1. SMi’s Italian PPP Forum Conference Rome, 25 September 2006 Radisson Hotel - Via Filippo Turati, 171 Improving Investment Prospects in Infrastructures and Energy Projects in Italy: Problems and Solutions Luigi Marsullo President, Finpublic – Project Financing, Italy Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it

2. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 2 The Italian background The Public sector has traditionally played a major role in infrastructures projects in Italy The public expenditure reduction has given rise to a significant impact on investments Social role of the infrastructures: this is the starting point for a new framework A new co-operation between public sector and private investors is needed

3. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 3 Key-factors for financing (1) Adequate evaluation and scheduling of projects, sharing decisions with local authorities Profitability of the projects, with market ROI and ROE ratios of the investments Faster and easier administrative procedures for projects authorisation Stakeholders involvement and social commitment for local consumers FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it

4. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 4 Key-factors for financing (2) Availability of public loans and grants (Programme-Contracts, Law 488/92 and green-certificates for renewable energy) Attractiveness for Banks and Investors, in terms of costs, timing and granted yields Proper cost-benefit analysis, also from a socio-economic point of view Certainty of prices (raw materials supplying, operation flexibility, technology reliability) FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it

5. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 5 The challenge: definition of public/private roles Sectors that are fully liberalised and other sectors affected by rules of public governance Utilities services operated under concessions by central or local government Quality and performance of Italian public utilities needs huge investments: financing is a key-issue

6. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 6 The Italian energy framework Italy is strongly dependent on external sources Average energy prices in Italy are higher than in the rest of Europe Energy policy is presently driven by market liberalisation, devolution to the Regions and diversification of supply sources Complex administrative procedures are required to conduct exploration and production investments

7. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 7 Energy market trends Improve integration of the Italian energy market into the single European market Promote the process of liberalisation of the electricity and gas markets Prepare the tools to promote and facilitate investments Increase transparency of markets rules and streamline administrative procedures

8. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 8 Recent issues in the Italian energy policy Diversification of energy sources and increase of efficiency Secure timely investments in energy-related infrastructures Clarify the responsibilities of Regions and Central Government

9. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 9 Energy investment outlook Total investment requirement for energy infrastructures in Italy over the period 2006- 2010 is expected in the range of 10-15 billion Euros

10. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 10 A new approach for financing Implementation of new financing approaches is required, according to international experiences: Project financing schemes: PPP, DBO, PF Performing bonds for operation and maintenance of energy infrastructures

11. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 11 The opportunities The Italian energy market may present significant opportunities to new investments Fair competition and transparency have to provide companies with a proper playground Financial and business environment looks friendly towards renewed and strengthened Public-Private Partnership and co-operation

12. FINPUBLIC srl – Project financing - Piazza G. Verdi, 9 – 00198 – Rome (I) phone +39 068415938 – fax +39 068549369 Email info@finpublic.it mobile +39 3356289831 www.finpublic.itinfo@finpublic.it 12 All rights reserved. No reproduction without Author’s expressed authoritation. luigi.marsullo@finpublic.it +39 3356289831 FINPUBLIC srl – Project Financing Piazza G. Verdi, 9 – 00198 – Rome Tel +39 068415938 – Fax +39 068549369 E-mail: info@finpublic.it