IPR in the Middle East

January 2006
1

Introduction
Mark Williamson
2

Middle East . . . in the IPR portfolio

Our commitment to the region
MW

Contract Type - IPR Group

(by net MW)
PPA

ME Net MW
Net MW
Tihama Ras Laffan B Qatar Saudi Umm Al Nar Arabia UAE 35% Al Kamil IPO

2,500 2,000 1,500 1,000 500 0

Al Hidd Bahrian

66%
Merchant
(short/medium term contracted)

34%

Net MW under construction

Set up in Shuweihat, UAE region Al Kamil, Oman

2000

2001

2002

2003

2004

2005

2006

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

Middle East . . . in the IPR portfolio

Contribution to IPR from the region
Middle East EBIT (m)
EBIT Equity 85

54

22

23

29

9 -1
2001 1 2002 2003 2004

Only includes equity from operating assets 4

Overview
Ranald Spiers
5

IPR in the Middle East

Six projects in six years with an enterprise value of US$6.5 billion ~ current IPR equity commitment of nearly US$400m
Creation of new region - 29m PBIT by 2004 Existing assets performing well

Al Hidd

Bahrain
Ras Laffan B

Qatar
Tihama Shuweihat UAE Umm Al Nar

Construction is the other major regional activity

Power and desalination ~ IPR largest private supplier of desalinated water in the world Pipeline of future projects

Saudi Arabia

UAE

Oman
Al Kamil
6

IPR in the Middle East

Name Country % of ownership

IPR Share (MW)

Net Desal Capacity (MIGD)

Net Steam Capacity (m lbs / hr)

Fuel Type

End of Power Contract

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

20 20 24 36 100

2.7 2.7

Gas Gas Gas Gas Gas Gas

2017 2024 2026 2026 2033 2028

Middle East EBIT (m)

9 2002

29 23

2003

2004

The Middle East - a growing asset portfolio

MW

8,000 7,000 6,000 5,000

1,075 1,075
1,075

6,570
910 600

6,870
910
900

6,995
910 1,025

Al Hidd Ras Laffan B Tihama Umm Al Nar extension

4,000 3,000 2,000 1,000 0

285
285

3,355 2,655
1,500 700 1,500 870
285

1,550

1,550

1,550

1,155
870
285

1,500 650
285

1,500 650
285

1,500

Shuweihat

870
285

650 (1) Umm Al Nar

285

Al Kamil

2002

2003

2004

2005

2006

2007

2008
(1)

650 MW retires at the end of 2008

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
9

Key markets
Primary target markets:

UAE
Qatar Saudi Arabia Oman Bahrain Kuwait
10

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 > 10% pa

Drivers for power and water demand ~ infrastructure development / tourism ~ replacement vs incremental demand
11

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

12

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
13

Return on investment

Return profile similar across the region

UAE local shareholder return 13% Seek to enhance returns by O&M, success fees and TSAs

Cash generation, use of Equity Bridge Loans

Scope to increase return once project has been commissioned, for example by refinancing

14

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

15

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)

16

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

17

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

18

Agenda
Contract Structures Financing our Growth Desalination Coffee Break Oman Abu Dhabi Saudi Arabia Qatar Coffee Break Bahrain Summary David Wadham Peter Barlow Jaideep Sandu Tom Mackay & Kevin Cox David Barlow & Ed Metcalfe David Barlow, Jeff Wright & Steve Pedrick Tom Mackay

John Hurst Ranald Spiers

19

Contract structures
David Wadham
20

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
21

Differences across contracts

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

22

PWPAs and PPAs

Project company responsible for: ~ ownership ~ design ~ operation ~ construction ~ commissioning ~ maintenance 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 O&M and equity return; pass-through output charge to cover variable O&M and fuel Payment is in local currency (except Tihama) but includes exchange rate protection 23

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

24

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
25

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) More flexibility (e.g. Al Kamil, Ras Laffan) Advantages of a combined owner/operator
26

Others

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 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
27

The benefits of an LTSA include:

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
28

Umm Al Nar Shareholders Agreement

Foreign shareholder has the ability to manage the project and 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 July29

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
30

Financing our growth

Peter Barlow
31

Project finance

Fundamental part of IPRs financial strategy

Objective is to finance on a non-recourse basis at the asset level

32

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

33

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

34

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
35

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

36

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)

37

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

38

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;

39

Case study:
Umm Al Nar
Debt Facilities
1) Equity Bridge Facility Of which: Islamic Tranche Of which: Conventional Tranche Amounts US$ million 441 291 150

Main Features
Tenor / Repayment: Bullet repayment on July 2008 Other: 100% guaranteed by Shareholders

2) Short Term Facility Of which: Islamic Tranche Of which: Conventional Tranche

232 Nil 232

Tenor / Repayment: July 2006 to July 2008 Other: Ranking Pari-Passu with Long Term F.

