IPR in the Middle East January 2006 1

IPR in the Middle East January 2006 1

IPR in the Middle East January 2006 1 Introduction Mark Williamson 2 Middle East . . . in the IPR portfolio ur commitment to the region Contract Type - IPR Group (by net MW) PPA ME Net MW MW 2,500 Net MW

2,000 Net MW under construction 1,500 1,000 500 0 Al Hidd Bahrian TihamaRas Laffan B Qatar Saudi Umm Al Nar Arabia UAE 35% Al Kamil IPO Set up Shuweihat, UAE in

region Al Kamil, Oman 2000 2001 2002 2003 2004 2005 2006 66% 34% Merchant (short/medium term contracted) Creating value through core skills Project development and construction Offtake contract design and execution Project financing

Plant operation - both power and 3 Middle East . . . in the IPR portfolio Contribution to IPR from the region Middle East EBIT (m) 85 EBIT 54 Equity 22 23 29 9 -1

1 2001 2002 2003 2004 Only includes equity from operating assets4 Overview Ranald Spiers 5 IPR in the Middle East Six projects in six years with an enterprise value of US$6.5 billion ~ current IPR equity commitment of nearly US$400m Al

Al Hidd Hidd Bahrain Ras Ras Laffan Laffan B Creation of new region - 29m PBIT by 2004 Qatar Existing assets performing well Construction is the other major Tihama Tihama regional activity Power and desalination ~ IPR largest private supplier of

desalinated water in the world Pipeline of future projects ~ three currently in bid/negotiation Umm Umm Al Al Nar Nar Shuweihat Shuweihat UAE Saudi Arabia UAE Oman Al Al Kamil Kamil 6 IPR in the Middle East Name

Country IPR % of Share ownership (MW) Net Desal Net Steam Capacity Capacity (MIGD) (m lbs / hr) Fuel Type End of Power Contract Al Kamil Oman 65

185 - - Gas 2017 Shuweihat UAE 20 300 20 - Gas 2024

Umm Al Nar UAE 20 310 20 - Gas 2026 Tihama KSA 60 645

- Gas 2026 40 410 24 - Gas 2033 40 364 36 -

Gas 2028 2,214 100 Ras Laffan B Qatar Al Hidd Bahrain Total Middle East EBIT (m) 2.7 2.7 29 23 9

2002 2003 2004 7 The Middle East - a growing asset portfolio MW 8,000 6,870 6,995 910 910 600 900 1,025 1,075 1,075

1,075 1,550 1,550 1,550 Umm Al Nar 7,000 6,570 6,000 910 5,000 4,000 3,355 3,000 2,000 1,000

0 1,155 2,655 700 1,500 1,500 Ras Laffan B Tihama extension 1,500 1,500 1,500 870

870 870 650 650 285 285 285 285 285 285 285 2002 2003

2004 2005 2006 2007 2008 285 Al Hidd Shuweihat 650(1) Umm Al Nar (1) Al Kamil 650 MW retires at the end of 2008

8 The Middle East Team Abu Dhabi Development Office ~ project selection, bidding, negotiating, project development and management Project companies ~ construction, asset management, client and partner relationships, operations and maintenance Operating companies ~ operations and maintenance, owner and partner relationships 9 Key markets Primary target markets: UAE Qatar Saudi Arabia

Oman Bahrain Kuwait 1 Macro environment Stable Governments, low country risk rankings and good credit ratings Massive oil and gas reserves Petrodollar economies Strong economic growth driven by high oil prices and diversification away from oil Growth rates between 5% to > 10% pa Drivers for power and water demand ~ infrastructure development / tourism ~ replacement vs incremental demand GCC states becoming increasingly interconnected and interdependent 1

Regulatory overview Pragmatic regulation, primary method of control via long-term contracts Markets unlikely to liberalise in the short or medium term Environmental regulation ~ most new plants gas-fired 1 Commercial structure Long-term contracts which set in stone all major revenues and costs Major risks laid off wherever possible PWPAs, PPAs, ECAs, NGSAs EPC costs fixed with LDs for delays in construction and poor performance

