IPR in the Middle East

1
IPR in the Middle East
January 2006
2
Introduction
Mark Williamson
3
Middle East . . . in the IPR portfolio
Our commitment to the region
Contract Type - IPR Group (by net MW)
PPA
ME Net MW
MW
Al Hidd Bahrian
34
66
Merchant (short/mediumterm contracted)
Ras Laffan B Qatar
Tihama Saudi Arabia 35 Al Kamil IPO
Net MW
Umm Al Nar UAE
Net MWunderconstruction

• Creating value through core skills
• Project development and construction
• Offtake contract design and execution
• Project financing
• Plant operation - both power and desalination

Shuweihat,UAE
Set up in region Al Kamil, Oman
2001
2003
2002
2004
2006
2005
2000
4
Middle East . . . in the IPR portfolio

• Contribution to IPR from the region

Middle East EBIT (m)
85
EBIT
54
Equity
29
23
22
9
1
-1
2001
2003
2002
2004
Only includes equity from operating assets
5
Overview
Ranald Spiers
6
IPR in the Middle East

• Six projects in six years with an enterprise
  value of US6.5 billion
• current IPR equity commitment of nearly
• US400m
• Creation of new region - 29m PBIT by 2004
• Existing assets performing well
• Construction is the other major regional
  activity
• Power and desalination
• IPR largest private supplier of desalinated
  water in the world
• Pipeline of future projects
• three currently in bid/negotiation

Al Hidd
Bahrain
Ras Laffan B
Qatar
Tihama
Umm Al Nar
Shuweihat
UAE
SaudiArabia
UAE
Oman
Al Kamil
7
IPR in the Middle East
IPRShare(MW)
Net SteamCapacity(m lbs / hr)
End ofPowerContract
Net DesalCapacity(MIGD)
FuelType
ofownership
Country
Name
Al Kamil Shuweihat Umm Al Nar Tihama Ras Laffan
B Al Hidd Total
Oman UAE UAE KSA Qatar Bahrain
65 20 20 60 40 40
185 300 310 645 410 364 2,214
Gas Gas Gas Gas Gas Gas
- - - 2.7 - - 2.7
2017 2024 2026 2026 2033 2028
- 20 20 - 24 36 100
Middle EastEBIT (m)
29
23
9
2002
2003
2004
8
The Middle East - a growing asset portfolio
MW
6,995
6,870
6,570
910
910
Al Hidd
910
1,025
900
Ras Laffan B
600
1,075
1,075
1,075
Tihama
3,355
1,550
1,550
1,550
Umm Al Narextension
2,655
700
1,500
1,500
1,500
1,500
1,500
1,155
Shuweihat
870
870
870
285
(1)
Umm Al Nar
650
650
650
Al Kamil
285
285
285
285
285
285
285
2002
2003
2004
2005
2006
2008
2007
(1)
650 MW retires at the end of 2008
9
The Middle East Team

• Abu Dhabi Development Office
• project selection, bidding, negotiating, project
  development and management
• Project companies
• construction, asset management, client and
  partner relationships, operations and maintenance
• Operating companies
• operations and maintenance, owner and partner
  relationships

10
Key markets

• Primary target markets
• UAE
• Qatar
• Saudi Arabia
• Oman
• Bahrain
• Kuwait

11
Macro environment

• Stable Governments, low country risk rankings and
  good credit ratings
• Massive oil and gas reserves
• Petrodollar economies
• Strong economic growth driven by high oil prices
  and diversification away from oil
• Growth rates between 5 to gt 10 pa
• Drivers for power and water demand
• infrastructure development / tourism
• replacement vs incremental demand
• GCC states becoming increasingly interconnected
  and interdependent

12
Regulatory overview

• Pragmatic regulation, primary method of control
  via long-term contracts
• Markets unlikely to liberalise in the short or
  medium term
• Environmental regulation
• most new plants gas-fired

13
Commercial structure

• Long-term contracts which set in stone all major
  revenues and costs
• Major risks laid off wherever possible
• PWPAs, PPAs, ECAs, NGSAs
• EPC costs fixed with LDs for delays in
  construction and poor performance
• Long term operations and maintenance service
  agreements with OEMs
• Interest rates and currencies hedged

14
Return on investment

• Return profile similar across the region
• UAE local shareholder return 13
• Seek to enhance returns by OM, success fees and
  TSAs
• Cash generation, use of Equity Bridge Loans
• Scope to increase return once project has been
  commissioned, for example by refinancing

15
Financial structuring

• Projects structured using project finance
• carried out in conjunction with London-based
  project finance team
• Maximise use of senior debt
• Availability of local capital and international
  debt with international MLAs /JBIC
• High leverage is not a problem

16
Competitive environment

• Projects becoming increasingly competitive but
  IPR still winning regularly
• New players from Japan, Korea, Malaysia
• Traditional competitors (Suez/Tractebel, AES,
  Marubeni)
• Fewer EPC contractors tends to limit competition
• Competitors or partners (eg Mitsui)

17
Partnerships

• Partnering is a key element of risk
  diversification and gaining local knowledge
• ADWEA, CMS, Saudi Oger, QEWC, Mitsui, TEPCO,
  Sumitomo, Chubu, Suez
• We choose the right partners to help us win the
  deal
• Each partner brings something different to the
  table

18
Desalination

• Strong power demand and even stronger water
  demand
• Most Gulf projects are designed to offer both
  power and water
• Increases the overall efficiency of the plant
• Uses waste heat from the steam
• IPR has assets with the major thermal
  desalination processes

