DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH Preconditions for Raising Capital for Independent Power Production Projects (IPPs) Access to Financing Renewable Energy In Nigeria Lagos, 04 June 2013

DEG – Promoter of entrepreneurial development cooperation  Founded:1962  Shareholder: KfW, Frankfurt  New commitments in 2012:EUR 1.3 billion  Portfolio 2012:EUR 6.0 billion DEG, a subsidiary of KfW, finances investments of private companies in developing and transition countries. As one of Europe’s largest development finance institutions, it promotes private business structures to contribute to sustainable economic growth and improved living conditions. By means of:  Long Term Loans  Mezzanine Finance  Equity  Guarantees 2 Corporate Data: DEG – Our business is developing:

Preconditions for succesful IPPs 3 1. Regulatory requirements 2. Technical requirements 3. Electricity off-takers 4. Yield expectations for investors and banks Key drivers for IPPs:

1. Regulatory reqiurements  Favourable investment climate and reliable legal system  Feed-in tariffs – regulated versus individual contracts  International tender process  Approvals  Clear policy framework to support the development of renewable energy projects 4

2. Technical reqiurements  Wind measurement studies (for 1-2 years)  Hydro studies  Existing infrastructure for the transport of equipment  Grid connection and capacity  Land-use rights / secured property 5

3. Electricity off-takers  Credit standing / company rating of off-taker  Major structural elements of PPAs: Tenure Take or pay Feed-in tariff Currency / Adaption to inflation International arbitration Compensation upon breach of contract 6

4. Yield expectations for investors and banks  Investors: IRR of %  Banks with long-term commitment: DSCR of (at P90)  Banks require an appropriate shareholder structure 7

DEG – IPP overview in Africa TypeProjectTimeCountryInvestment Volume MW Volume Diesel Power UtilityKipevu II2000Kenya13 MEUR74 RABAI2008Kenya12 MEUR90 Gas Power UtilityAzito S.A.1998Ivory Coast11.3 MUSD288 Azito S.A.2012Ivory Coast25 MUSD140 AESNB2003Nigeria7.5 MUSD270 Takoradi2012Ghana30 MUSD330 Hydropower UtilityBujagali2007Uganda30 MUSD250 BUJAGA2011Uganda10.5 MUSD250 Integrated Power Utility AESCM2006Cameroon15 MEUR- CEC2007Zambia11 MUSD- Geothermal Power Utility Olkaria2008Kenya50 MEUR48 OtherInfrastructure Fund 2001African continent 25 MEUR- 8

Get in touch! Andreas Voss Regional Director West Africa KfW / DEG Office Accra Volta Street No. 7 Airport Residential Area P.O. Box 9698 K.I.A. Accra Ghana Phone: Telefax: Internet: 9