requirements to economic operators, potential participants in this procedure are consistent with the subject and value of the concession, as well as the volume of construction and services. The peculiarities of the object of concession are taken into account and adjusted to the maximum extent. As stated below, no undue advantage is given and no disadvantage is given to any economic operator or to certain works or services. In view of this, economic operators (including subcontractors and third parties) should not have grounds for exclusion under Art. 60, para. 2 and 3 of the CA, in compliance with Art. 60, para. 4 of the CA as well as the bidders must meet the minimum requirements for participation, namely:

1.1. Conditions for participation related to technical ability and financial and economic standing, according to Art. 62 of the CA. The requirements are tailored to the subject matter and features of the concession and provide real competition. The aim is to designate an operator that has the experience and the opportunity to develop to the full potential of Plovdiv Airport. The aim is also to compete participants who are able to provide in short terms and for the duration of the concession of the necessary financing for the implementation of the investment program. In view of the subject matter of the concession and in compliance with the requirements of the CA, the specific requirement for an airport operator license in accordance with the Bulgarian legislation is laid down. In this way the future professional management of Plovdiv Airport is fully guaranteed. 1.1.1. Operational experience. а) The bidder must have operated (and is currently operating) at least one international airport with a passenger flow of at least 450 000 (four hundred and fifty thousand) passengers for a period not less than 5 years in the last 10 (ten) years until the date of submission of the application and the offer by the bidder. In order to demonstrate compliance with this condition, the bidder must submit: 31 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

1) a declaration in accordance with the model to the Concession Documentation, with each and all projects duly completed by the bidder as evidence and signed by a person with representative authority, and 2) document (license, certificate, registration, contract or other documents under the participant's national law) issued by an official authority, by the relevant airport owner/ contractor or an official register, with information from which can be established the airport, the period of operation and managementby the bidder, the average number of passengers / cargo and the type of airport service provided. This document shall be presented in the original or certified copy and, if issued in a foreign language, shall be accompanied by an unofficial translation into Bulgarian. In the case of participation in the form of a association/consortium, this condition should be fulfilled by its member designated as an airport operator or through the capabilities of a third party that provides its resources to the bidder to fulfill this condition.

b) Requirements for issuance of an Airport Operator License under the Bulgarian law.

According to Art. 64 of the Concessions Act, Art. 43b, para. 4 and Art. 48d, para. 2, items 3 of the Civil Aviation Act, and Art. 34 and 35 of Ordinance 20/2006, for the purpose of issuing a License for an Airport Operator to the Concessionaire, the bidder shall submit documents proving: 1) financial stability of the bidder according to Art. 34 item 1 of Ordinance 20/2006; and

2) availability of personnel possessing qualification, professional experience and experience required for carrying out the activity of an Airport Operator in accordance with Article 34, item 2 b.(a) of Ordinance 20/2006.

In order to prove that they meet the above requirements, the Participants must provide the following documents: in respect of item (1), it is necessary to submit a certified annual financial statement by a registered auditor for the last closed financial year and an interim financial report for the month preceding that of applying for an airport operator license and, with respect to paragraph (2) above, a list of persons proposed to be appointed to senior management and operational positions At the airport, including the following information: names, education, qualification, positions, experience (which must be not less than five years), as described in more detail in the relevant part of the Concession documentation.

1.1.2. Financial and economic situation. а) Registered capital The bidder must have a registered capital of not less than BGN 1 000 000 (one million) at the time of submission of the application and the offer. When the capital is registered abroad, the amount must correspond to the lev equivalent of the capital at the respective exchange rate of the Bulgarian National Bank for the currency of registration, determined at the date of the deadline for receipt of applications and offers. Where the participant is in the form of a association/consortium, the condition for the amount of the fixed capital is satisfied by the cumulative registered capital of the economic

32 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property operators - members of the association/consortium or by the size of the capital of one of the members of the association/consortium - at their discretion. In the case of foreign persons as members of the consortium, the second sentence of the preceding paragraph shall apply. The fulfillment of this condition shall be declared by the participant and he shall prove it by presenting an up-to-date document on the registered capital issued by a competent authority, register or other according to the legislation of the state of registration - in original or certified copy. Where the entry is in the Commercial Register kept by the Registry Agency, such document shall not be presented if the participant has indicated his UIC. Where the document is in a foreign language, an unofficial translation into Bulgarian shall also be provided.

b) Amount of balance value and/or market value of the participant's fixed tangible assets:

6.4.2.1. Amount of balance value and/or market value of the tangible fixed assets of the participant, or at least one member of the consortium, if the participant is a consotritum for the last 3 (three) financial years, not less than BGN 40 000 000 (forty million), defined as average arithmetic balance value of tangible fixed assets. 6.4.2.2. The fulfillment of the condition under item 6.4.2.1 shall be declared by the participant and they shall prove it by presenting the annual financial statements and/or by the relevant market valuation prepared by a licensed appraiser for each of the last three completed financial years together with the relevant audit reports and reports of the managing body. If required by the law of the country in which the participant is established, the annual financial statements submitted must be certified by an auditor. The absence of an audit requirement from the relevant legislation shall be demonstrated by the participant with a declaration. c) Fundraising experience The participant must have the ability to finance a project in the infrastructure sector through equity and/or debt financing raised for such a project, and in particular an attempt to fund at least one such project with a value exceeding BGN 10 000 000 (ten million) , respectively, in the last 10 years until the date of submission of the application and the offer. Where the participant is in the form of an association/consortium, the condition for the ability to finance a project is cumulatively satisfied by the economic operators - members of the association/consortium, to fund the projects or by one of the members - at their discretion. For the fulfillment of the condition the participant shall submit a declaration, as well as prove it with a submitted document - certificate or other, issued by the owner of the capital or the respective financing institutions, persons or loan sources, their representative or agent, indicating the financed project from the infrastructure sector, the amount of funding provided for it and the period of its realization. The document, if not in English, shall be accompanied by unofficial translations into English and Bulgarian; if it is drafted in English, it is accompanied by an unofficial translation into Bulgarian. A participant may prove that any of the conditions under "a", "b" and "c" are fulfilled with the capabilities of a third party. In this case, they shall also present a document (s) that the resources of the third party will be made available during the execution of the Concession Agreement, and that the third party will be jointly and severally liable with the concessionaire for the implementation of the Concession Agreement, taking into account the nature thereof. and the amount of the third party's commitment to provide resources.

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1.1.3. The participants in the procedure submit a guarantee for participation in the amount of BGN 1 000 000 (one million).

