1. 6/8/12 PPC-Energy: Update on Window 1 RE-IPP Procurement Programme. 07 June 2012 11

2. 6/8/12 Presentation Content  Introduction.  RE-IPP Procurement Process Background.  Overview of Evaluation Process (bid window 1).  Sequence of event.  Evaluation Composition.  Preferred Bidder Results and MW allocation.  Financial Evaluation.  Bid Window 2 progress. 22

3. 6/8/12 Introduction The procurement documents were released on the 03 of August 2011 and compulsory bidders conference for the first and second window on the 14 of September 2011. The document provides for procurement of 3725MW in five different rounds subject to the availability of the MW The Department, under bid window one: – Received 53 Bids by the 4th of November – Announced 28 preferred bidders in December 2011 With regards to bid window two: – Received 79 bids on the 5th of March 2012 – These bids amount to 3255MW whilst the cap was 1275MW 33

4. Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level 6/8/12 Procurement documents: Request for Proposals Part A: General Requirements and RulesPart B: Qualification Criteria Power Purchase Agreement Wind PPASolar PPA Implementation Agreement Contract between the IPP and the DepartmentObligation for IPP to deliver on economic development Part C: Economic Development CSP PPA…….etc In buyer default – Department to pay the IPP Small hydro PPA Procurement Process Background 44

5. Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level 6/8/12 Procurement Process Background: IPPGovernmentEskom Government Framework Support Agreement Implementation Agreement Power Purchase Agreement Contractual Arrangement 55

6. Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level 6/8/12 Request for Proposal (RFP) RFP Part A RequirementsRules RFP Part B Qualification RFP Part C Comparative Evaluation Price Job creation LandEconomic DevelopFinanceTechnicalEnvironmentPrice Local contentPreferential ProcurementEnterprise Development Socio-economic development Capacity Procurement Process Background 66

7. 6/8/12 Part c evaluation 77 Price 70 % 30 % Economic Dev Job creation Socio -Economic Local content Preferential Procurement Project cost Rand/MW

8. 6/8/12 Overview of evaluation process (Bid Window 1) 88

9. 6/8/12 99 EventDate Ministerial determination (in consultation with National Energy Regulator of South Africa) 3, 725 MW of new generation capacity required by 2016 Q2 of 2011 Programme launch DoE issued a Request for Proposals 31 July 2011 Procurement uploaded on DoE website Interested Bidders requested to register on a dedicated programme site: www.ipp-renewables.co.za 03 August 2011 Compulsory Bidders’ Conference Interested Bidders taken through the bidding process Drew interest from across the globe 14 September 2011 Close of 1st Bidding Window Evaluations ensued from 04 to 28 November 2011 Conducted by international and local financial, technical and legal experts 04 November 2011 Announcement of Preferred Bidders 28 preferred out of 53 Projects need to reach financial close by June 2012 07 December 2011 Sequence of Events: Bid Window 1

10. Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles Click to edit the outline text format Second Outline Level  Third Outline Level Fourth Outline Level  Fifth Outline Level  Sixth Outline Level  Seventh Outline Level  Eighth Outline Level Ninth Outline LevelClick to edit Master text styles – Second level Third level – Fourth level » Fifth level 6/8/12 Evaluation team: International reviewers Legal review – Linklaters (UK) Technical review – Blueprint consult Financial review – cross- moderation between the two Financial Advisory firms Governance review – Ernst & Young Legal evaluation team Bowman Gilfillan Edward Nathan Sonneberg Ledwaba Mazwai Webber Wentzel BKS Technical evaluation team Mott Macdonald Financial evaluation team Ernst & Young PWC Evaluation Streams: Legal Environment Environmental Authorization Legal Land Land right Notarial lease registration Proof of land use application Legal Commercial Acceptance of the PPA Project structure Economic Development Contributor status level 5 Compliance with threshold Financial Full and partial price indexation Technical Eligibility Energy resource Evaluation Composition 1010

11. 6/8/12 Renewable Energy IPP’s: Window 1 Preferred Bidder 1111 Allocation to Preferred Bidders: Window 1 Allocation per Determination Still Available MW allocation per Determination MWPercentageMWPercentage Solar PV631.5343.6%818.4756.4%1450.00 Solar CSP150.0075.0%50.0025.0%200.00 Wind633.9934.3%1216.0165.7%1850.00 Biomass0.000.0%12.50100.0%12.50 Biogas0.000.0%12.50100.0%12.50 Landfill gas0.000.0%25.00100.0%25.00 Small Hydro0.000.0%75.00100.0%75.00 Total MW1415.5239.0%2209.4861.0%3625.00 Total Capacity - Bids Received2127.66 Percentage Preferred Bidders66.5% Number of Passing Bids28

12. 6/8/12 Contracted Number of Jobs: Window 1 & Window 2 Compared. 1212 Jobs during constructionJobs during operations First Round 13 908 874 Second Round 22 590 1 371

13. 6/8/12 Financial Evaluation (Bid Window 1) 1313

14. 6/8/12 Introduction Majority of bids to a generally high standard; No bidder submitted a fully compliant Part B submission; Significant number of “failures” related to non-material omissions and inconsistencies perhaps reflecting tight timeframe for bid preparation; 1414

15. 6/8/12 Financial Evaluation Key areas of shortcoming included: Letters of support not provided by parent company &/or funders; Rationale and quantum of success fees not fully described; Limited information on hedging strategies; Incomplete financial accounts for equity participants Calculation of partial/fully indexed tariffs not done comprehensively. 1515

16. 6/8/12 Financial evaluation results Results post-clarification: Solar PVWindCSPHydroTotal Pass (MW)68270115001533 No. Projects21102033 Fail (MW)35723304594 No. Projects1630120 1616

17. 6/8/12 Financial Analysis – Tariffs Majority of bidders have priced at or just below the applicable technology price cap; Similarly most bidders have shown a strong preference for a fully indexed tariff; This may reflect bidder expectation that Round 1 would be undersubscribed. 1717

18. 6/8/12 Bidding Price Differential: Window 1 & Window 2 Compared. 1818 Technology 2nd Round Average 1st Round AverageDifferencePrice Cap Solar PhotovoltaicR 1 993.20R 2 662.00-25.1%R 2 850.00 Onshore WindR 1 005.30R 1 134.00-11.3%R 1 050.00 Small HydroR 1 030.00 0.0%R 1 030.00 Concentrated Solar Power R 2 512.00R 2 686.00-6.5%R 2 850.00 Landfill GasR 840.00

19. 6/8/12 Overview of evaluation process (Bid window 2) 1919

20. 6/8/12 2020 Financial Investment: Bid Window 2 Number of Projects Net Capacity (MW) Total Project Cost (R' 000 000) Concentrated Solar Power Northern Cape150R 4 483 Landfill Gas Gauteng114R 237 KwaZulu Natal13R 52 Onshore Wind Eastern Cape10619R 12 812 Northern Cape2238R 4 853 Western Cape10599R 12 202 Solar Photovoltaic Eastern Cape6190R 5 382 Free State4145R 4 558 Gauteng3136R 3 139 Limpopo4127R 4 559 Mpumalanga19R 248 North West367R 2 376 Northern Cape23799R 22 745 Western Cape7221R 6 708 Small Hydro Free State28R 202 Northern Cape110R 498 Grand Total793 233R 85 054

21. 6/8/12 Preferred Bidders Geographic Distribution 2121

22. Click to edit Master subtitle style 6/8/12 Thank You 2222