1. Financing Energy Sector Requirements, Challenges and Opportunities Jagannatha Kumar, CFO, Reliance Petroleum Ltd. Financing Energy Sector Requirements, Challenges and Opportunities Jagannatha Kumar, CFO, Reliance Petroleum Ltd. July 2006 RIL’s Existing Refinery At Jamnagar, Gujarat

2. www.ril.com 2 Contents Sources of Finance Key Challenges in Financing Financing Requirements for Energy Sector Key Requirements RPL - A case Study

3. www.ril.com 3 Contents Sources of Finance Key Challenges in Financing Financing Requirements for Energy Sector Key Requirements RPL - A case Study

4. www.ril.com 4 Source :IEA Increase in World Energy – Production and Consumption Almost all the increase in production will occur outside OECD 1971-2000 2001-2030

5. www.ril.com 5 Energy Investment by Region 2001-2030 Source : IEA More than $ 16 Trillion ($550 bn/ year) needs to be invested in Energy Supply infrastructure till 2030. India needs average investment of USD ~25 Bn per annum

6. www.ril.com 6 World Energy Investment 2001-2030 Source : IEA Except for electricity, production accounts for majority of investment in supply chain

7. www.ril.com 7 Energy investment share in GDP 2001-2030 Much higher share of GDP in developing countries than in OECD

8. www.ril.com 8 Energy Investment and Domestic Savings Source :IEA Challenge is to channel some of the domestic savings to investments in Energy sector

9. www.ril.com 9 Contents Sources of Finance Key Challenges in Financing Financing Requirements for Energy Sector Key Requirements RPL - A case Study

10. www.ril.com 10 Financing- Challenges Need to Diversify Pressure on Public Sources Limitations of Private Investments Availability of Institutional Finance: – Bankability of Projects – Risk Appetite of Banks/FI – Exposure Norms nSector caps and nCompany/Group caps

11. www.ril.com 11 Contents Sources of Finance Key Challenges in Financing Financing Requirements for Energy Sector Key Requirements RPL - A case Study

12. www.ril.com 12 Sources Of finance Need to have proper balance of various sources Need to tap all possible sources of finance. – Promoter and Market Equity (Availability of funds, expectations of returns, cost of servicing) – Domestic Banks and FIs (Lack of depth, Exposure Norms, cost of borrowing) – Domestic Bond Market (Under developed, lack of depth) – Offshore debt (Exchange risk, Political/Regulatory risks, Lack of appetite for longer tenors)

13. www.ril.com 13 Contents Sources of Finance Key Challenges in Financing Financing Requirements for Energy Sector Key Requirements RPL - A case Study

14. www.ril.com 14 Key requirements to get finance Need to have a well structured project Stable regulatory framework Robust Business Model Resourceful Promoters with adequate experience and financial strength Optimum Debt Equity Mix Competitive Costs Optimum Size Risk Allocation amongst various parties

15. www.ril.com 15 Contents Sources of Finance Key Challenges in Financing Financing Requirements for Energy Sector Key Requirements RPL - A case Study

16. www.ril.com 16 RPL: Key Strengths Strong Promoters – India’s only private sector company in Fortune Global 500 Low capital costs – Amongst lowest both in terms of $/bbl as well as $/complexity bbl Global size and scale – Will be amongst Top-10 refineries globally Superior complexity – Nelson Complexity Index of ~14 Robust Business Model – Wide feedstock and product options and positive GRM outlook Well structured project meeting requirements of various parties

17. www.ril.com 17 Results So Far………… Entire Equity Raised Including by way of Pre IPO placement of USD 600 Mn and Net Public Offer of USD 600 Mn. Chevron invested Rs 1350 Crores (~USD 300 mn) in the project for 5% equity stake IPO generated demand for 23,050 Mn shares (~USD 32 Bn) against offer size of 450 Mn shares QIB demand of over ~25 Bn including FII demand of ~USD 21 Bn; Over 1.4 Mn investors.

18. www.ril.com 18 RPL Prev. Best USD 25.37 BN QIB Demand USD 10.69 BN 2.10 MM # Applications 1.45 MM USD 2.77 BN Retail Demand USD 1.07 BN USD ~7 BN Monies Collected USD 4.49 BN 51.22x Overall Subscription 13.14x Note: (1) IPOs above USD 500 MM 290% 137% 250% 45% 39% Set New Benchmarks

19. www.ril.com 19 Summary Large investment requirements Limited availability of long term sources Need to attract investments from diverse sources Enabling investment framework is key requisite

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