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IPR in the Middle East January 2006.

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Presentation on theme: "IPR in the Middle East January 2006."— Presentation transcript:

1 IPR in the Middle East January 2006

2 Introduction Mark Williamson INTRODUCTION Page 1

3 Middle East . . . in the IPR portfolio
Our commitment to the region Contract Type - IPR Group (by net MW) PPA MW ME Net MW Al Hidd Bahrian 66% 34% Ras Laffan B Qatar Merchant (short/medium term contracted) Net MW Tihama Saudi Arabia 35% Al Kamil IPO Umm Al Nar UAE Net MW under construction Creating value through core skills Project development and construction Offtake contract design and execution Project financing Plant operation - both power and desalination Set up in region Al Kamil, Oman Shuweihat, UAE 2000 2001 2002 2003 2004 2005 2006 INTRODUCTION Page 2

4 Middle East . . . in the IPR portfolio
Contribution to IPR from the region Middle East EBIT (£m) 85 EBIT Equity 54 22 23 29 9 -1 1 2001 2002 2003 2004 Only includes equity from operating assets INTRODUCTION Page 3

5 Overview Ranald Spiers OVERVIEW Page 1

6 IPR in the Middle East Bahrain Qatar Saudi Arabia UAE Oman
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 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 UAE Shuweihat Saudi Arabia UAE Oman Al Kamil OVERVIEW Page 2 MIDDLE EAST Page 2

7 IPR in the Middle East Middle East EBIT (£m) OVERVIEW Page 3 29 23 9
IPR Share (MW) Net Desal Capacity (MIGD) Net Steam Capacity (m lbs / hr) End of Power Contract % of ownership Fuel Type Name Country Al Kamil Shuweihat Umm Al Nar Tihama Ras Laffan B Al Hidd Total Oman UAE KSA Qatar Bahrain 65 20 60 40 185 300 310 645 410 364 2,214 - 20 24 36 100 - 2.7 Gas 2017 2024 2026 2033 2028 Middle East EBIT (£m) 29 23 9 2002 2003 2004 OVERVIEW Page 3

8 The Middle East - a growing asset portfolio
MW 6,870 6,995 6,570 910 910 910 Al Hidd 600 900 1,025 Ras Laffan B 1,075 1,075 1,075 Tihama 3,355 2,655 1,550 1,550 700 1,550 Umm Al Nar extension 1,500 1,500 1,155 1,500 1,500 1,500 Shuweihat 285 870 870 870 650 650 650 (1) Umm Al Nar 285 285 285 285 285 285 285 Al Kamil 2002 2003 2004 2005 2006 2007 2008 (1) 650 MW retires at the end of 2008 OVERVIEW Page 4

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 OVERVIEW Page 5

10 Key markets Primary target markets: UAE Qatar Saudi Arabia Oman
Bahrain Kuwait OVERVIEW Page 6

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 > 10% pa Drivers for power and water demand infrastructure development / tourism replacement vs incremental demand GCC states becoming increasingly interconnected and interdependent OVERVIEW Page 7

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 OVERVIEW Page 8

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 OVERVIEW Page 9

14 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 OVERVIEW Page 10

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 OVERVIEW Page 11

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) OVERVIEW Page 12

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 OVERVIEW Page 13

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 OVERVIEW Page 14

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 OVERVIEW Page 15

20 CONTRACT STRUCTURES Page 1
David Wadham CONTRACT STRUCTURES Page 1

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 plant’s available capacity and output Contract with sovereign/quasi-sovereign counterparty state’s single buyer of power and water CONTRACT STRUCTURES Page 2

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 O&M or combined owner/operator structures Government interest in some projects CONTRACT STRUCTURES Page 3

23 CONTRACT STRUCTURES Page 4
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 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 ownership operation maintenance CONTRACT STRUCTURES Page 4

24 CONTRACT STRUCTURES Page 5
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 CONTRACT STRUCTURES Page 5

25 CONTRACT STRUCTURES Page 6
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 years (Tihama, Abu Dhabi and Bahrain) to 25 years (Qatar), but without market liberalisation renegotiation clauses CONTRACT STRUCTURES Page 6

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 CONTRACT STRUCTURES Page 7

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 CONTRACT STRUCTURES Page 8

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 CONTRACT STRUCTURES Page 9

29 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 July 2005) CONTRACT STRUCTURES Page 10

30 CONTRACT STRUCTURES Page 11
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 CONTRACT STRUCTURES Page 11

31 FINANCING OUR GROWTH Page 1
Peter Barlow FINANCING OUR GROWTH Page 1

32 FINANCING OUR GROWTH Page 2
Project finance Fundamental part of IPR’s financial strategy Objective is to finance on a non-recourse basis at the asset level FINANCING OUR GROWTH Page 2