19
Agenda
Contract Structures
David Wadham
Financing our Growth
Peter Barlow
Desalination
Jaideep Sandu
Coffee Break
Oman
Tom Mackay Kevin Cox
Abu Dhabi
David Barlow Ed Metcalfe
Saudi Arabia
David Barlow, Jeff Wright Steve Pedrick
Qatar
Tom Mackay
Coffee Break
Bahrain
John Hurst
Summary
Ranald Spiers
20
Contract structures
David Wadham
21
Similarities across contracts

• Part-owned in conjunction with other
  international or local partners
• Financed on a highly leveraged, project finance
  (limited-recourse) basis
• Operate with the security of a long-term power
  (and water) offtake contract for the plants
  available capacity and output
• Contract with sovereign/quasi-sovereign
  counterparty
• states single buyer of power and water

22
Differences across contracts

• PWPAs structured on an energy conversion basis
  (ECA) or fuel supply agreement (FSA)
• Most projects are BOO, some BOOT
• Sub-contracted OM or combined owner/operator
  structures
• Government interest in some projects

23
PWPAs and PPAs

• Project company responsible for
• design
• construction
• commissioning
• Offtaker obligation to provide connections to
  power and water grid and purchase available
  capacity and output
• Flat tariff with capacity charge to recover debt
  service, fixed OM and equity return
  pass-through output charge to cover variable OM
  and fuel
• Payment is in local currency (except Tihama) but
  includes exchange rate protection

• ownership
• operation
• maintenance

24
PWPAs and PPAs (cont.)

• Capacity or termination payments guaranteed by
  the host government
• Revenue protection for offtaker defaults and
  political force majeure (war, change in law,
  government action/inaction)
• Commercial documents subject to local law but
  international arbitration
• Finance and construction documents subject to
  English law

25
PWPAs and PPAs (cont.)

• Energy conversion (Abu Dhabi, Tihama) or separate
  fuel supply arrangements (Oman, Qatar, Bahrain)
• BOO (Abu Dhabi, Oman, Bahrain), BOOT (Tihama and
  Qatar), with a transfer to the offtaker
• Accounting treatment always an operating or
  finance lease
• Terms vary from 15 years (Oman), through 20-23
  years (Tihama, Abu Dhabi and Bahrain) to 25 years
  (Qatar), but without market liberalisation
  renegotiation clauses

26
Operation and maintenance

• Abu Dhabi
• Requires a separate operator owned by foreign
  investors
• Payment on a fixed price basis
• Ability to generate Operator fees and bonuses
  against a lower equity stake (e.g. Umm Al Nar,
  20 stake in the generator, but a 70 stake in
  the operator)
• Others
• More flexibility (e.g. Al Kamil, Ras Laffan)
• Advantages of a combined owner/operator

27
Gas turbine maintenance

• Long-term arrangements with the OEM (Al Kamil,
  Umm Al Nar, Tihama with GE and Shuweihat and Ras
  Laffan with Siemens)
• For one or two maintenance cycles
• The benefits of an LTSA include
• All scheduled maintenance sub-contracted for a
  fixed price, with a degree of unscheduled outage
  cover provided within the price
• Based on a term warranty concept, i.e. OEM
  guarantees to replace all program parts as needed

28
Shareholding structure
The advantages of a government shareholding and
the need to generate local investment
opportunities

• Abu Dhabi IWPPs have 60 holding retained by the
  government
• Al Kamil initially 100 owned by IPR, now 65
  owned following a mandatory IPO on the Muscat
  Stock Market
• Ras Laffan has no direct state involvement,
  although QEWC holds 55 and is in turn listed on
  the DSM
• Tihama and Bahrain owned entirely by private
  investors

29
Umm Al Nar Shareholders Agreement

• Foreign shareholder has the ability to manage the
  projectand enjoys significant minority
  protection
• coupled with government partner with shared goals
  as an investor
• Board of 7 directors (4 ADWEA and 3 foreign
  investors)
• Foreign investor appoints the Executive Managing
  Director
• Ed Metcalfe
• Voting on all significant matters at board and
  shareholder level requires approval of both ADWEA
  and the foreign investor
• Government IPO provisions (Taqa was listed on the
  ADSM in July 2005)

30
Conclusion

• Long-term off take arrangements with single state
  buyers, guaranteed by sovereigns with investment
  grade ratings and a strong economic future
• Robust contractual terms offering secure future
  returns with revenue protection for supplier and
  offtaker defaults and for political force
  majeure events
• Projects are embedded in the region, with
  governments participating as co-investors or
  encouraging direct public ownership
• Key cost risks (financing and gas turbine parts
  and maintenance) well mitigated through long-term
  hedging and supply arrangements
• Upside remains through refinancing opportunities,
  the ability to reduce costs over time and
  merchant tail on BOO projects

31
Financing our growth
Peter Barlow
32
Project finance

• Fundamental part of IPRs financial strategy
• Objective is to finance on a non-recourse basis
  at the asset level

33
Structure of Middle East IPPs/IWPPs

• Assets backed by long-term (20yrs) Power (and
  Water) Purchase Agreements (PPAs/PWPAs)
• Contractual Structure designed specifically for
  non-recourse financing
• Clients obligations backed by Government
  guarantees
• Predictable, long-term cashflows allow high
  leverage without sponsors support