3) Long Term Facility Of which: Islamic Tranche Of which: Conventional Tranche

1,105 250 855

Tenor / Repayment: Door-to-door 20 years; Profiled repayments: Jan 2009 to Jul 2023 Other: "True-Up Advance": Drawdown at end of availability period to repay part of EBF and achieve 80:20 gearing (subject to cover ratio covenants)

Total Debt Facilities

1,778

40

Case study:
Umm Al Nar
Capital Structure
Total Funding Requirements:
Of which: Acquisition Purchase Price Of which: EPC Contract Amounts US$ million

2,116
1,000 736 After "Refinance" US$m % 0 0.0% 1,102 52.1% 0 0.0% 14.9% 315 698 33.0% 2,116

Sources of Funds
Short Term Facility Long Term Facility Equity Bridge Facility Equity Injection Cash Flow From Operations

Total Sources of Funds:

Before "Refinance" US$m % 231 10.9% 978 46.2% 440 20.8% 0 0.0% 468 22.1% 2,116

2,116

41

Desalination
Jaideep Sandhu
42

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)

43

IPR Middle East Desalination portfolio

2006
Shuweihat S1 IWPP MSF (Fisia) Umm Al Nar MSF & MED (Fisia, IHI, Sidem, Doosan, Hitachi Zosen)* Ras Laffan Facility B MSF (Doosan) 30 311.5 60 90 345 100

2008
100

181.5

95

Al Hidd, Bahrain MSF & MED (Fisia, Sidem)

Total Desalination capacity

Potential opportunity: Abu Dhabi Reverse Osmosis Plant

52.5 Assume construction

44

Typical Power/Water Revenue Split

Dependant on power and water capacities and load factors

Power/Water capacity ratio of 15:1 (1,500 MW/100 MIGD) ~ e.g. Shuweihat, water contributes around 40% of the revenue and profit Power/Water capacity ratio of 5:1 (1,000 MW/100 MIGD) ~ e.g. UAN, water contributes around 68% of the revenue and profit

45

Multi Stage Flash Technology - 1

Vacuum

Brine
Vapour Vapour

Seawater

Steam Power

Condensing
Desalinated Water

Vapour & Brine Droplets

Vapour & Brine Droplets

Brine recirculation Reject Brine

46

Multi Stage Flash Technology - 2

Well proven track record Large capacity units Low O&M cost High quality product water

Used in IWPPs where adequate steam and power is available Technology - Doosan, Hitachi Zosen, HHI/Sasakura and Fisia
47

Multi Effect Distillation Technology - 1

Seawater

2nd
Vapour

Effect

Vacuum Vapour

1St

Effect

Steam Condenser Condensate

Desalinated Water

Desalinated Water

Reject Brine
48

Multi Effect Distillation Technology - 2

Well proven track record

Mid-size units
Low O&M 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

49

Reverse Osmosis Process - 1

Chemicals Desalination Water Chemicals

Potable Water

Post treatment system

Reject Brine

Membrane Racks

High pressure Pre treatment pump system

50

Reverse Osmosis Process - 2

Preferred option for stand alone water plants Low capacity units Easy O&M Lower installation cost Higher O&M Cost

Standardisation of membranes
51

Integrated Power and Water Plant

Combined Power and Water Plant
Air Gas /Oil HRSGs

Steam Turbines

G
Gas Turbines Brine Return

MSF/MED distillers

S/W Intake

52

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

53

Middle East IWPP Desalination markets

M IGD

2500
2005 2015

2000

Anticipated Integrated Power and Water Plant Investment Abu Dhabi Oman Qatar Saudi Arabia Bahrain $4 bn $2 bn $3 bn $12 bn $2 bn

1500

1000

500

Abu Dhabi

Oman

Qatar Bahrain Saudi Arabia

54

Oman
Tom Mackay & Kevin Cox
55

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

GDP growth rate (1) Credit rating

(3)

3.3% BBB+ 1.6%

Inflation

(2)

Population growth(2)

2.5%

(1) DOE/EIA database 2005 (2) MEED Dec 2005 (3)

S&P

Oil dominated economy - proven reserves of 5.5bbl

Recent diversification utilising gas
56

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
57

Power and Water Sector

Peak demand 2,500 MW in 2005 growing at 6% in both power and water

Market shares :

Facility (2004 figures)

