1. Operational Excellence in Distribution – Project Contractors Meeting 28 th October 2015

2. 1 SEC Vision is to become a modern company with world class performance… We serve our customers and country by delivering world class power services Serving two stakeholders: Our customers and society Committed to improve Long-term ambition to become world-class Offering power and services in future … and distribution wants to significantly contribute to this SEC vision through the Operational Excellence initiative

3. 2 Distribution business unit has selected ambitious targets for 7 KPIs to closely monitor its performance O&M OPEX / Km Operations & maintenance operational expenditure in SAR per distribution network line km SAIDI NB CAPEX/ New Customer SAIFI R&I CAPEX / Additional MWh New connection time Average interruption duration per delivery point New built capital expenditure in SAR per new customer Average number of interruptions per delivery point Capital expenditure (including reinforcement & integration) in SAR per additional MWh sold Average time required to install a new connection BU OPEX / MWh Business unit operational expenditure (excluding depreciation ) in SAR per MWh energy sold KPIs Description 13% 22% 12% 18% 42% 59% 22% Source: Arthur D. Little *2014 KPI Status according to final 2014 figures Target till 2019

4. 3 The initiative will be split into 10 modules over a period of 12 months ModuleDescription Connection procedure streamlining Definition of streamlined connection process model to ensure safety and “first-time- right” milestones delivery Life Cycle Management and Value-based maintenance strategy Implement life cycle management and value based maintenance strategy for key assets to reduce TOTEX 1) of key distribution assets Technical losses reduction Define implementable actions to reduce technical losses including installation points for meters and checkpoints to reduce losses Asset management Policy and Strategy Define Asset Management Policy & Strategy to set a financial and strategic framework for AM of all major asset classes 1 Outage Management: Contingency Planning Develop plans and procedures maximizing operation continuity of critical assets 2 Asset Standardization Define component standards, evaluate potential savings and propose conversion strategy to new technical asset standards 3 Planning Management Develop and implement load forecast process & network loading model, secure quality & control of supplied materials and distribution equipment 4 Control Center structure improvement Develop network operation strategy, define clear responsibilities between national grid and distribution control centers, provide control center org. structure including definition of procedures & processes 5 Power system protection, system operation & design Develop Protection Strategy & Planning and Protection System Operation & Design to support functional protective relaying with minimum impact on grid reliability 6 1 2 3 New asset service model development and roll-out Develop new asset service model including measures to increase staff utilization, contractors management and call-centers performance and define the roll-out plan 4

5. 4 Connection procedure streamlining module will comprise of several activities ModuleMain Activities Performed Connection procedure streamlining Life Cycle Management and Value-based maintenance strategy Technical losses reduction Asset management Policy and Strategy Analyze root causes for large disparities in connection time across Kingdom to be improved to achieve the targets. Develop strategy to ensure safety and “first-time-right” for all process steps and minimize overall number of steps (e.g. through task bundling) and number of involved organization parts (ensured end-to-end responsibility with right check and balance process). Study the lack sides in the coordination with outside agencies (Utility and other government agencies) and propose improvement to the exiting communication means. Finalize implementation plan including necessary tools, capacities and capabilities. Develop planning and construction,procedures,standards and inspection procedures and forms needed for ( Network design, planning, construction ),Programs and system Technology needed from end-to-end responsibilities. 1 Outage Management: Contingency Planning 2 Asset Standardization 3 Planning Management 4 Control Center structure improvement 5 Power system protection, system operation & design 6 1 2 3 New asset service model development and roll-out 4

6. 5 Life Cycle Management and Value-based maintenance strategy module will comprise of several activities ModuleMain Activities Performed Connection procedure streamlining Life Cycle Management and Value-based maintenance strategy Technical losses reduction Asset management Policy and Strategy Develop Value-based maintenance strategy for all asset, covering at least asset health, maintenance cost, replacement cost, useful life time. Propose advance asset monitoring systems and real time condition monitoring process including technology requirements and re- evaluate based from existing technology in order to recommend better and reliable solutions. Identify best practice for maintenance. Including factors such as improving the existing DMM’s to international standards and developing the missing ones considering hot, humid, foggy and dusty weather, maintenance strategy, risk assessments and training. Develop Roles, Polices, responsibilities, procedures and capabilities needed for asset maintenance management and decision-making structure, covering both strategic and tactical decisions. 1 Outage Management: Contingency Planning 2 Asset Standardization 3 Planning Management 4 Control Center structure improvement 5 Power system protection, system operation & design 6 1 2 3 New asset service model development and roll-out 4