34
Lenders view on IPP/IWPP risk/country risk

• No merchant risk
• Excellent track record of project financed
  IPPs/IWPPs success stories / accepted model in
  the banking market
• Loan syndication allows diversification of
  lending across different projects/countries
  lower risk
• Project financed IPPs/IWPPs include security on
  assets and stricter covenants than corporate
  loans
• ME countries hydrocarbon-rich, financially sound
  and politically stable country risk acceptable
  to most international PF lenders

35
International and regional debt providers

• IPRs approach mix international and regional
  lenders expertise
• International lenders particularly active in most
  countries in the region UAE, Oman, Qatar and
  Bahrain
• Predominantly regional lenders in the Kingdom of
  Saudi Arabia (KSA) so far
• Recent improvements in KSA (e.g. entry in WTO)
  suggests increased role of intl lenders there
• Islamic financing further source of liquidity, of
  which IPR has experience through Umm Al Nar and
  Shuweihat
• Export Credit Agencies being increasingly used

36
IPR capabilities in debt capital raising

• Core skill - IPR takes lead role in every project
  financing
• To date 5 IPPs/IWPPs project financed in the
  region
• Raised 3.9 billion in non-recourse bank debt
• IPR successfully financed first large scale IPP
  in Saudi Arabia
• Financing also achieved in potentially adverse
  market conditions(e.g. Shuweihat syndication
  launched on 12 Sept.2001 Umm Al Nar financing
  arranged at start of 2nd Iraq war)
• In 2004 successful IPO of Al Kamil on Omani stock
  exchange

37
IPR capabilities in debt capital raising Non
recourse long-term debt

• Al Kamil 100m
• Shuweihat 1.2 billion (of which 100m Islamic
  Tranche)
• Umm Al Naar 1.1 billion (of which 250m Islamic
  Tranche)
• Tihama 510m
• Ras Laffan 663m
• Al Hidd 1.0 billion (in negotiation)

38
Lenders appetite for future deals

• Competitive pricing and increasing level of
  interest suggest large appetite for future
  IPP/IWPP deals in the region
• Virtually all major international project finance
  lenders present in the region and display
  appetite for more deals
• More regional players are becoming familiar with
  project finance through participation in loan
  syndications

39
Case study Umm Al Nar

• Largest IWPP in the world
• existing net capacity 870 MW (power) 162 MIGD
  (water)
• after construction net capacity 1,550 MW (2,200
  MW for 2 years during construction) 95 MIGD
• 23 year PWPA with ADWEA proven contractual
  structure (4th such deal in Abu Dhabi, but
  longest tenor to date)
• Largest ever project finance deal at the time,
  when lenders appetite in the region was
  limited
• Financing plan structured to maximise liquidity
  and included use of Islamic financing, short
  and long term conventional debt
• Long-term debt tenor 20 years
• Optimal utilisation of operating cash flow for
  project funding

40
Case study Umm Al Nar
Amounts
Debt Facilities
Main Features
US million
1) Equity Bridge Facility
441
Tenor / Repayment
Bullet repayment on July 2008
Of which Islamic Tranche
291
Of which Conventional Tranche
150
Other
100 guaranteed by Shareholders
2) Short Term Facility
232
Tenor / Repayment
July 2006 to July 2008
Of which Islamic Tranche
Nil
Other
Of which Conventional Tranche
232
Ranking Pari-Passu with Long Term F.
3) Long Term Facility
1,105
Tenor / Repayment
Door-to-door
years Profiled
20
Of which Islamic Tranche
250
repayments Jan 2009 to Jul 2023
Other
Of which Conventional Tranche
855
"True-Up Advance" Drawdown at end
of availability period to repay part of
EBF and achieve 8020 gearing (subject
to cover ratio covenants)
Total Debt Facilities
1,778
41
Case study Umm Al Nar
Amounts
Capital Structure
US million
Total Funding Requirements
2,116
Of which Acquisition Purchase Price
1,000
Of which EPC Contract
736
Sources of Funds
Before
After
"Refinance"
"Refinance"
USm

USm

Short Term Facility
231
10.9
0
0.0
Long Term Facility
978
46.2
1,102
52.1
Equity Bridge Facility
440
20.8
0
0.0
Equity Injection
0
0.0
315
14.9
Cash Flow From Operations
468
22.1
698
33.0
Total Sources of Funds
2,116
2,116
2,116
42
Desalination
Jaideep Sandhu
43
Introduction

• Removal of salts from seawater
• suitable for human consumption, agriculture or
  industrial use
• Desalination Processes
• Thermal Distillation Processes - Multi Stage
  Flash (MSF) - Multi Effect Distillation (MED)
• Membrane Processes - Reverse Osmosis -
  Electro Dialysis
• Hybrid Plant (Thermal with RO)

44
IPR Middle East Desalination portfolio
2006
2008

• 100
• 181.5
• -
• 30
• 311.5
• 52.5

Shuweihat S1 IWPPMSF (Fisia) Umm Al NarMSF
MED (Fisia, IHI, Sidem, Doosan, Hitachi
Zosen) Ras Laffan Facility B MSF (Doosan) Al
Hidd, BahrainMSF MED (Fisia, Sidem) Total
Desalination capacity Potential
opportunityAbu Dhabi Reverse Osmosis Plant