Ghubrah

Fuel Power Water Type MW MIGD Owner

Gas/Oil 527 42 EHC

Rusayl
Wadi Al Jizzi

Gas/Oil
Gas/Oil Gas/Oil Gas/Oil Gas/Oil

688
334 280 285 427 585 200 3,326

EHC
EHC

Other smaller investments 24%

Al Manah Al Kamil

Suez Energy IPR

Dhofar 6% 5% IPR 13% Suez Energy 6% AES

46%

Electricity Holding Company

Barka 1

20 33 0 95

AES

Sohar (in construction) Gas/Oil Salalah Total

PWP estimates 2004

Suez Energy PSEG

Gas/Oil

58

Al Kamil asset overview

Location: Sharquiya region Gross capacity: 285 MW OCGT
UAE
Al Kamil

Fuel: Gas with oil back-up

Employees: 30 plant and 7 Muscat office Configuration: Dual fuel plant using GE frame 9E turbines (3 units) Operational: Q4 2002

Saudi Arabia

Oman

59

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 Government guarantees PPA is US$ and PPI linked with capacity payments based on availability Original investment of $133m, funded 80/20 debt/equity

O&M subcontracted to an IPR

60

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
61

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 62

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
63

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

64

Abu Dhabi
David Barlow & Ed Metcalfe
65

Macro environment

UAE - federation of 7 Emirates ~ political power Abu Dhabi GDP in 2004: $103bn

GDP growth rate (1) Credit rating

(2)

6.4% A1 3.4%

Currency: UAE Dirham pegged to US$

Inflation

(1)

Oil: 98 bbls proven reserves (3) ~ 8% of proven world reserves

Gas - 212 TCF proven reserves (3) - 5th largest in world

Population growth(1)

6.0%

(1) Source: MEED, 2004 (2) Moodys, Dec 2004 (3) Oil & Gas Journal, 2005

Codified legal system ~ existing alongside a Sharia system

66

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
67

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
68

Demand growth
Abu Dhabi Power Demand 1993 - 2004
8000 7000 6000
Power, MW

Abu Dhabi Power Demand Forecast 2005-2015

12000 10000
Power, MW

5000 4000 3000 2000 1000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year

8000 6000 4000 2000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Year

Installed Power Capacity

Peak Power Demand

Installed Power Capacity

Required Power Capacity

69

Demand growth
Abu Dhabi Water Demand 1993 - 2004
600 500
Water, MIGD

Abu Dhabi Water Demand Forecast 2005 - 2015

900 800 700
Water, MIGD

400 300 200 100 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year

600 500 400 300 200 100 0 2005 2006 2007 2008 2009 2010
Year

2011

2012

2013

2014

2015

Water Capacity

Water Demand

Installed Water Capacity

Required Water Capacity

70

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

UAE
Saudi Arabia

Umm Al Nar

Oman

71

Umm Al Nar

72

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
O&M ownership - 70% IPR and 30% TEPCO

73

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

74

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
75

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)

76

UAN New Plant Extension

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

77

Contractor for UAN Plant Extension

Mitsui single EPC Contractor

Toshiba power plant (Toshiba main sub-contractor) Hitachi Zosen Desalination Plant

TM T&D 400kV switchyard

COD expected Q3 2006

78

O&M 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

79

Shuweihat asset overview

Location: Emirate of Abu Dhabi

Gross Capacity: 1,500 MW, 100 MIGD

Fuel: Gas (CCGT)/desalination

Employees: 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

Saudi Arabia

Oman

80

Shuweihat

81

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
O&M IPR/CMS JV (50:50 ownership)

82

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 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
83

Potential Projects

Saudi Arabia
David Barlow, Jeff Wright & Steve Pedrick
84

Macro environment

Saudi ruled by the Al-Saud family (1)

GDP $251bn Oil dominated economy: 262 (3) bbls oil reserves, 25% of proven world total (3) Gas reserves: 235 TCF proven, worlds 4th largest

GDP growth rate (1) Credit rating

(2)

5.3% A/Baa2 0.2%

Inflation

(1)

Population growth(1)
(1)

2.7%

Source: MEED, 2004 Oil & Gas Journal, 2005

(2) S&P / Moodys (3)

85

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

86

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
87

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
Tihama

Saudi Arabia

UAE

Configuration:
3 sites each: 2 x GE 7FA 1 site: 2 x GE 7EA

Oman

88

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
89

Saudi Aramco

Saudi Oger

The client, off-taker and fuel supplier Owned 100% by Saudi Government

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

Number of employees 52,500

Worlds leading producer and exporter of oil ~ circa 3 billion barrels per annum

Turnover $1.8 billion per annum

90

Worlds top exporter of natural gas Number of employees liquids 26,000

Saudi Aramco 3rd party cogen program

Project contractual structure
Sponsors

General Electric
Sub-Contract Packages Civil Mechanical Electrical C&I Fire Protection Banque Saudi Fransi SAMBA Arab Bank Contractual Services Agreement Main Contractor EPC Contract

International Power 60% Saudi Oger 40%

Shareholders Agreement Usufruct Agreements

HHI

Mitsui
Facility Agreement

Tihama

Energy Conversion Agreements Ancillary Services Agreements

Saudi Aramco

Banks

Owners Engineer PB Power

Riyadh Bank
Saudi Hollandi Etc.