7. 6 New asset service model development and roll-out module will comprise of several activities (1/2) ModuleMain Activities Performed Connection procedure streamlining Life Cycle Management and Value-based maintenance strategy Technical losses reduction Asset management Policy and Strategy Activity-based analysis of field staff utilization, Field Force Management to confirm the adequacy of the size of the manpower to the assigned activates. Research best practices on deployment models and assess relevance for COMPANY. Develop appropriate measures to increase utilization (e.g. task bundling, one-man units, start from home and others) and determined capability and technology gaps and shall develop measures to increase field staff utilization in operations, maintenance, and construction. Define system for continuous auditing of resource utilization improvements. Perform analysis of best practice on field force management & deployment models and assessment of their relevance for SEC and alignment with new organization (operations, maintenance, construction). 1 Outage Management: Contingency Planning 2 Asset Standardization 3 Planning Management 4 Control Center structure improvement 5 Power system protection, system operation & design 6 1 2 3 New asset service model development and roll-out 4

8. 7 New asset service model development and roll-out module will comprise of several activities (2/2) ModuleMain Activities Performed Connection procedure streamlining Life Cycle Management and Value-based maintenance strategy Technical losses reduction Asset management Policy and Strategy Develop the best practice for managing contractors, evaluate the operation, construction and maintenance contractors manpower,call-centers complains requests, field force manpower (COMPANY Inspectors, Contractors) and the best way to integrate with financial department and other related Business lines or Departments. Develop Asset services Management performance assessments and improvements with IP’s and KPI’s measures and alignment with new organization and approved KPI’s. Define IT system tools, programs, workflow, process, manpower (work force) capabilities, training requirements needed to implement the new assets services from substation to Customer Meter. Review the current operation and maintenance contracts/ contractors practices across Distribution System Operators (DSOs) and all the procedure related to contracts/ contractors and analyses. Develop strategy to ensure safety and “first-time-right” for all process steps and minimize overall number of steps (e.g. through task bundling) 1 Outage Management: Contingency Planning 2 Asset Standardization 3 Planning Management 4 Control Center structure improvement 5 Power system protection, system operation & design 6 1 2 3 New asset service model development and roll-out 4

9. 8 2Project Organization month To ensure project success, work on the streams will be done with close cooperation with our contractors Our key focus for improvement: Higher harmonization of processes, procedures and standards across regions Close monitoring and benchmarking of costs and network reliability Strong emphasis on Quality and HSE What this means for you as a contractor: New world class processes and procedures will be implemented across multiple areas We will introduce new condition based maintenance methods We will enhance our IT support especially in the field force management area together with clear time norms and utilization reporting There will be new technical standards implemented in the future Optimization of connection processes and time norms will be one of the key customer oriented efforts There will be a new outsourcing/ insourcing model across multiple areas

10. 9 Each module delivery will be supported by experienced consultants and international experts Consulting teamExpert teamSEC teamSEC Partners Subject matter experts nominated by leading western utilities Management consultants with utilities transformation programs management Selected top performers and technical experts Role:  Provide technical expertise in the specific areas of asset management and asset service  Share best practices and benchmarks  Transfer of technical expertise from leading DSOs and their service companies Role:  Project management & leadership according to work-plan  Overall responsibility for high quality project deliverables  Coordination of experts, transfer of knowledge and best practices  KPI monitoring Role:  Understanding of recent practices in SEC and data collection  Definition and full ownership of final recommendations  Responsibility for implementation in their geographical area  Communication with respective geographical units Role:  Support SEC team on implementation of recommendations  Support initiative team on understanding of roles and policies Contractors and suppliers