• 100
• 95
• 60
• 90
• 345
• Assumeconstruction

45
Typical Power/Water Revenue Split

• Dependant on power and water capacities and load
  factors
• Power/Water capacity ratio of 151 (1,500 MW/100
  MIGD)
• e.g. Shuweihat, water contributes around 40 of
  the revenue and profit
• Power/Water capacity ratio of 51 (800 MW/160
  MIGD)
• e.g. UAN, water contributes around 68 of the
  revenue and profit

46
Multi Stage Flash Technology - 1
Vacuum
Seawater
Brine
Vapour
Vapour
Steam
Power
Condensing
Brinerecirculation
Vapour Brine Droplets
DesalinatedWater
Vapour Brine Droplets
RejectBrine
47
Multi Stage Flash Technology - 2

• Well proven track record
• Large capacity units
• Low OM cost
• High quality product water
• Used in IWPPs where adequate steam and power is
  available
• Technology - Doosan, Hitachi Zosen, HHI/Sasakura
  and Fisia

48
Multi Effect Distillation Technology - 1
Seawater
Vacuum
1St Effect
2nd Effect
Vapour
Vapour
Steam
Condenser
Condensate
DesalinatedWater
DesalinatedWater
Reject Brine
49
Multi Effect Distillation Technology - 2

• Well proven track record
• Mid-size units
• Low OM cost
• High quality product water
• Used in IWPPs where adequate steam is available
  but may be some constraints on power
• Technology - Sidem, Weir Techna, IDE and Doosan

50
Reverse Osmosis Process - 1
Chemicals
Chemicals
DesalinationWater
Potable Water
Highpressurepump
Posttreatment system
MembraneRacks
Pre treatmentsystem
Reject Brine
51
Reverse Osmosis Process - 2

• Preferred option for stand alone water plants
• Low capacity units
• Easy OM
• Lower installation cost
• Higher OM Cost
• Standardisation of membranes

52
Integrated Power and Water Plant

• Combined Power and Water Plant

HRSGs
Air
Gas /Oil
Steam Turbines
G
G
Gas Turbines
Brine Return
MSF/MED distillers
S/W Intake
53
Growth potential

• Driven by increasing scarcity of fresh water
  resources coupled with increases in population,
  urbanisation, and industrial development
• In parts of the region and around the world,
  development of desalination plants essential for
  survival
• Currently 75 of Global Desalination capacity in
  10 countries, mainly focussed in Saudi Arabia
  17.5, UAE 16.5, USA 16, Kuwait 6.5
• The efficient Integrated Power and Water Projects
  becoming a standard in the Middle East IPP
  process
• sets a good precedent for development elsewhere

54
Middle East IWPP Desalination markets
Anticipated Integrated Power and Water Plant
Investment
Abu Dhabi Oman Qatar Saudi Arabia Bahrain
4 bn 2 bn 3 bn 12 bn 2 bn
55
Oman
Tom Mackay Kevin Cox
56
Macro environment

• Ruled by Sultan Qaboos since 1970
• GDP in 2004 US 24.4 billion
• Currency Omani Rial pegged to US
• Codified legal system, existing alongside a
  Sharia system
• Oil dominated economy - proven reserves of 5.5bbl
• Recent diversification utilising gas reserves of
  29TCF - mainly LNG sales

(1)
GDP growth rate Credit rating Inflation
Population growth
3.3 BBB 1.6 2.5
(3)
(2)
(2)
(1)
DOE/EIA database 2005 MEED Dec 2005 SP
(2)
(3)
57
Market structure

• Electricity and Water Sector deregulated in 2003
• separation of generation, transmission and
  distribution/supply
• Independent Regulator overseas power and water
  sector
• Transmission Company (Transco) dispatches plant
  based on economic merit order and system
  requirements
• Government owned Power and Water Procurer (PWP)
  is sole purchaser of power and water - then
  onsells to Distribution companies
• Government owned Electricity Holding Company
  (EHC) - holds shares in 100 government owned
  companies pending privatisation
• Real commitment to privatisation with Government
  completely divesting its interests in privatised
  entities

58
Power and Water Sector

• Peak demand 2,500 MW in 2005 growing at 6 in
  both power and water
• Market shares

Water MIGD
Power MW
Fuel Type
Facility (2004 figures)
Owner
EHC
42
527
Gas/Oil
Ghubrah
EHC
0
688
Gas/Oil
Rusayl
EHC
334
Gas/Oil
Wadi Al Jizzi
Other smaller investments
Suez Energy
0
280
Gas/Oil
Al Manah
IPR
285
Gas/Oil
Al Kamil
24
ElectricityHoldingCompany
AES
20
427
Gas/Oil
Barka 1
46
Suez Energy
33
585
Gas/Oil
Sohar (in construction)
6
Dhofar
5
PSEG
0
200
Gas/Oil
Salalah
IPR
13
95
3,326
Total
6
Suez Energy
PWP estimates 2004
AES
59
Al Kamil asset overview
Location Sharquiya region Gross capacity 285
MW OCGT Fuel Gas with oil back-up Employees 30
plant and 7 Muscat office Configuration Dual
fuel plant using GEframe 9E turbines (3
units) Operational Q4 2002
UAE
Al Kamil
Oman
SaudiArabia
60
Al Kamil commercial overview

• Publicly listed on Muscat Securities Exchange
• IPR own 65, balance held by local shareholders
• 15 year PPA and GSA expiring April 2017
• backed by Oman Governmentguarantees

• PPA is US and PPI linked with capacity payments
  based on availability
• Original investment of 133m, funded 80/20
  debt/equity
• OM subcontracted to an IPR subsidiary backed by
  9 yr GE LTSA