1.1.3. The reasons for determining the above requirements to economic operators are:

а) Concerning the selection of the Economic and Financial Condition criterion: The specified minimum value of the indicators for proving the criterion of economic and financial condition is a necessary condition for the participants in the procedure to be stable companies, with the financial ability to make significant investments in the object of concession and a high value of their assets, part of which could serve to secure the financing of their proposed investment program when needed. The financial stability of the participants is also a guarantee for the realization of the necessary investments for the development and modernization of the airport infrastructure, technical facilities and equipment through adequate financing. The aim is to compete participants who are able to provide in the short term, as well as for the duration of the concession of the necessary financing for the implementation of the investment program. In this regard, participants in the procedure are also required to demonstrate the ability to finance a project in the infrastructure sector.

b) Concerning the selection of the Technical Capability criterion: In the present case, given the concession object, the participant is required to have practical experience in operating an international airport with a passenger flow of not less than 450,000 (four hundred and fifty thousand) passengers, for a total period of not less than 5 ( five) years in the last 10 (ten) years, up to the date of submission of the application and the offer by the prticipant. The criteria thus laid down are a guarantee for the expertise and professional resources of the participants in the activities of management, operation and development of airports. This experience is also a guarantee for improving the existing airport infrastructure, reaching the set international standards and categories, transferring management know-how, generating traffic and developing commercial activities in the region. The requirements are tailored to the subject matter and features of the concession and provide real competition. The formulation of these requirements takes into account the traffic forecasts at Plovdiv Airport, which are contained in the concession analyzes, as well as requirements laid down in procedures similar to the present one. The aim is to designate a concessionaire to be able to operate an airport with traffic expected for Plovdiv airport in the short term after the start of the concession. Increasing the level of technical security, technology and organization of work in accordance with the requirements of European standards and international best practices, which are aimed at setting the above criteria, will be a prerequisite for increasing the capacity of the airport to attract a fundamentally new passenger and cargo traffic and for the realization of the much needed investments for Plovdiv Airport. c) The introduction of a guarantee for participation in the procedure is not excluded from both the Concessions Directive and the Bulgarian Concessions Act. This, of course, does not mean that the introduction of a guarantee of participation should not be duly justified. First of all, for large concession procedures (as is the current procedure), this is an established practice. Secondly, the presentation of a guarantee for participation in the procedure is also a guarantee of the security of the intentions of the respective participant, thus, the potential participant expresses their serious intentions for completing their participation in the procedure. Thirdly, the guarantee of participation also creates the necessary certainty for the contracting authority that a participant in the procedure will not unreasonably refuse further participation after the costs of preparation and implementation 34 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

of the procedure have been incurred. “Leaving" of a particular participant, especially at the end of the procedure, is also a matter of reputational risk for the contracting authority.

2. MINIMUM REQUIREMENTS TO OFFERS AND AWARD CRITERIA:

According to Art. 65 of the CA the minimum requirements to th offers shall form the mandatory characteristics and the minimum performance levels of the subject-matter and the object of the concession. In the case of a works concessions and service concessions, the minimum requirements to offers are technical and functional requirements, financial and economic requirements and legal requirements, including on competition protection, on the object of the concession and the works and/or services included in the subject of the concession. For the purposes of this concession, minimum requirements to offers have been laid down, representing technical and functional requirements, financial and economic requirements and legal requirements. 2.1. Minimum technical and functional requirements The minimum requirements to the offers are related to the nature and specifics of the concession object - civil airport for public use Plovdiv and are specified in detail in the concession documentation, respectively, are taken into account in the draft Concession Agreement and the annexes thereto. Here are the basic and essential requirements that the object of concession must at least meet for the entire duration of the concession: 1) Airport code designation– 4D 2) Bearing capacity of artificial pavements intended for aircraft: а) Runway for take-off and landing – PCN 60 b) Taxiways – PCN 60 c) Aprons – PCN 60 3) Light system for accurate approach for landing by category I

4) Category of emergency and fire service - 7 5) Airport opening hours 24/7 6) Standard for the level of passenger service - C Level or OPTIMUM Level under the New IATA Classification 7) Mandatory ground-based activities for which the concessionaire must obtain a license and perform independently (without subcontractor/s) а) Passenger service b) Baggage handling c) Aircraft servicing on the apron d) Service of aircraft with fuels and oils e) Cargo and mail handling. 35 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

f) Aircraft servicing.

2.2. Financial and economic requirements The minimum financial and economic requirements to the offers are set out in Annex 8 to the Concession Documentation and, in summary, include: 2.2.1. Minimum amount of the proposed investments by the participant - BGN 100 000 000 2.2.2. The minimum amount of the annual concession fee shall be as follows: а) a fixed portion of not less than BGN 100 000 (excluding VAT) annually, adjusted every three years from the Concession term with the Consumer Price Index with a cumulative three-year period. The indexed part of the Annual Concession Fee may not be lower than its size for the previous indexed period; b) variable part of not less than 5% of the CONCESSIONER's gross revenue from all activities for the current year related to the use of the object of the concession and the VAT due on the amount. There is a grace period between the start date of the concession until the expiration of 48 months, during which the Concessionaire does not owe a concession fee.

2.3 Legal requirements The legal requirements are related to the law requirements, ensuring the application of the principles set out in Art. 4 of the LC, as well as with good practices and experience in conducting such procedures. They are specified in detail in the concession documentation, with the main ones listed here. 2.3.1. A participant in the procedure for designation of a concessionaire is entitled to submit only one set of application and offer, including when being a member of a participant consortium/other form of association that is not a legal entity. The requirements to the participation of a group of economic operators are set out in the Concession Documentation. The cases in which the third party has the opportunity to prove the requirements, as well as the obligation to provide these resources in the execution of the concession or for joint and several liability with the concessionaire (regarding the financial and economic conditions), respectively, are specified in detail. of a subcontractor. 2.3.2. It is envisaged as a requirement the creation of a project company in the form of a capital trading company: (a) where the participant in the procedure designated as a concessionaire is in the form of an association/consortium/other form of association other than a legal entity, or (b) on a proposal of an economic operator - participant in the procedure, which takes the capital of the project company as its sole owner. When creating a project company, the requirements of Art. 21 of the CA are respected, specifying in the Concession Agreement the joint and several liability of the economic operators participating in the group, respectively the independent economic operator with the project company for the implementation of the Concession Agreement, as stipulated therein, and this will be specified in accordance with the application and the offer regarding the nature and the amount of participation of each of the economic operators in the project company or their commitment to provide resources to the project company. The project company is bound by the bid of the bidder designated as a concessionaire. The way the resources are made available, as well as the participation of the private partner or the participants in the group as subcontractors, shall be indicated in the participant's offer and included in the financial and economic model.