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 FINANCING OUR GROWTH Page 3

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 FINANCING OUR GROWTH Page 4

35 International and regional debt providers
IPR’s 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 int’l 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 FINANCING OUR GROWTH Page 5

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 FINANCING OUR GROWTH Page 6

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) FINANCING OUR GROWTH Page 7

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 FINANCING OUR GROWTH Page 8

39 FINANCING OUR GROWTH Page 9
Case study: Umm Al Nar Largest IWPP in the world: existing net capacity: 870 MW (power) 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 FINANCING OUR GROWTH Page 9

40 FINANCING OUR GROWTH Page 10
Case study: Umm Al Nar Debt Facilities Amounts US$ million Main Features 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 Of which: Conventional Tranche 232 Other: Ranking Pari-Passu with Long Term F. 3) Long Term Facility 1,105 Tenor / Repayment: Door-to-door 20 years; Profiled Of which: Islamic Tranche 250 repayments: Jan 2009 to Jul 2023 Of which: Conventional Tranche 855 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 FINANCING OUR GROWTH Page 10

41 FINANCING OUR GROWTH Page 11
Case study: Umm Al Nar Capital Structure Amounts 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" US$m % US$m % Short Term Facility 231 10.9% 0.0% Long Term Facility 978 46.2% 1,102 52.1% Equity Bridge Facility 440 20.8% 0.0% Equity Injection 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 FINANCING OUR GROWTH Page 11

42 Desalination Jaideep Sandhu DESALINATION Page 1

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) DESALINATION Page 2

44 IPR Middle East Desalination portfolio
2006 2008 Shuweihat S1 IWPP MSF (Fisia) Umm Al Nar MSF & MED (Fisia, IHI, Sidem, Doosan, Hitachi Zosen)* Ras Laffan Facility B MSF (Doosan) Al Hidd, Bahrain MSF & MED (Fisia, Sidem) Total Desalination capacity Potential opportunity: Abu Dhabi Reverse Osmosis Plant 100 181.5 - 30 311.5 52.5 100 95 60 90 345 Assume construction DESALINATION Page 3

45 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 DESALINATION Page 4

46 Multi Stage Flash Technology - 1
Vacuum Brine Seawater Vapour Vapour Steam Power Condensing Brine recirculation Desalinated Water Vapour & Brine Droplets Vapour & Brine Droplets Reject Brine DESALINATION Page 5

47 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 DESALINATION Page 6

48 Multi Effect Distillation Technology - 1
Seawater 2nd Effect Vacuum 1St Effect Vapour Vapour Steam Condenser Condensate Desalinated Water Desalinated Water Reject Brine DESALINATION Page 7

49 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 DESALINATION Page 8

50 Reverse Osmosis Process - 1
Chemicals Chemicals Desalination Water Potable Water High pressure pump Post treatment system Membrane Racks Pre treatment system Reject Brine DESALINATION Page 9

51 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 DESALINATION Page 10

52 Integrated Power and Water Plant
Combined Power and Water Plant Air HRSGs Gas /Oil Steam Turbines G G Gas Turbines Brine Return MSF/MED distillers S/W Intake DESALINATION Page 11

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 DESALINATION Page 12

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 DESALINATION Page 13

55 Oman Tom Mackay & Kevin Cox OMAN Page 1

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 Sha’ria system Oil dominated economy - proven reserves of 5.5bbl Recent diversification utilising gas reserves of 29TCF - mainly LNG sales GDP growth rate Credit rating Inflation Population growth (1) 3.3% BBB+ 1.6% 2.5% (3) (2) (2) (1) DOE/EIA database 2005 MEED Dec 2005 S&P (2) (3) OMAN Page 2

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 OMAN Page 3

58 Power and Water Sector Peak demand 2,500 MW in 2005 growing at 6% in both power and water Market shares : Facility (2004 figures) Fuel Type Power MW Water MIGD Owner Ghubrah Gas/Oil 527 42 EHC Rusayl Gas/Oil 688 EHC Wadi Al Jizzi Gas/Oil 334 EHC Other smaller investments Al Manah Gas/Oil 280 Suez Energy 24% Al Kamil Gas/Oil 285 IPR Electricity Holding Company Barka 1 Gas/Oil 427 20 AES 46% Dhofar 6% Sohar (in construction) Gas/Oil 585 33 Suez Energy 5% Salalah Gas/Oil 200 PSEG IPR 13% Total 3,326 95 6% Suez Energy PWP estimates 2004 AES OMAN Page 4

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 GE frame 9E turbines (3 units) Operational: Q4 2002 UAE Al Kamil Saudi Arabia Oman OMAN Page 5

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 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 subsidiary backed by 9 yr GE LTSA OMAN Page 6