61
Al Kamil performance

• Commercial availability of 99.9
• No lost time accidents
• Excellent maintenance and inspection record with
  3 inspections carried out on time and within
  budget
• Fully compliant with all environmental
  requirements
• Successful in exceeding Omanisation targets with
  45 Omani staff
• Excellent relations with all relevant
  Governmental agencies

62
Al Kamil creating value

• Operation
• Maintenance of high availability and control of
  direct costs
• Financing
• IPO in August 2004 of 35 of equity at 1.7x par
  value
• Renegotiated Senior Debt in November 2005,
  extending maturity, lowering margins and
  back-ending repayment profile
• Medium term
• Expansion of plant as local load grows
• Extension of PPA or exploitation of merchant tail
• Use of non-OEM parts or renegotiation of LTSA
  terms
• Further potential for future refinancing

63
Future prospects / outlook

• Regional and international finance available for
  Omani Power deals
• New project opportunities
• 685 MW Rusayl / 550-700 MW, 30 MIGD Barka II
  IWPP, bid due 27th March 2006
• future privatisation of Ghubrah (527 MW and 42
  MGD) and Wadi Al Jizzi (334 MW)
• expansion of Al Kamil
• standalone IWP programme in Oman

64
Summary

• Economically and politically stable
• Committed to privatisation programme
• Well structured, low risk business at Al Kamil
• Excellent technical and commercial performance
• Real potential to enhance returns of existing
  business and add additional projects

65
Abu Dhabi
David Barlow Ed Metcalfe
66
Macro environment

• UAE - federation of 7 Emirates
• political power Abu Dhabi
• GDP in 2004 103bn
• Currency UAE Dirham pegged to US
• Oil 98 bbls proven reserves
• 8 of proven world reserves
• Gas - 212 TCF proven reserves- 5th largest in
  world
• Codified legal system
• existing alongside a Sharia system

(1)
GDP growth rate Credit rating Inflation
Population growth
6.4 A1 3.4 6.0
(2)
(1)
(1)
(3)
(1)
Source MEED, 2004
(2)
Moodys, Dec 2004
(3)
Oil Gas Journal, 2005
(3)
67
Abu Dhabi Power Water Sector

• Abu Dhabi Water Electricity Authority (ADWEA)
• Regulation Supervision Bureau
• Abu Dhabi Water Electricity Company (ADWEC)
• single procurer and seller of electricity and
  water
• Abu Dhabi Transmission Company
• transmission of both power and water
• Abu Dhabi Distribution Company and Al Ain
  Distribution Company
• Generation of IWPPs and ADWEA owned Companies

68
Abu Dhabi IWPPs

• Middle Easts most successful privatization
  programme
• six projects in excess of US 5 billion
  invested
• Contractual structure
• 60 government ownership guarantees stability and
  fair treatment for the project company
• Long-term off-take arrangements backed by
• robust demand growth for power and water
• significant oil reserves and a strong economy

69
Demand growth
70
Demand growth
71
Umm Al Nar asset overview
Location Emirate of Abu Dhabi Net capacity
Present 873 MW, 162 MIGD Final 1,550 MW, 95
MIGD Fuel Gas (CCGT)/desalination Employees
Present 500 Final 160 Configuration (final) 5
GE 9FA gas turbines 2 x295 MW Toshiba steam
turbines 2x12.5 MIGD Hitachi Zosen, 5x12.5 MIGD
Doosan MSF, 2x3.5 MIGD Sidem MED desalination
units
UAE
UmmAl Nar
Oman
SaudiArabia
72
Umm Al Nar
73
Umm Al Nar commercial overview

• IPR 20, ADWEA 60, TEPCO 14, Mitsui 6
• 23 year PWPA with ADWEC
• 2.1 billion investment (80 debt and 20 equity)
  
• Financing - 1,100m 20yr loan, 230m 5yr loan,
  440m equity bridge facility balance from
  existing plant revenues
• OM ownership - 70 IPR and 30 TEPCO

74
Arabian Power Company 2.1 billion project

• Purchase and operation of current Umm Al Nar, Old
  Existing Assets and New Existing Assets
• Construction of Umm Al Nar New Plant Extension
  and integration with New Existing Assets
• Closure of old existing assets in 2008

75
Old Existing Assets

• Capacity payments - generous availability targets
• UAN East Station (commissioned in 1979-84)
• 4 Gas Turbines, total 250 MW
• 6 MSF Desalination units, total 41.7 MIGD
• UAN West Station (commissioned in 1981-86)
  consists of
• 10 Steam Turbines, total 790 MW
• 10 MSF Desalination units, total 53.2 MIGD
• Decommissioned 2008

76
New Existing Assets

• UAN West B Station (commissioned in 2002/3)
• 5 x 12.5 MIGD Desalination plant (MSF)
• 2 x 3.5 MIGD Desalination plant (MED)

77
UAN New Plant Extension

• Net capacity
• 1,500 MW Power
• 25 MIGD Water
• Integration of New Existing Assets
• Full commercial operation 2006

78
Contractor for UAN Plant Extension

• Mitsui single EPC Contractor
• Toshiba power plant (Toshiba main sub-contractor)
• Hitachi Zosen Desalination Plant
• TM TD 400kV switchyard
• COD expected Q3 2006