36 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

2.3.3. The preparation of the application, the offer, including the proposal and the binding proposal and other documents determined by the grantor will be carried out according to the models contained in the Concession documentation. The requirements for the application and the offer, including their content, design and presentation, are set out in detail in the Concession documentation. The notice of initiation of the procedure will exclude the possibility of presenting variants of the offer.

2.3.4. The requirements to the offers and evaluation criteria are set out in Annex 8 to the Concession Documentation and in this justification.

The reasons for the criteria thus proposed.

TheFinancial proposal criterion with a weight of 45 percent is included in order to guarantee financial revenue for the state from the concession, and the determination of a part of it as a percentage of revenue makes it adequate for the economic activity to be carried out on the object of the concession. The Technical Proposal criterion with a weight of 55 percent was introduced as part of the criteria for the evaluation of offers, since the subject of concession involves the management and operation of the airport. The grantor should ensure that the prospective concessionaire has a clear vision of the effective management of the airport and the achievement of the objectives set out in the opening of the concession award procedure. In the light of the foregoing, it should be stated that the criteria proposed are lawful. The expediency of the concession is determined by the object of the concession, the need to make investments in the object of the concession, the objectives of the concession and the fair distribution of the benefits of the concession between the Grantor and the concessionaire.

V. ESTIMATED VALUE OF FINANCIAL AND ECONOMIC ELEMENTS OF CONCESSION

1. FORECAST OF THE CONCESSION

According to Art. 28, para. 1 of the CA the estimated value of a works concession shall include the value of the following possible estimated revenue accruing to the concessionaire: 1. the revenue from the exploitation of the construction work or of the services included in the object of the concession; 2. the revenue from any form of option and from any extension of the duration concession or another modification of the Concession Agreement; 3. the revenue from the payment of fees and fines by the users of the works or of the services other than those envisaged to be collected for the grantor; 4. the payments or any other financial advantages in any form whatsoever made by the grantor to the concessionaire, including compensation for compliance with a public service obligation and subsidies; 5. the grants or any other financial advantages, in any form, from other parties for 37 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

the performance of the concession; 6. the revenue from sales of any assets which are part of the object of the concession; 7. all the supplies and services that are made available to the concessionaire by the grantor, where such supplies and services are necessary for executing the works or providing the services.

According to Art. 4, para. 3 of the Ordinance on the requirements for determining the financial and economic elements of the concession (the Ordinance) the estimated value of the works concession is calculated on the basis of the discounted cash flow method at a discount rate of 4%. According to Art. 4, para. 2 of the Ordinance the estimated revenues of the concessionaire determined with the justification of the concession shall be included in the estimated value of the concession in full amount without value added tax. Calculation of the estimated value of the works concession at Plovdiv Airport: 1. A vertical structural analysis of the revenues of Plovdiv Airport for the previous year was carried out. 2. An increase trend over the next 35 (thirty-five) years is determined for each revenue. 3. A summary table of revenue is prepared by item, the total revenue received is discounted by a discount factor of 4%. The estimated value of the works concession for “Civil Airport for Public Use Plovdiv” is calculated as the total turnover of the concessionaire (excluding VAT) in the operation of the concession object, received as the sum of all revenues from the operation of the works and services, which are the subject of this procedure, taking into account the following basic assumptions: 1) Term of concession - 35 years; 2) The participant designated as a concessionaire will be entitled to collect all airport charges, revenues from commercial aviation activities that it performs, including ground handling under Art. 48e, para. 3, items 2-7 of the CAA, as well as the revenues from performing commercial activities at the concession site; 3) Making all investments compulsory elements of the investment program; 4) Estimated revenues for the duration of the concession that the concessionaire will receive from regulated aviation activities, the revenues from commercial aviation activities (eg ground handling under Art. 48e, para 3, items 2-7 of the CAA, and non-aviation activities are calculated as follows:

Discounted revenue for the Discount rate 4% duration of the concession (BGN) Total revenue from regulated 47 301 760,28 activities Total revenue from commercial 57 854 904,58 aviation activities Total non-aviation commercial 91 690 307,87 revenue

38 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Discounted revenue for the Discount rate 4% duration of the concession (BGN) Total revenue 196 846 974,70

The total estimated value of the concession is in the amount of BGN 196 846 974,70.

The estimated value of the concession is calculated without deducting the estimated costs that the concessionaire will incur in the operation and management of the concession site. The estimated value of the concession is also calculated for possible extensions of the concession term by 1/3 of the original term, the total term of all extensions cannot exceed that 1/3, i.e. up to 46,7 years (560 months) ), as follows:

Discounted revenue for the Discount rate 4% duration of the concession (BGN) Total revenue from regulated 61 610 409,16 activities Total revenue from commercial 76 592 524,62 aviation activities Total non-aviation commercial 120 636 881,34 revenue Total revenue 258 839 815,12

2. ECONOMIC BALANCE OF CONCESSION AND RISK ALLOCATION

2.1. Economic balance of Concession

The economic balance of the concession shall be maintained throughout the duration of the concession. The economic balance is defined in Art. 30, para. 1 of the CA as a balance between the benefits for the concessionaire and the grantor at the risks assumed thereby. First, the economic balance of the concession is determined by the rights and obligations of the parties and the conditions for the realization of the concession described in the Concession Agreement. For the purpose of determining the economic balance, a forecast matrix of the main risks and a rate of return for the concessionaire and the grantor are included. The fair distribution of economic benefits between the grantor and the concessionaire requires the direct revenue of the state from concession payments and tax profits, and the concessionaire's profits from the activities in the concession object, to be balanced. The grantor receives a number of economic benefits from the concession: The direct economic benefits to the grantor are realized through concession fee, profit tax and investment in public state property. The concession fee is dependent on airport charges and will increase with the development of airport traffic. According to the financial model forecast, airport charge revenues will represent increasing flows, respectively, and cash 39 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property flows to the grantor. The state has the possibility to transfer to the concessionaire the inherent risk accompanying the investment requirement. Also, as a result of this concession, the grantor will be relieved of the burden of funding for maintenance and possible investments related to the airport. Apart from the direct revenue for the grantor, the concession will also realize other indirect benefits such as profits and incentives for the development of the regional and national economy from the operation of the airport and the gradual increase in traffic, as well as potential for commercial development. The grantor will also realize socio-economic benefits of the concession: а) created new jobs in the region - temporary in the period of construction and expansion of the activity; permanent as employed in the concessionaire's principal activity as an airport operator and indirectly - newly created jobs in related activities; b) revenue from personal revenue tax and related social security as a result of job creation; c) savings from social payments. The development of Plovdiv Airport, as envisaged through the implementation of the concession, will have a beneficial effect for the region by: а) increasing economic activity; b) improving the business structure; c) growth of regional economy; d) the expected multiplication of some of the effects: in the development of regional infrastructure and other public activities.

