EcoEnergy

Background
Ukraine has since its independence in 1991 experienced a continuous increase in energy costs related to the supply of natural gas from Russia, by which the Government, the Parliament and the President have jointly and under broad coalition decided to find alternative sources of energy. In addition, Ukraine is negotiating with the European Union to sign an Association Agreement. Among the requirements included in the aforementioned agreement Ukraine will commit to a number of environmental directives, of which one is the Landfill Directive that outlines a clear framework to reduce the use of landfills to the maximum possible. Therefore the Ukrainian Government has worked diligently over the last years to create a legal and tax framework for the successful attraction of investments in the field of renewable energy; bio-fuel, biogas and energy recovery, as well as other sources of renewable energy.

The framework includes new and amended laws and regulations and all have passed the proper political and administrative processes, the Government, the Parliament and the office of the President. This framework is generally referred to as the "Road Map" On June 15th 2009 EcoEnergy, BiogasProm Ukraine, the Ukrainian Government and 14 Ukrainian Municipalities signed two Memorandums of Understanding ("MoU") by which EcoEnergy will develop, finance, build, own and operate "renewable energy" facilities, and the Ukrainian Government will promote the operational requirements of EcoEnergy by offering "Contractual Guarantees", including, but not limited to:

• Off-take agreements for the sale of electricity, heat and waste treatment
• Sufficient waste and other fuels of "renewable " character for the operation of the facilities
• Land for the facilities
• Permits
• Tax incentives

For the successful execution of the above, EcoEnergy has entered into a partnership with BiogasProm AB and LLC BiogasProm Ukraine. BiogasProm has a long experience in project development in Ukraine in order to assist EcoEnergy in the development, construction and operation of the facilities in Ukraine.

Project Status
Since early fall of 2009 EcoEnergy Scandinavia has been working diligently to develop the Donetsk project. Included in that work has been:

• Review, analysis and development of the Feasibility Study performed by SEP (Scandinavian Energy Project AB) commissioned by the City Council of Donetsk.

• Inquiry and confirmation of facts regarding heat, electricity and waste data for the design of the facility

• Inquiry into legal framework in Ukraine for the development, design, permitting, financing, construction, ownership and operation of a waste to energy facility

• Official project launch on November 18th 2009, executed by the Mayor of Donetsk Mr. Lukyanchenko and the Chairman of EcoEnergy Scandinavia AB Mr. Guldstrand

• Identification and due diligence of land allocation alternatives, resulting in a preliminary allocation of the project on land south of the Proletarskiy district in Donetsk

• Launch of the process to develop the Environmental Impact Assessment in December 2009

• Launch of the process to develop the Environmental Impact Assessment in December 2009

• Launch of the Public Consultation and Disclosure Program on April 28th 2010

• Launch of the negotiations for heat, electricity and waste treatment supply services, including drafting of relevant contracts

• Launch of the development of the Engineering, Procurement and Construction Turnkey contract, including the competitive procurement of suppliers for the different lots of equipment and services

• Development of the Information Memorandum for the financing of the project with local and international financial institutions