79
OM Agreement

• IPR/TEPCO experienced management team
• Existing highly skilled staff
• IT infrastructure implemented to IPR standards
• Environmental standard ISO 14001
• 12 year Contractual Service Agreement with GE

80
Shuweihat asset overview
Location Emirate of Abu Dhabi Gross Capacity
1,500 MW, 100 MIGD Fuel Gas (CCGT)/desalination E
mployees 130 staff Configuration 5 x Siemens
V94.3A2 Gas Turbines 2 Siemens steam turbines 6
x 16.7 MIGD Fisia Italimpianti desalination units
UAE
Shuweihat
Oman
SaudiArabia
81
Shuweihat
82
Shuweihat commercial overview

• IPR 20, CMS 20, ADWEA 60
• 20 year PWPA with ADWEC
• 1.6 billion investment - 80 debt and 20 equity
  
• Financed 950m 20 yr commercial tranche, 250m 20
  yr Islamic tranche, 350m equity bridge loan
• OM IPR/CMS JV (5050 ownership)

83
Abu Dhabi - new projects

• ADWEA Planned Projects
• 52.5 MIGD reverse osmosis desalination plant
• IPR and Mitsui in discussion with ADWEA
• 1,500 MW, 100 MIGD Shuweihat S2 IWPP
• Potential Projects
• New Abu Dhabi Island developments
• potential demand of 4,000 - 7,000 MW
• IWPP to supply Aluminium smelter - up to 2,000 MW
  
• Fujairah F2 IWPP 1,000 MW 70 MIGD

84
Saudi Arabia
David Barlow, Jeff Wright Steve Pedrick
85
Macro environment

• Saudi ruled by the Al-Saud family
• GDP 251bn
• Oil dominated economy 262 bbls oil reserves, 25
  of proven world total
• Gas reserves 235 TCF proven, worlds 4th
  largest

(1)
GDP growth rate Credit rating Inflation
Population growth
5.3 A/Baa2 0.2 2.7
(2)
(1)
(1)
(1)
(3)
(1)
Source MEED, 2004
(3)
(2)
SP / Moodys
(3)
Oil Gas Journal, 2005
86
Power and water industry

• Ministry of Water and Electricity
• Saudi Electricity and Cogeneration Regulatory
  Authority
• Saudi Electricity Company
• existing power generation, transmission and
  distribution
• responsible for new build IPPs
• Saline Water Conversion Company
• existing desalination capacity
• Water Electricity Company
• jointly owned by SEC and SWCC
• responsible for new build IWPPs

87
Power and water industry

• Country installed capacity (2001, MWE figures)
• diesel fuel 450 MW
• gas fuel 15,500 MW
• oil (HFO/crude) 10,000 MW
• 1,470 MIGD
• Demand growth
• 6 forecast growth rate for power, 8 forecast
  for water
• peak demand 24.5 GW in 2001, installed capacity
  26 GW
• growth from population increase and industrial
  diversification

88
Tihama Power asset overview

• Location Eastern Province
• Gross capacity 4 plants under construction,
  total capacity 1,085 MW, 4,400,000 lbs/hr steam
• Fuel Gas (Cogen) supplied FOC by Saudi Aramco
• Employees 140 total
• Configuration
• 3 sites each 2 x GE 7FA 1 site 2 x GE 7EA

Tihama
UAE
SaudiArabia
Oman
89
Tihama Power commercial overview

• Owner / operator structure 60 IPR, 40 Saudi
  Oger
• 20 year ECAs with Saudi Aramco
• 612m investment (80 debt and 20 equity)
• Lenders
• Bank Saudi Fransi
• Samba
• Arab Bank
• Riyadh Bank
• International Banks

90
Saudi Aramco
Saudi Oger

• The client, off-taker and fuel supplier
• Owned 100 by Saudi Government
• Number of employees 52,500
• Worlds leading producer and exporter of oil
• circa 3 billion barrels per annum
• Worlds top exporter of natural gas liquids
• circa 6.7 billion cu.ft./day

• Established in 1978 Saudi Oger is an
  international construction company based in Saudi
  Arabia
• Background in construction but business
  diversification strategy into power and telecoms
  well underway
• Turnover 1.8 billion per annum
• Number of employees 26,000

91
Saudi Aramco 3rd party cogen programProject
contractual structure
Sponsors International Power 60 Saudi Oger 40
General Electric
Contractual Services Agreement
Shareholders Agreement
Usufruct Agreements
Sub-Contract Packages Civil Mechanical
Electrical CI Fire Protection
Energy Conversion Agreements
EPC Contract
Tihama
Saudi Aramco
Main Contractor
Mitsui
HHI
Facility Agreement
Ancillary Services Agreements
Banque Saudi Fransi SAMBA Arab Bank Riyadh
Bank Saudi Hollandi Etc.
Owners Engineer PB Power
Banks
92
Tihama Power OM arrangements

• IPR / Saudi Oger Management
• Experienced staff recruited from Middle East and
  Asia
• Extensive staff training
• IT infrastructure and systems implemented to IPR
  standards
• 20 year technical services agreement with IPR
• 12 year contractual services agreement with
  General Electric