The concession will be for a period of 35 years, with the possibility of extension, and the total duration of all extensions, regardless of the reason for this, may not be longer than one third of the specific term of the concession. The specific term of this concession is 35 years, which means that the total term of all extensions cannot be longer than 11,7 years. It is envisaged to pay a one-time concession fee of BGN 150 000 (excluding VAT) within one month after signing the Concession agreement to a bank account specified by the grantor. Until the grace period expires, the one-time concession payment will be the only payment from the concessionaire to the grantor. The annual concession fee due after the expiration of the grace period has been determined as follows: а) a fixed part in the amount of BGN 100 000 (excluding VAT) per year - minimum amount of the fixed concession fee; b) variable part of 5% of the concessionaire's gross revenue from all activities for the current year related to the operation of the concession object - minimum amount of the fixed concession fee. A grace period is foreseen, for the concessionaire to be released from the obligation to pay the annual concession fee, of 48 (forty-eight months) months from the start date of the concession, due to the significant amount of investments pledged in the investment program and the need to accumulate funds. for their financing by the concessionaire. The purpose is to enable the concessionaire to generate funds from operating activities during the first years of 40 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property the concession to secure part of the investment costs during their occurrence. The amount of investments in the object of concession for the whole term of the contract should be not less than BGN 100 000 000. Equity to loan financing ratio is plotted against market practices 60:40. The discount rate of 4% was used for the discounting of cash flows and the calculation of FNPV for the project, according to Art. 28, para 1, item 3 of the Ordinance on the requirements for determining the financial and economic elements of the concession. One of the most important criteria for the financial performance of a project is the Net Present Value (FNPV). It is a quantitative expression of the cumulative effect of the investment made over the entire project planning horizon. Since the discount rate is an alternative investment opportunity, the net present value reflects the net increase in invested capital over the increase that would have provided this alternative investment. Then the FNPV's interpretation will mean the investor's revenue in excess of the minimum required return. In fact, net present value reflects the movement of all costs incurred, the conversion of investments into assets and the effect of market value on the overall balance of capital at the end of the planning horizon. In this situation, the concession is attractive to the future concessionaire, who will be able to generate profitability from its overall activity in the provision of services within the activities performed through the concession. The internal rate of return of equity and of the project, regardless of the source of funding, exceed the discount rate, which indicates the attractiveness of the investment. The profitability of the project is commensurate with the industry average. The fair distribution of the economic benefit between the grantor and the concessionaire requires the direct revenue of the state from concession payments and tax profits, and the concessionaire's profits from the activities at the concession object are balanced. The financial benefits to the country from the project arenot less than: а) for the duration of the concession, the proceeds from the concession fees are expected to exceed EUR 12 681 902. The amount is calculated on the basis of payment of the annual concession remuneration, including fixed concession fee and the value of the variable concession fee, calculated on the basis of 5% of the estimated concessionaire's revenue included in the analyst's financial and economic model; b) the envisaged minimum investments for the development, maintenance and modernization of the airport for the duration of the concession amount to BGN 100 000 000 excluding VAT. The circumstances in which the economic balance will be considered to be disturbed are defined in Art. 123, para. 2 of the Concessions Act (CA), as well as circumstances of factual or legal nature, related to the object of the concession, construction and / or services, which are defined by the Concession Agreement and which represent the totality of all the arrangements in the contract at the date of its conclusion. It is suggested that the concession agreement indicates the cases in which the economic and financial balance of the concession will change, which falls outside the typical cases of modification to which the concessionaire and the grantor are entitled. The methods by which the balance sheet is changed are specified in the concession agreement. For the purposes of the economic balance of the concession, an annual analysis, after 41 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property the deadline for publication of the financial statements of the concessionaire, will be conducted to analyze the benefits to the concessionaire and the grantor based on the actual financial results of the concession. The analysis will be accompanied by a comparison of the ratio of benefits to the concessionaire and the grantor, according to the set financial model proposed by the offer of the concessionaire, reflecting the actual results of the concession accumulated since the beginning of the concession. In this regard, a mechanism for restoring the economic balance is foreseen, in case the concessionaire's internal rate of return of the equity of the concessionaire exceeds by thirty percent (30%) the amount of the internal rate of return of their equity according to the offer in two consecutive years, the grantor will have the right to restore the balance in his favor.

2.2.Allocation of risks. The major concession-related risks are indicated in the table below. It is proposed that the concessionaire should be responsible for the entire operational risk and the construction risk. It has been stated that all the other risk shall be distributed between the concessionaire and the granting authority with the concession agreement, depending on the ability of each party to better evaluate, control and manage the relevant risk, while the risks which can be evaluated, controlled and managed in relatively the same way by both parties shall be distributed between the parties as shared risks. The level of risk is defined as a combination of the probability of risk occurrence and its relevance to the project implementation. Analysis of the individual types of risks:

2.2.1. Operational risk The operational risk borne by the concessionaire includes both demand and supply risks. The supply risk is the probability of occurrence of events, facts or circumstances which may have unfavourable effect on the market demand of the subject of concession or on the services offered. The concessionaire will be responsible for the management of demand- ofservices risk in so far as the revenues generated by the investor are directly conditional on the quality and level of the services offered, and accordingly the number of passengers, airplanes and cargo to whom and to which services are provided, as well as on the investments made for increasing the capacity of the airport. The demand risk is the probability of the mismatch between the subject of concession, the offer of services or economic activities and market demand. The demand risk also includes the risk of availability of the services offered. The demand risk includes the responsibility for and incurring additional costs for events occurring during the operation of the subject of concession, including as a result of: а) low revenue collection levels because of bad management of airport services and economic activities; b) revenue foregone resulting from the disruption of the continuous provision of airport; c) services and economic activities because of bad management and maintenance of the subject of concession; d) increased operation costs for the subject of concession and for airport services above the levels specified in the concessionaire’s offer; e) natural events which may lead to partial damages to the subject of concession or to temporary disruption of airport services except for the perish of the subject of concession or part of it as a result of a natural disaster. 42 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

The operational risk is always borne by the concessionaire and when, under normal conditions of operation, the Concession Agreement does not guarantee the return on the investments made and the costs of operating the services or works subject to the concession.