91

Tihama Power O&M 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

92

Uthmaniyah - GE 7FA

93

Shedgum - GE 7FA

94

Ras Tanura - GE7EA

95

Juaymah - GE 7FA

96

Tihama Power Generation Company Ltd.

Saudi Aramco 3rd Party Cogeneration Project
NTP Feb 26 2004 Q2 04 Uthmaniyah 311 MWe Gross
21 months

Q1 06

Q3 04

Shedgum 311 MWe Gross

22 months

Q2 06 Q3 06

Q4 04

Ras Tanura 152 MWe Gross

22 months

Q1 05

Juaymah 312 MWe Gross

22 months

Q4 06

97

IWPP structure

98

IWPP and IPP programme

Project Shoaiba(1) Shuqaiq(2) Ras Al Zour Al Jubail Muzahimiyah Rabigh II Qurayyah II Subukh Yanbu II Shuqaiq III Riyadh PP10 (extn)
(1)

Sponsor WEC WEC WEC WEC SEC SEC SEC SEC SEC SEC SEC

Power 900 MW 700 MW 2,500 MW 1,100 MW 1,725 MW 2,400 MW 3,600 MW 1,725 MW 2,400 MW 600 MW 1,725 MW

Water 195 MIGD 24 MIGD 176 MIGD 75 MIGD 150 MIGD

Ras Al Zour Qurayyah II Yanbu II Subukh Rabigh II Muzahimiyah Shoaiba Al Jubail Riyadh PP10

UAE

150 MIGD 23 MIGD

Saudi Shuqaiq III Arabia

Shuqaiq

Oman

Closed Dec 2005(2)

Launched Dec 2005

99

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
100

Qatar
Tom Mackay
101

Macro environment

Country ruled by the Al-Thani family following independence from UK protectorate in 1971 GDP in 2004: US $28.4 billion Codified legal system alongside a Sharia system

GDP growth rate (1) Credit rating

(3)

7.0% A+ 4.7%

Inflation

(2)

(2) Currency: Qatari Rial pegged to US$ Population growth

2.6%
(1) DOE/EIA 2005 (2) MEED, 2005 (3) S&P

Oil related economy: 15.2 bbls reserves Gas dominated economy: proven reserves of 910 TCF - 3rd largest proven reserves in the world

102

Installed capacity
Current market share is as follows:

Facility RAFASAT Fuel Type Gas Power Water MW MIGD 970 55 Owner
QEWC

QEWC at 76% Power

RAF B
RAF B1 RAF B2
(1)

Gas
Gas Gas Gas Gas

609
376.5 567 756 1025 4304

33
0 29 40 60 217

QEWC
QEWC QEWC AES/QEWC/ QP/GIC QEWC/IPR/ Chubu Electric

IPR at 9.5 % Power

AES at 9.6% Power Other smaller shareholders 4.9% Power

Ras Laffan A Ras Laffan B Total

(1)

(1)

2005 figures from Kahramaa Under Construction

103

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
104

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 US$10 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

105

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

Ras Laffan B

Qatar

UAE

Saudi Arabia

UAE Oman
106

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 (stateowned 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
107

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
108

Ras Laffan B

109

Ras Laffan B

110

Ras Laffan B

111

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 US$3 billion in offers
112

Bahrain
John Hurst
113

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

(1)

7% A4.9%

Inflation
Population growth

1.5%
(1)

S&P

114

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)
115

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

Saudi Arabia

UAE Oman
116

Al Hidd

117

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/O&M structure

118

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

119

Summary
Ranald Spiers
120

Middle East Regional IWPP markets

Capacity New capacity 2004 required by 2014 8,000 MW 3,000 MW 2,700 MW 2,000 MW 4,000 MW 8,000 MW 2,000 MW 30,000 MW 5,000 MW 2,000 MW 5,000 MW Demand growth % (per year) 7% 6% 8% 9% 8% 6%
121

Country UAE Oman Qatar Bahrain Kuwait

Saudi Arabia 26,000 MW

Middle East Region - growth in IPP projects

1994 - 2000 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+

2001 - 2004

2005 - 2008

122

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 1&2 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
123

Desalination - growth potential

MIGD

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)

2500

2000

2005 2015

Anticipated integrated power and water plant investment

1500

1000

500

Abu Dhabi Oman Qatar Saudi Arabia Bahrain

Abu Oman Qatar Bahrain Saudi Dhabi Arabia

$4 bn $2 bn $3 bn $12 bn $2 bn

124

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

125

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

126