93
Uthmaniyah - GE 7FA
94
Shedgum - GE 7FA
95
Ras Tanura - GE7EA
96
Juaymah - GE 7FA
97
Tihama Power Generation Company Ltd.Saudi Aramco
3rd Party Cogeneration Project
NTP Feb 26 2004
Q1 06
Q2 04
Uthmaniyah 311 MWe Gross
21 months
Q2 06
Q3 04
Shedgum 311 MWe Gross
22 months
Q3 06
Q4 04
Ras Tanura 152 MWe Gross
22 months
Q4 06
Q1 05
Juaymah 312 MWe Gross
22 months
98
IWPP structure
99
IWPP and IPP programme
Sponsor
Water
Power
Project
(1)
WEC
195 MIGD
900 MW
Shoaiba
(2)
WEC
24 MIGD
700 MW
Shuqaiq
WEC
176 MIGD
2,500 MW
Ras Al Zour
Ras Al Zour
Qurayyah II
WEC
75 MIGD
1,100 MW
Al Jubail
Al Jubail
Yanbu II
Subukh
SEC
1,725 MW
Muzahimiyah
Rabigh II
RiyadhPP10
SEC
150 MIGD
2,400 MW
Rabigh II
UAE
Muzahimiyah
SEC
3,600 MW
Qurayyah II
Shoaiba
SaudiArabia
SEC
1,725 MW
Subukh
Shuqaiq III
SEC
150 MIGD
2,400 MW
Yanbu II
Oman
Shuqaiq
SEC
23 MIGD
600 MW
Shuqaiq III
SEC
1,725 MW
Riyadh PP10 (extn)
(1)
(2)
Closed Dec 2005 Launched Dec 2005
100
Saudi Arabia - other opportunities

• Marafiq
• 2,500 MW 176 MIGD at Jubail (bids due in April
  2006)
• 600 MW Yanbu
• Aramco
• possible expansion of existing Tihama assets
• other cogeneration opportunities
• Maaden
• IWPP supply for Aluminium smelter, mining
  extraction projects
• Saline Water Conversion Company
• new build desalination driven projects
• Privatisation of existing SEC and SWCC assets

101
Qatar
Tom Mackay
102
Macro environment

• Country ruled by the Al-Thani family following
  independence from UK protectorate in 1971
• GDP in 2004 US 28.4 billion
• Currency Qatari Rial pegged to US
• Codified legal system alongside a Sharia system
• Oil related economy 15.2 bbls reserves
• Gas dominated economy proven reserves of 910 TCF
  - 3rd largest proven reserves in the world

(1)
GDP growth rate Credit rating Inflation
Population growth
7.0 A 4.7 2.6
(3)
(2)
(2)
(1)
DOE/EIA 2005
(2)
MEED, 2005
(3)
SP
103
Installed capacity
Water MIGD
Power MW
FuelType

• Current market share is as follows

Owner
Facility
QEWC
55
970
Gas
RAFASAT

• QEWC at 76 Power
• IPR at 9.5 Power
• AES at 9.6 Power
• Other smaller shareholders 4.9 Power

QEWC
33
609
Gas
RAF B
QEWC
0
376.5
Gas
RAF B1
(1)
QEWC
29
567
Gas
RAF B2
AES/QEWC/QP/GIC
40
756
Gas
Ras Laffan A
(1)
QEWC/IPR/Chubu Electric
60
1025
Gas
Ras Laffan B
217
4304
Total
2005 figures from Kahramaa Under Construction
(1)
104
Power and water sector

• Installed capacity of some 2,712 MW and 128 MIGD
• additional 1,592 MW and 89 MIGD under
  construction
• Qatar Electricity Water Company (QEWC)
  historically developed all power generation and
  water projects
• KAHRAMAA sole purchaser and distributor of all
  power and water in country
• Electricity/water demand has growth historically
  6-8 per annum

105
Attractiveness

• Projected demand for Electricity and Water in
  2006 and 2007 is over 20 and 10 respectively
• Major Industrial developments in Ras Laffan and
  Mesaieed in the Petro-chemical, LNG expansions
  and Aluminium Smelter
• New developments worth US10 billion plus in 2005
• fuelling new expansion in the electricity and
  water sector
• Two IWPPs in Qatar
• Ras Laffan A (AES EMP) 750 MW, 40 MIGD
• Q Power (QEWC/IPR/Chubu Electric) 1,025 MW, 60
  MIGD

106
Ras Laffan B asset overview


Location Ras Laffan Industrial City Gross
Capacity 1,025 MW, 60 MIGD Fuel
Gas(CCGT)/Desalination Employees 86 - 6 IPR, 4
QEWC, 2 Chubu, and during construction around
4,000 Configuration V94.3 Siemens Gas Turbines
and 15 MIGD Doosan Desalination Units
Operational from 2006
RasLaffan B
Qatar
UAE
SaudiArabia
UAE
Oman
107
Ras Laffan B commercial overview

• Q Power (the project company) is owned 55 by
  Qatar Electricity Water company, 40 by IPR and
  5 by Chubu Electric
• Power and water capacity and output sold to
  KAHRAMAA (state-owned single buyer of power and
  water)
• under 25 year BOOT Power and Water Purchase
  Agreement
• Plant scheduled to enter commercial operation in
  three phases between 2006 - 2008
• 900 investment - 80 debt and 20 equity
• Long Term LTSA signed with Siemens for Gas
  Turbine Maintenance

108
Ras Laffan B construction progress

• All three Siemens Gas Turbines are on site and
  are being installed.
• 220kV switchgear for all gas turbines completed
• First Doosan Desalination Unit installed and work
  is progressing well on its associated pumps and
  pipe work
• First HRSG with its associated equipment being
  erected
• Progress on connecting to the Seawater intake and
  outfall pipework in advanced stage of completion