2.2. Construction risk Design and construction works risks, the probability of higher costs – higher compared to the costs forecast and proposed by the concessionaire in its offer – for the performance of the concessionaire’s investment programme and for maintaining the operation suitability and the development of the subject of concession. These risks include geological and geodetic risks; risks of natural disasters during the construction and assembly works; increase in the market prices of construction materials and services, inflation risk, technological risk, risk of section of subcontractors, risk of bad management during the works, and risks related to the construction and other works envisaged in the concessionaire’s investment programme.

Table 1 Матрица на риска и разпределение на рисковете между концедента и концесионера

Risk Description and risk Risk allocation mitigation measures For the Shared risk For the Concessionaire Granting authority Airport charges The airport charges shall be X collected by the concessionaire.

Revenues from The concessionaire shall be X commercial activity entirely responsible for the collection of revenue from commercial activity and for the rights and risks concerning the development with the only limitations being the non- interference in the efficient and safe operation of the airport and the objective of the concession. Traffic Entirely the responsibility of the X concessionaire Operational activity Aas the whole, the concessionaire X should be responsible for the operational activity which should be in line with the international standards, with the specific special cases of exemptions/ exceptions Licences The concessionaire has the X obligation to obtain all due licences, certificates and other documents in accordance with the Civil Aviation Act. Capital Investment It is entirely the responsibility of X Planning the concessionaire which should submit the general plan and/ or the investment programme to the granting authority within the time limits.

43 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

Financing It is entirely the responsibility of X the concessionaire. Macroeconomic risk risk It is entirely the responsibility of X the concessionaire (e.g. interest rates, currency exchange rates, inflation, etc.). Design and construction It is entirely the responsibility of X the concessionaire to ensure the safety of the design and construction activities. In this regard, there might be reference to the regulations of the European Aviation Safety Agency and Appendix 14 of the International Civil Aviation Organization (ICAO). Management and It is entirely the responsibility of X maintenance of the the concessionaire with possible facilities inspections by the granting authority and independent engineers from the civil aviation regulator. Ground Services The concessionaire should have X the due licences and to ensure the necessary systems and equipment. Persons who provide ground services and are external staff or are part of the users should be given access and equipment in accordance with the European directives and the Civil Aviation Act in force. Fire Protection It is entirely the responsibility of X the concessionaire. Activities related to air It is carried out by the Air Traffic X traffic control/ aviation Control of the Bulgarian Air services Traffic Services Agency Security It is the responsibility of the X concessionaire to ensure security and the development, maintenance and operation of security facilities, with a few exceptions. Insurance It is the responsibilityХ X ofX the concessionaire to ensure and pay X the due insurance. The granting authority may exempt the concessionaire from this obligation in exceptional cases when no insurances can be ensured under reasonable conditions.

3. CONCESSIONAIRE’S REVENUE Revenues are estimated based on the financial data provided by Plovdiv Airport EAD for the last four reporting years. The estimates take into account the full amount of the

44 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property actual invoiced airport charges; rather than their amount recognized in the profit and loss account as revenue of Plovdiv Airport AED. The purpose of the analysis is to forecast the revenues for the entire duration of the concession. The concession will generate revenue in three directions, which will also serve as a basis for determining the annual concession fee payments to the state: 1) Revenue from regulated activities - airport charges. Estimated on the basis of the natural traffic indicators according to the Ordinance on the charges for using the Airports for public use and for Air Navigation services in the Republic of Bulgaria. 2) Revenue from commercial aviation activities includes revenue from: groundhandling. They are projected at prices determined in the Price List of the airport services provided by Plovdiv Airport EAD, with an increase in proportion to the expected development of traffic. 3) Non-aviation commercial revenue - this is the revenue from the airport from the commercial premises on the territory of the airport, rental of premises, advertising, car parking and other additional services, such as video production. The revenue estimate is made at constant prices from 2018, based on the current airport charges, in accordance with the Ordinance on the charges for using the Airports for public use and for Air Navigation services in the Republic of Bulgaria, the actual reported revenues from the activities performed by the airport operator and according to the price list and the contracts concluded at the time of the preparatory actions. The estimate for the traffic of the aircraft, passengers and cargoes and the estimated minimum investments included in the investment program serve as a basis for the formation of the estimated revenues. The unit fees/prices are indexed to the rate of increase in operating expenses every 10 years in order to guarantee the availability of funds for the capital repairs envisaged over 10 years and to maintain the financial efficiency of the concession. As revenue grows, so do the nominal values of annual payments to the state, which are at least 5% of the total revenue of the concession.

4. PAYMENTS BY THE GRANTOR

This concession does not envisage payments from the grantor to the concessionaire for the investments and services rendered by them.

5. CONCESSION FEE

Upon expiration of the grace period specified in the Concession Agreement - 48 months from the start date of the concession, the Concessionaire shall pay an Annual Concession Fee, consisting of two parts: а) a fixed part of not less than BGN 100 000 (excluding VAT) annually, adjusted every three years from the Concession Term with the Consumer Price Index with a cumulative three-year period. The indexed part of the Annual Concession Fee may not be lower than its amount for the previous indexed period.

45 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

b) variable part of not less than 5% of the CONCESSIONER's gross revenue from all activities for the current year related to the use of the object of the concession and the VAT due on the amount. For the duration of the concession, the proceeds from the concession fees are expected to be at least 12 681 902 EUR. The amount is calculated on the basis of payment of the minimum amount of the fixed concession fee and 5% of the estimated revenues in the financial model developed by the analyst Option

6. DURATION OF CONCESSION

The eligible duration of the works concession in accordance with Art. 34, Para. 1 of the Concessions Act is 35 years. The duration of the concession may be extended but the overall period of all the extensions – regardless of the reasons for them – may not be longer one-third of the specific duration specified in the concession agreement. In the case of the concession of Plovdiv Airport the duration of the concession is set to be 35 years with possible extension and the overall period of all the extensions may not be longer than 11,7 years (140 months). The proposed maximum period and the extension option are determined on the basis of the time taken by the concessionaire to recover the investments made and the costs of operating the construction or services and to obtain the return on the invested capital, taking into account the forecast economic balance and the price of the services to be provided. The following financial and social aspects have been taken into account in determining the maximum duration of the concession: 1. Significant financial resources are needed to carry out the investment program that ensures the development of the airport; accordingly, the repayment period for the investments made is significant (27 years without discounting / 33 years with discounted cash flows);

