1. 0 EBRD views with respect to gas sector restructuring Marko Kecman Associate Banker, Power & Energy Utilities Vrnjačka Banja, Serbia 4 th October 2005

2. 1 Content About the EBRD Power and Energy Utilities Reform and Restructuring Why work with the EBRD

3. 2 A network of 32 offices in 27 countries

4. 3 Transition Impact Additionality Sound Banking Public and Private Sector Strong Environmental Mandate What is the EBRD

5. 4 EBRD Facilities Loans Guarantees Equity Partial risk guarantees (e.g. political) Extension of loan maturities Non/partial recourse to sponsors Project specific Hard/local currency Medium and long term Floating/fixed rates New equity Privatisation Quasi-equity

6. 5 Content About the EBRD Power and Energy Utilities Reform and Restructuring Why work with the EBRD

7. 6 Power & Energy Utilities - Objectives Support sector reforms Accelerate competition & market liberalisation Foster privatisation & private investment Finance reinforcement of grid & inter- connection Prioritise environmental & energy efficiency investments

8. 7 Evolving regulatory environment and market Subsidised tariffs: high energy consumption Market Infrastructure: Critical under-investment Ageing assets, low efficiency, high losses Environmental standards Power & Energy Utilities – Key Issues

9. 8 Content About the EBRD Power and Energy Utilities Reform and Restructuring Why work with the EBRD

10. 9 Transition economies remain too inefficient in their use of energy Needed: a combination of Price reform, accompanied by measures that provide social protection for the vulnerable, Measures to raise collection rates Introduction of new institutions designed to provide appropriate regulatory supervision Tariff reform and clear regulations, free of political interference, will attract long term Strategic Investors

11. 10 Sector Reform Needs to Be Properly Sequenced Monolithic company Corporatisation of company Unbundle into separate functions: extraction, transportation and distribution Privatisation Market liberalisation Time Regulatory development Getting it wrong can thwart the benefits of reform

12. 11 Reformed Gas Sector Structure Competing Supply Regulated Transportation Company Regulated Distribution Companies Consumers

13. 12 Romania: Investing in Gas Distribution Distrigaz Sud EUR 31 million equity investment representing 5.1% beneficial ownership in Distrigaz Sud Company privatised in 2004 to Gaz de France

14. 13 Content About the EBRD Power and Energy Utilities Reform and Restructuring Why work with the EBRD

15. 14 Why work with the EBRD? Willing to invest in equity Mitigation of political and regulatory risks Access to policy dialogue Flexible deal structure Catalyses additional financing

16. 15 Why work with the EBRD – Our Clients

17. 16 EBRD contact Marko Kecman, Associate Banker Power & Energy Utilities Telephone: + 40 21 202 7138 Fax: + 40 21 202 7110 e-mail: kecmanm@buh.ebrd.com website: www.ebrd.com