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 OMAN Page 7

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 OMAN Page 8

63 Future prospects / outlook
Regional and international finance available for Omani Power deals New project opportunities: 685 MW Rusayl / 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 OMAN Page 9

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 OMAN Page 10

65 Abu Dhabi David Barlow & Ed Metcalfe ABU DHABI Page 1

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 TCF proven reserves - 5th largest in world Codified legal system existing alongside a Sha’ria system GDP growth rate Credit rating Inflation Population growth (1) 6.4% A1 3.4% 6.0% (2) (1) (1) (3) (1) Source: MEED, 2004 (2) Moody’s, Dec 2004 (3) Oil & Gas Journal, 2005 (3) ABU DHABI Page 2

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 ABU DHABI Page 3

68 Abu Dhabi IWPPs Middle East’s 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 ABU DHABI Page 4

69 Demand growth ABU DHABI Page 5

70 Demand growth ABU DHABI Page 6

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 Umm Al Nar Oman Saudi Arabia ABU DHABI Page 7

72 Umm Al Nar ABU DHABI Page 8

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 O&M ownership - 70% IPR and 30% TEPCO ABU DHABI Page 9

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 ABU DHABI Page 10

75 Old Existing Assets Capacity payments - generous availability targets
UAN East Station (commissioned in ); 4 Gas Turbines, total 250 MW 6 MSF Desalination units, total 41.7 MIGD UAN West Station (commissioned in ) consists of; 10 Steam Turbines, total 790 MW 10 MSF Desalination units, total 53.2 MIGD Decommissioned 2008 ABU DHABI Page 11

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) ABU DHABI Page 12

77 UAN New Plant Extension
Net capacity 1,500 MW Power 25 MIGD Water Integration of New Existing Assets Full commercial operation 2006 ABU DHABI Page 13

78 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 ABU DHABI Page 14

79 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 ABU DHABI Page 15

80 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 Oman Saudi Arabia ABU DHABI Page 16

81 Shuweihat ABU DHABI Page 17

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 O&M IPR/CMS JV (50:50 ownership) ABU DHABI Page 18

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 MW IWPP to supply Aluminium smelter - up to 2,000 MW Fujairah F2 IWPP 1,000 MW + 70 MIGD ABU DHABI Page 19

84 Saudi Arabia David Barlow, Jeff Wright & Steve Pedrick
SAUDI ARABIA Page 1

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, world’s 4th largest GDP growth rate Credit rating Inflation Population growth (1) 5.3% A/Baa2 0.2% 2.7% (1) (2) (1) (1) (3) (1) Source: MEED, 2004 (3) (2) S&P / Moody’s (3) Oil & Gas Journal, 2005 SAUDI ARABIA Page 2

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 SAUDI ARABIA Page 3

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 SAUDI ARABIA Page 4

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 Saudi Arabia UAE Oman SAUDI ARABIA Page 5

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 SAUDI ARABIA Page 6

90 Saudi Aramco Saudi Oger The client, off-taker and fuel supplier
Owned 100% by Saudi Government Number of employees 52,500 World’s leading producer and exporter of oil circa 3 billion barrels per annum World’s 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 SAUDI ARABIA Page 7

91 Saudi Aramco 3rd party cogen program Project contractual structure
Sponsors International Power 60% Saudi Oger 40% General Electric Sub-Contract Packages Civil Mechanical Electrical C&I Fire Protection Contractual Services Agreement Shareholder’s Agreement Usufruct Agreements EPC Contract Energy Conversion Agreements HHI Main Contractor Mitsui Tihama Saudi Aramco Facility Agreement Ancillary Services Agreements Banque Saudi Fransi SAMBA Arab Bank Riyadh Bank Saudi Hollandi Etc. Owner’s Engineer PB Power Banks SAUDI ARABIA Page 8

92 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 SAUDI ARABIA Page 9

93 Uthmaniyah - GE 7FA SAUDI ARABIA Page 10

94 Shedgum - GE 7FA SAUDI ARABIA Page 11

95 Ras Tanura - GE7EA SAUDI ARABIA Page 12

96 Ju’aymah - GE 7FA SAUDI ARABIA Page 13

97 Tihama Power Generation Company Ltd
Tihama Power Generation Company Ltd. Saudi Aramco 3rd Party Cogeneration Project NTP Feb Q2 04 Uthmaniyah 311 MWe Gross Q1 06 21 months Q3 04 Shedgum 311 MWe Gross Q2 06 22 months Q4 04 Ras Tanura 152 MWe Gross Q3 06 22 months Q1 05 Ju’aymah 312 MWe Gross Q4 06 22 months SAUDI ARABIA Page 14