2. In accordance with the objectives of the concession is to create in the concessionaire economic incentives and incentives for investment. This implies the granting of a longer concession period in order to ensure that the expected return on investment is obtained;

3. The concessionaire is expected to finance a significant portion of its investment program through borrowing, and therefore the loan repayment period, which is 20 years under the proposed investment program and structure for financing and servicing loans, should be taken into account;

4. A long enough period is required to allow for the physical depreciation and exploitation of the underlying fixed assets;

5. The operation of the concession site guarantees the engagement of at least 75 people full-time staff;

6. The long-term activity of the concessionaire will ensure stability and security of the grantor's revenue and security and continuity of the offered services. This, in turn, will

46 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property have a beneficial effect on the development of the region and airport services throughout the country;

7. The maximum term of the concession will facilitate the realization of the desired return on the funds invested by the concessionaire and thus will reduce the incentives for increasing the charges and prices of the services offered. This will lead to greater competition in the industry and benefits for users of airport services throughout the country;

8. The maximum duration of the concession will stimulate investments in excess of the amount stipulated in the minimum investment program and ensure the development of the airport. This, in turn, would contribute to a more efficient operation of the concession site and, accordingly, would lead to an increase in the concessionaire's revenues as well as a corresponding increase in the annual concession fee;

9. A longer concession period reduces the risk of adverse effects on the concessionaire if they are realized lower than projected levels of traffic/revenue. This way the concessionaire will have a longer period of time to adapt and achieve the desired return on investment.

47 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

VI. FORECAST LEGAL ARRANGEMENTS

In view of the nature, type, complexity and specifics of this concession, the following forecast legal arrangements have been identified to be implemented through the notice, concession documentation and Concession Agreement, whose design is part of the concession documentation.

1. TYPE OF PROCEDURE

As can be seen from the determined estimated value of the concession, the latter is one with cross-border interest according to Art. 11, para. 1 of the LC. For concessions with cross-border interest, it is permissible to carry out all the procedures for determining a concessionaire regulated by law - open procedure, competitive procedure with negotiation and competitive dialogue, subject to the legal grounds for their conduct. On the basis of this, the assessment of the circumstances essential for the object of the concession and its objectives, and based on the experience and practice to date, it is proposed to conduct an open procedure for determining the concessionaire. One of the significant advantages of the open procedure is the possibility of maximum achievement of the set goals and protection of the public interest in advance clarification of all elements of the concession and concession procedure, attracting the interest of serious investors and airport operators in the absence of issues that can provoke doubts about the different approach to the applicants or participants, as well as ensuring to the greatest extent the application of the established in Art. 4, para. 1 of the LC guiding principles such as publicity, transparency, proportionality, equality and non-discrimination. The open procedure is a one-stage procedure, it does not negotiate and the appointment of a concessionaire is made on the basis of the facts, documents presented and proposals made in the applications and offers of the participants, as well as in accordance with the provided in the draft Concession Agreement. The evaluation of the proposals to be evaluated by the participants is carried out on the basis of the award criteria and the identified indicators contained in the evaluation methodology in the Concession and Notice Documentation, which are provided free access and maximum publicity and transparency through their publication in the National Concession register and the grantor's website.

2. LEGAL ARRANGEMENTS FOR THE BIDDERS IN THE PROCEDURE UPON CONCLUSION AND IMPMENETATION OF THE CONCESSION AGREEMENT

2.1. Form of participation in the procedure and requirements The legal arrangements for the participants in the procedure are determined in compliance with the legal provisions in Art. 18 et seq.of the CA, and taking into account the specifics of the concession and the requirements of the special CAA regarding the regimes under which the main activities for the provision of services at a civil airport for public use are performed. In view of this, the Concession Documentation lays down rules concerning the various eligible participants in the concession procedure, whether they are individual (individual) participants or a group of economic operators in the form of an association, consortium or other form which is not a legal entity. 48 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

In the case of a participant a group of economic operators requirements re laid down for the settlement of the relationship by concluding a contract’agreement for the formation of an association/consortium/other form of association, which is not a legal entity duly signed, in which at least the following is fulfilled or settled: 1) designate an authorized member of the assocation/consortium (lead partner) with the right to represent and assume obligations that bind all other members in connection with the concessionaire designation process, including but not limited to the submission of an application and an offer on behalf of the members and, in the case of assignment – for the signing of the Concession Agreement; 2) designate one of the members of the association/consortium as an airport operator or, as an option, explicitly designating a third-party designated by the association/ consortium as an airport operator (it is permissible to designate the same member for lead partner and airport operator ); 3) the members of the association/consortium are jointly and severally liable to the grantor for the performance of the concessionaire's obligations and in accordance with the terms and conditions specified in the concession agreement; 4) creation of a project company in the form of a capital trading company with the participation of the participants in the association/consortium in its capital in the ratio of the offer and the association/consortium contract; 5) an obligation for the project company to be provided by the participants in the association/consortium resources with which the participant has demonstrated compliance with the requirements for technical ability and / or financial and economic status, such as the way the resources are provided, and the participation of the private partner or the participants in the group are subcontracted in the offer and included in the financial and economic model; 6) no change in the composition of the bidder after the submission of the application and the offer can be made. When signing a Concession Agreement, any change shall be made in accordance with the provisions and conditions stipulated in the Concession Agreement and in compliance with the Concessions Act. The group of economic operators has the right to fulfill the conditions for participation under Art. 62 of the CA through the cumulative experience/resources of the economic operators - members of the association/consortium, with the exception of the requirements for experience in operating and managing airports and for the license. At the same time, remains the condition that the requirements regarding experience in operating and managing airports are satisfied by the airport operator, who, in the event of designating the participant for concessionaire, should be licensed as an airport operator if it meets the requirements.

2.2. Airport Operator 1) Aiport Operator upon participant a group of economic operators In the case of an association/consortium participant, its member designated as an airport operator must meet the requirements for an airport operator at the time of submission of the application and the offer, as well as after the conclusion of the Concession Agreement, in the case of designating the participant as a concessionaire as well as to hold: а) at least 20% (twenty percent) of the company capita/stocks/ shares which give the Concessionaire voting rights until the fifth year after the Start Date of the Concession, and 49 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

b) and minimum 10% (ten percent) of the company capital/ stocks/ shares which give the Concessionaire voting rights until the later date of the two: (a) tenth year after the Start Date of the Concession or (b) two year after the opening of the cargo-terminal. 2) Airport operator with individual participant A bidder submitting an application and an offer as an individual person (individual participant) must meet the requirements for an airport operator, determined at the time of application and offer submission as well as after the conclusion of the Concession Agreement for obtaining an airport operator license. 3) Airport operator – thirt party An individual participant or participant in the form of an association/consortium may fulfill the requirements for operating an airport (an airport operator) through a third party - an airport operator. In this case, it shall provide evidence of fulfillment of the requirement by the third party and, if the bidder is designated as a concessionaire, must submit as a prerequisite under the concession agreement a document for the due commitment of the third party - airport operator.