109
Ras Laffan B
110
Ras Laffan B
111
Ras Laffan B
112
Potential future projects

• Mesaieed
• 2,000 MW, 40 MIGD currently in development
• bids to be in by 15 March 2006
• Dukhan 1 2
• 3,000 MW, 60 MIGD
• Availability of regional and international
  finance
• eg Ras Gas LNG train 2 needed US 1.5 billion
  received US3 billion in offers

113
Bahrain
John Hurst
114
Macro environment

• Political
• stable, liberal, and the most democratic of the
  Gulf States
• Currency pegged to the US
• Legal structure very similar to that of the UAE

GDP growth rate Credit rating Inflation
Population growth
7 A- 4.9 1.5
(1)
(1)
SP
115
Power and Water industry

• Regulatory framework
• transmission and distribution is solely
  Government-owned
• MEW is the sole offtaker for power and water
  backed by Government of Bahrain Guarantee
• International Power and Suez Energy key players
  in the market
• Demand growth 8 power, 10 water
• Installed capacity 2,000 MW (excluding Alba
  aluminum smelter)

116
Al Hidd asset overview
Location Manama Gross Capacity 910 MW and 30
MIGD, 60 MIGD under construction Fuel Natural
gas Employees 2 IPR, 1 Suez, 1 Sumitomo, 198
Seconded from MEW Configuration Phase I - 2 x
13E2 30 MIGD water Phase II - 3 x 13E2
Al Hidd
Bahrain
Qatar
UAE
SaudiArabia
UAE
Oman
117
Al Hidd
118
Al Hidd commercial overview

• Hidd Power Company IPR 40, Suez 30, Sumitomo
  30
• 22-year PWPA with Ministry of Electricity and
  Water 22-year NGSA with Bahrain Petroleum
  Company (BAPCO)
• 1.25 billion investment - 85 debt, 15 equity
• Lenders - JBIC, 6 MLAs led by Royal Bank of
  Scotland
• Combined Owner/OM structure

119
Prospects / outlook

• IPR consortium has been operating Hidd plant from
  23 Jan 2006
• Financial close expected in July 2006
• payment of purchase price in July
• Immediate earnings
• MEW / MOF are both pragmatic and fair clients
• 2,000 MW IPP to be released by Government of
  Bahrain shortly

120
Summary
Ranald Spiers
121
Middle East Regional IWPP markets
Demand growth (per year)
New capacityrequired by 2014
Capacity2004
Country
7
8,000 MW
8,000 MW
UAE
6
2,000 MW
3,000 MW
Oman
8
30,000 MW
26,000 MW
Saudi Arabia
9
5,000 MW
2,700 MW
Qatar
8
2,000 MW
2,000 MW
Bahrain
6
5,000 MW
4,000 MW
Kuwait
122
Middle East Region - growth in IPP projects
Al Manah, Salalah, Al Kamil, Barka
(Oman)Taweelah A2, Taweelah A1 (UAE) TOTAL
PROJECT COSTS 3bn SADAF (Saudi Arabia)
Shuweihat, Umm Al Nar (UAE) Ras Laffan A
(Qatar) Sohar (Oman) Al Ezzel (Bahrain) TOTAL
PROJECT COSTS 6bn Taweelah B, Taweelah RO,
Fujairah, Shuweihat S2 (UAE) Ras Laffan B,
Mesaieed, (Qatar), Barka 2, Ghubrah, Rusayl
(Oman) Shoaiba, MARAFIQ , Rabigh, Shuqaiq, Raz
Al Zhor (SaudiArabia) ? TOTAL PROJECT COSTS
15bn
1994 - 2000
2001 - 2004
2005 - 2008
123
Middle East Region - short term prospects

• UAE
• Shuweihat S2 new build 1,500 MW 100 MIGD
• Fujairah F2 1000MW 70 MIGD
• New Abu Dhabi island development 4,000 MW - 7,000
  MW
• Oman
• Barka 2 new build 700 MW 30 MIGD
• Rusayl 685 MW existing
• Ghubrah sale of existing 527 MW 42 MIGD
• Wadi Al Jizzi 334 MW

• Bahrain
• 2,000 MW IPP
• Qatar
• Mesaieed 2,000 MW, 40 MIGD
• Dukhan 12 3,000 MW, 60 MIGD
• Saudi Arabia
• Shuqaiq 700 MW, 70 MIGD
• Marafiq 2,500 MW, 176 MIGD
• Ras Al Zour 2,500 MW, 175 MIGD

124
Desalination - growth potential

• Scope for further desalination projects in the
  Middle East
• Operating desalination plants - a key skill for
  IPR
• Ability to capitalise on the ME experience
  elsewhere (Australia, USA)

Anticipated integrated power and water plant
investment
Abu Dhabi Oman Qatar Saudi Arabia Bahrain
4 bn 2 bn 3 bn 12 bn 2 bn
125
Strategic focus

• Extract maximum value from current projects
• Maintain geographic focus on Gulf States and
  Saudi Arabia
• Seek selective opportunities in North Africa
  (Morocco/Egypt etc) markets with similar
  commercial and risk profile
• Target to win one project each year over the next
  four/five years

126
Success factors

• Best-in-class operation
• assets performing in accordance with contracts
• World class project finance capabilities
• High quality people to implement and run new
  projects
• Excellent reputation
• delivered assets on time and within budget
• Robust relationships with key clients, partners
  and contractors