98 IWPP structure SAUDI ARABIA Page 15

99 IWPP and IPP programme Saudi Arabia UAE Oman SAUDI ARABIA Page 16
Project Sponsor Power Water Shoaiba (1) WEC 900 MW 195 MIGD Shuqaiq (2) WEC 700 MW 24 MIGD Ras Al Zour WEC 2,500 MW 176 MIGD Ras Al Zour Al Jubail WEC 1,100 MW 75 MIGD Qurayyah II Muzahimiyah SEC 1,725 MW Yanbu II Subukh Al Jubail Rabigh II SEC 2,400 MW 150 MIGD Rabigh II Riyadh PP10 Muzahimiyah UAE Qurayyah II SEC 3,600 MW Shoaiba Saudi Arabia Subukh SEC 1,725 MW Yanbu II SEC 2,400 MW 150 MIGD Shuqaiq III Oman Shuqaiq III SEC 600 MW 23 MIGD Shuqaiq Riyadh PP10 (extn) SEC 1,725 MW (1) Closed Dec Launched Dec 2005 (2) SAUDI ARABIA Page 16

100 Saudi Arabia - other opportunities
Marafiq 2,500 MW MIGD at Jubail (bids due in April 2006) 600 MW Yanbu Aramco possible expansion of existing Tihama assets other cogeneration opportunities Ma’aden IWPP supply for Aluminium smelter, mining extraction projects Saline Water Conversion Company new build desalination driven projects Privatisation of existing SEC and SWCC assets SAUDI ARABIA Page 17

101 Qatar Tom Mackay QATAR Page 1

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 Sha’ria system Oil related economy: 15.2 bbls reserves Gas dominated economy: proven reserves of 910 TCF - 3rd largest proven reserves in the world GDP growth rate Credit rating Inflation Population growth (1) 7.0% A+ 4.7% 2.6% (3) (2) (2) (1) DOE/EIA 2005 (2) MEED, 2005 (3) S&P QATAR Page 2

103 Installed capacity Current market share is as follows:
Fuel Type Power MW Water MIGD Facility Owner RAFASAT Gas 970 55 QEWC QEWC at 76% Power IPR at 9.5 % Power AES at 9.6% Power Other smaller shareholders 4.9% Power RAF B Gas 609 33 QEWC RAF B1 Gas 376.5 QEWC RAF B2 (1) Gas 567 29 QEWC Ras Laffan A Gas 756 40 AES/QEWC/ QP/GIC Ras Laffan B (1) Gas 1025 60 QEWC/IPR/ Chubu Electric Total 4304 217 2005 figures from Kahramaa Under Construction (1) QATAR Page 3

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 QATAR Page 4

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 US$10 billion plus in 2005 fuelling new expansion in the electricity and water sector Two IWPP’s in Qatar Ras Laffan A (AES +EMP) 750 MW, 40 MIGD Q Power (QEWC/IPR/Chubu Electric) 1,025 MW, 60 MIGD QATAR Page 5

106 Ras Laffan B asset overview
Location: Ras Laffan Industrial City Gross Capacity: 1,025 MW, 60 MIGD Fuel: Gas(CCGT)/Desalination Employees: 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 QATAR Page 6

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 $900 investment - 80% debt and 20% equity Long Term LTSA signed with Siemens for Gas Turbine Maintenance QATAR Page 7

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 QATAR Page 8

109 Ras Laffan B QATAR Page 9

110 Ras Laffan B QATAR Page 10

111 Ras Laffan B QATAR Page 11

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 US$3 billion in offers QATAR Page 12

113 Bahrain John Hurst BAHRAIN Page 1

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) S&P BAHRAIN Page 2

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) BAHRAIN Page 3

116 Al Hidd asset overview Bahrain 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 13E MIGD water Phase II - 3 x 13E2 Al Hidd Bahrain Qatar UAE Saudi Arabia UAE Oman BAHRAIN Page 4

117 Al Hidd BAHRAIN Page 5

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/O&M structure BAHRAIN Page 6

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 BAHRAIN Page 7

120 Summary Ranald Spiers SUMMARY Page 1

121 Middle East Regional IWPP markets
Capacity 2004 New capacity required by 2014 Demand growth % (per year) Country UAE 8,000 MW 8,000 MW 7% Oman 3,000 MW 2,000 MW 6% Saudi Arabia 26,000 MW 30,000 MW 8% Qatar 2,700 MW 5,000 MW 9% Bahrain 2,000 MW 2,000 MW 8% Kuwait 4,000 MW 5,000 MW 6% SUMMARY Page 2

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+ SUMMARY Page 3

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 MIGD Rusayl 685 MW existing Ghubrah sale of existing 527 MW 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 SUMMARY Page 4

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 SUMMARY Page 5

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 SUMMARY Page 6

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 SUMMARY Page 7


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