2.3. Proof by relying on the capabilities of third parties The Concessions Act (Art. 63 of the Concessions Act) provides for the possibility for the bidder to prove the fulfilment of certain requirements concerning the technical capabilities and the financial and economic standing by relying on the capabilities of one or more third parties, regardless of the legal links between them. When the bidder proves the fulfillment of the requirements concerning the technical capabilities and the financial and economic standing by relying on the capabilities of one or more third parties, the exclusion and the eligibility requirements shall apply to these third parties. This is in full compliance with the provisions of Art. 38 of the Concessions Directive which provides that an economic operator may rely on the capabilities of another subject regardless of the legal nature of the links between them. In such a case the economic operator should prove to the granting authority that that it will have at its disposal, throughout the period of the concession, the necessary resources.

2.4. Subcontractors. When the Bidder specifies in the application subcontractors, the bidder should provide information on these subcontractors as described in the Concession Documentation. There should be no reasons for exclusion for each subcontractor specified in the Application and each subcontractor shall sign an individual eligibility declaration and a declaration on the absence of circumstances under Art. 60 of the Concessions Act. Depending on the activities to be carried out by the respective subcontractor specified in the application, the subcontractor should meet the requirements of Art. 61, Para. 2, 3 and/or 5, and/or Art. 64, Para. 1 of the Concessions Act. 2.5. Concession Grantor - Concessionaire relations in cases where a group of economic operators is involved or the creation of a project company is envisaged The creation of a public-private company is not foreseen. The reason for this is the desire for a new, professionally established economic operator. The creation of a project company is envisaged - if the designated for concessionaire participant is a group of economic operators, it must establish one as the law does not specify

50 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property in what legal form it should be, but it must be a capital trading company (eg a joint stock company or a limited liability company). When setting up the project company, the economic operators involved in the procedure for designating a concessionaire as a group shall record all capital in the ratio specified in the offer. Except in the case of a project company with a certain concessionaire a group of economic operators, a project company may also be formed on the proposal of an economic operator made in its offer. In this case, the participant designated as a concessionaire shall be the sole owner of the capital of the project company incorporated as a sole proprietorship company. In all cases, the determining factor for the concession-concessionaire relationship is that, as in the case of a group of economic operators, the participants in it, and the economic operator in the cases of Art. 21, para. 4 of the LC must be jointly and severally liable with the project company for the implementation of the Concession Agreement, as provided in it, and taking into account the nature and size of the participation of each of the economic operators in the project company, respectively their commitment to provide resources to the project company in the manner indicated in the tender (also included in the financial and economic model). 2.5. Direct Agreement The draft concession agreement also provides for the conclusion of a direct agreement with the financial institutions providing funds for the concession whenever possible. Such practice is applicable to larger and more complex projects related to the need to provide substantial financial resources for construction and other activities that cannot initially be secured by the proceeds of the construction and/or service operation. This agreement will determine the conditions, responsibilities and penalties, which would contribute to the stability of the project and is an additional positive prerequisite for fulfilling the concessionaire's obligations under the Concession Agreement. This document will address the substantive issues of how collateral is financed and provided. In all cases, the concessionaire shall not be entitled to use as collateral the object of the concession, public state property. In cases where it is not feasible to conclude a direct agreement due to a secured financing scheme which does not provide for such, issues regarding the way of financing and provision of collateral shall be settled in the Concession Agreement, respectively, such clauses are provided in the draft concession agreement.

2.6. The participants in the procedure are expected to submit a guarantee for participation in the amount of BGN 1 000 000 (one million).

3. CONDITIONS OF ENTRY INTO FORCE OF THE CONCESSION AGREEMENT, POSTPONING OR TERMINATION CONDITIONS

The draft concession agreement stipulates that the Concession Agreement shall enter into force on the date of its signing. As the terms of the concession are complex and some of them require technological 51 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property time, the competent authorities have to decide in order for the concessionaire to exercise his rights and fulfill his obligations, a period of time called a transitional period is provided. During the transitional period, the necessary permits, licenses, certificates, issued by the competent authorities, related to the operation, management and operation of the airport, including a license for an airport operator and an operator for ground handling, shall be taken and obtained at least for the activities under Art. 48e, para. 3, items 2-7 of the CAA. The next set of issues to be addressed during this period is related to the financing (in whole or in part) of the concession activities. The concessionaire also needs additional time to obtain other acts and settle legal relationships that are binding or relevant to their activities and the object of the concession. After the expiration of the transition period is the concession start date at which the preconditions are fulfilled and the concessionaire can begin effective implementation of the concession, including taking overthe management and operation of the airport. In general, the preconditions are two groups: The first group includes preconditions that relate to the concessionaire and they owe their fulfillment, this is understandably the larger group of conditions. These include such essential conditions as: 1. the establishment and registration of a project company, where applicable; 2. the signing and entry into force of the direct agreement between the grantor, the concessionaire and the financing institutions, where applicable, and/or securing the engagement of the third party (s), where applicable; 3. obtaining the necessary permissions and approvals that the concessionaire must hold, including but not limited to: an airport operator's license; license for groundhandling activities under Art. 48e, para. 3, items 2-7 of the CAA; the certificate of operational fitness aofthe airport with the concessionaire registered; certificate of operational serviceability of the light-technical landing system with the concessionaire registered; certificates of serviceability of groundhandling systems and facilities; 4. receipt by the concessionaire of an unconditional concentration permit issued by the Commission for Protection of Competition under Chapter Five "Control on concentrations between undertakings" by Art. 22 et seq. of the Law on Protection of Competition; or by the European Commission pursuant to Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation); 5. conclusion of contracts with users of airport services, with the staff under the conditions of art. 123a of the Labor Code, etc.; 6. making a one-time concession fee of BGN 150 000 excluding VAT. For the second group of conditions, the implementation is the burden of the grantor, among which may be indicated: 1. if necessary, take action and obtain approval from the European Commission regarding possible state aid under Art. 107-109 of the Treaty on the Functioning of the European Union (TFEU) and the State Aid Act; 2. to establish the fulfillment of the preconditions and to transfer to the concessionaire the object of the concession and the concession assets, etc.

52 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property

4. USER RELATIONS, LIABILITY TO OTHER PERSONS IN THE PERFORMANCE OF CONSTRUCTION AND /OR SERVICES

One of the main conditions of the concession is the obligation of the concessionaire to maintain in serviceability for the entire duration of the concession the object of concession. At the same time, the purpose of the concession is not only to maintain the concession facility, but also to ensure its development, on the one hand, by investing funds and executing the investment program in the modernization and development of the airport infrastructure, and on the other - by professional management, providing airport services and performing other activities of higher quality, respectively enhancing the interest and confidence of the users of these services. Expectations for airlines and passengers are the investments that the concessionaire will make in airport infrastructure, equipment and technology and safety improvements to increase the number of airport service users while reducing processing time, improving efficiency and security. passengers and cargo. Save time, more efficient service and greater security are benefits for airlines and passengers, as well as being directly relevant to the effectiveness of the concession, as well as an expression of revenue, including airport charges. For the reimbursement of investments and costs made, the concessionaire will collect in theirfavor all airport charges, as well as revenues from groundhandling and other commercial activities. It is envisaged that the concessionaire will receive direct payments by customers - Art. 32, para. 1, item 1 of the CA. The realization of responsibility to others in the performance of construction and / or services is regulated on two levels - by the applicable legislation (laws and regulations in the relevant field), as well as at the contractual level by concluding contracts with users of services such as airlines and and others. In the process of design and construction, the requirements of the Spatial Planning Act and its implementing regulations are of paramount importance, regulating the main points in the relations between the participants in the construction process (investor, designer, builder, construction supervisor) with the definition of obligations and conditions for the respective activities, as well as other general and special laws - environmental legislation, special CAA, health and safety law at work and many more. At the next level, these relationships are detailed by contracts, where applicable, as well as by administrative acts when provided for by a legislative act. Respectively, in case of default, the guilty person/ faulty party is threatened to bear administrative, respectively contractual liability. In the provision of services, those related to the management and operation of a civil airport for public use are also regulated in detail, in addition administrative regimes with the issuance of licenses, certificates and other documents certifying compliance with the relevant requirements are applicable. An important fact is that these documents are subject to periodic certifications, for which inspections are being carried out, as well as other forms of control. All this is related to the achievement and maintenance of the required level of quality, safety, resource security and other requirements on which the quality of the services provided to consumers depends - air carriers, passengers, shippers and othrservice users. Regulatory and administrative regimes are also applicable in the provision of other services, e.g. for duty-free trading facilities, currency exchange offices, catering establishments which the person concerned (concessionaire or third party to which they are provided for use) must meet, one of the purposes of which is to protect the interests of service users . Accordingly, if the requirements are not complied with, the relevant permit,

53 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property registration, certificate shall be revoked and the right to provide the services or perform the activity shall be terminated.

5. ACQUISITION AND TRANSFER OF OWNERSHIP OR RETURN OF THE CONCESSION OBJECT

5.1. Public state property Concerning the ownership of the object of concession, it has the status of public state property, which determines the restrictions and possibilities for its use and disposal. Beyond the provisions of the State Property Act, the Civil Aviation Act, etc. normative acts, condition of the concession is non-change of ownership and status of the object of the concession, which applies to both parties to the Concession Agreement. Again, a consequence of the status of public state property is the fact that all accretions and improvements to the concession object occur under the ownership of the grantor from the moment of their creation. Thus, the improvements resulting from the concessionaire's investments, including the creation of new buildings, facilities and other assets, will emerge as the property of the grantor, and the concessionaire will only have the right to exploit them for the purpose of recovering the investment. The only real estate, which are privately owned by the state are buildings that will not be subject to disposition deals but may be removed from the concessionaire as unfit, resulting in a vacant lot - part of the concession territory to be used for other purposes and for the development of the concession object. 5.2. Transfer and return of the object of concession The concession agreement regulates the relations between the grantor and the concessionaire, related to the conditions, procedure and terms for the submission of the object of concession. The same will be handed over by the grantor to the concessionaire on the start date of the concession, which will be formalized through a bilateral handover protocol signed by representatives of both parties (with the assistance of the existing Plovdiv EAD Airport Operator if necessary). The conditions under which the object of the concession is handed over shall be the same as it is in the state in which it is located, with a valid certificate of operational serviceability and other certificates and documents for a functioning civil airport for public use. The concession territory and the appurtenances specified by the grantor to the object of the concession shall also be transferred. The retransmission (return) of the object of concession by the concessionaire to the grantor is made after the expiration of the concession term, including its extensions, if any, or upon its early termination. The concession agreement sets out the requirements regarding the condition in which the concession object is transferred to the grantor, which must be at least operational enough to provide services and activities for its intended purpose. The object is transferred in its entirety, together with the accretions, if any, and the improvements made. The concession territory and the appurtenances to the object of the concession are also transferred. Upon termination of the Concession Agreement, the term for handover and/or acceptance of the object of concession is 30 days from the date of termination, regardless of the reason for this. On the part of the grantor, a special commission shall be appointed for the handover and acceptance of the object of the concession and a minutes shall be drawn up, which shall 54 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property be signed by the members of the commission and by the authorized representative of the concessionaire. The law prohibits the concessionaire from exercising detention on the site, regardless of the reason on which the Concession Agreement is terminated. When the concessionaire refuses to hand over the object of the concession, or if at the date of termination of the concession agreement the concessionaire is terminated without a successor, or there is another inability to hand over the object, the commission appointed by the grantor draws up a statement of findings to handover the object, which determines the condition of the object and certifies the refusal or inability to handover.

6. TERMS AND CONDITIONS FOR SETTLEMENT OF DISPUTES BETWEEN THE PARTIES

Disputes between the parties shall be settled by negotiation and, where this is not possible, they shall be settled by a court in accordance with the Code of Civil Procedure, except where an arbitration clause is provided for in the concession agreement. In this case, it is suggested that the applicable dispute settlement order should be the common claim.

VII. OPPORTUNITY TO RECEIVE GRANT FINANCIAL SUPPORT FOR FINANCING CONCESSION COSTS THROUGH EUROPEAN STRUCTURAL AND INVESTMENT FUNDS

Not applicable, except at the concessionaire's initiative, if they, on their own account and on their own initiative, prepare, submit and apprve a project.

55 Justification for the works concession for “Civil Airport for Public Use Plovdiv” – public state property