Long term operations and maintenance service agreements with OEMs Interest rates and currencies hedged 1 Return on investment Return profile similar across the region UAE local shareholder return 13% Seek to enhance returns by O&M, success fees and TSAs Cash generation, use of Equity Bridge Loans Scope to increase return once project has been commissioned, for example by refinancing 1 Financial structuring Projects structured using project finance ~ carried out in conjunction with London-based project

finance team Maximise use of senior debt Availability of local capital and international debt with international MLAs /JBIC High leverage is not a problem 1 Competitive environment Projects becoming increasingly competitive but IPR still winning regularly New players from Japan, Korea, Malaysia Traditional competitors (Suez/Tractebel, AES, Marubeni) Fewer EPC contractors tends to limit competition

Competitors or partners (eg Mitsui) 1 Partnerships Partnering is a key element of risk diversification and gaining local knowledge ADWEA, CMS, Saudi Oger, QEWC, Mitsui, TEPCO, Sumitomo, Chubu, Suez We choose the right partners to help us win the deal Each partner brings something different to the table 1 Desalination Strong power demand and even stronger water

demand Most Gulf projects are designed to offer both power and water Increases the overall efficiency of the plant Uses waste heat from the steam IPR has assets with the major thermal desalination processes 1 Agenda Contract Structures David Wadham Financing our Growth Peter Barlow Desalination Jaideep Sandu Coffee Break Oman Tom Mackay & Kevin Cox Abu Dhabi David Barlow & Ed Metcalfe Saudi ArabiaDavid Barlow, Jeff Wright & Steve Pedrick Qatar Tom Mackay Coffee Break

Bahrain John Hurst Summary Ranald Spiers 1 Contract structures David Wadham 2 Similarities across contracts Part-owned in conjunction with other international or local partners Financed on a highly leveraged, project finance (limited- recourse) basis Operate with the security of a long-term power (and water) offtake contract for the plants available capacity and output Contract with sovereign/quasi-sovereign counterparty ~ states single buyer of power and water

2 Differences across contracts PWPAs structured on an energy conversion basis (ECA) or fuel supply agreement (FSA) Most projects are BOO, some BOOT Sub-contracted O&M or combined owner/operator structures Government interest in some projects 2 PWPAs and PPAs Project company responsible for: ~ ownership ~ design ~ construction ~ operation ~ maintenance ~ commissioning Offtaker obligation to provide connections to power and

water grid and purchase available capacity and output Flat tariff with capacity charge to recover debt service, fixed O&M and equity return; pass-through output charge to cover variable O&M and fuel Payment is in local currency (except Tihama) but includes exchange rate protection 2 PWPAs and PPAs (cont.) Capacity or termination payments guaranteed by the host government Revenue protection for offtaker defaults and political force majeure (war, change in law, government action/inaction) Commercial documents subject to local law but

international arbitration Finance and construction documents subject to English law 2 PWPAs and PPAs (cont.) Energy conversion (Abu Dhabi, Tihama) or separate fuel supply arrangements (Oman, Qatar, Bahrain) BOO (Abu Dhabi, Oman, Bahrain), BOOT (Tihama and Qatar), with a transfer to the offtaker Accounting treatment: always an operating or finance lease Terms vary from 15 years (Oman), through 20-23 years (Tihama, Abu Dhabi and Bahrain) to 25 years (Qatar), but without market liberalisation renegotiation clauses

2 Operation and maintenance Abu Dhabi Requires a separate operator owned by foreign investors Payment on a fixed price basis Ability to generate Operator fees and bonuses against a lower equity stake (e.g. Umm Al Nar, 20% stake in the generator, but a 70% stake in the operator) Others More flexibility (e.g. Al Kamil, Ras Laffan) Advantages of a combined owner/operator 2 Gas turbine maintenance Long-term arrangements with the OEM (Al Kamil, Umm Al Nar, Tihama with GE and Shuweihat and Ras Laffan with Siemens) For one or two maintenance cycles

The benefits of an LTSA include: All scheduled maintenance sub-contracted for a fixed price, with a degree of unscheduled outage cover provided within the price Based on a term warranty concept, i.e. OEM guarantees to replace all program parts as needed 2 Shareholding structure The advantages of a government shareholding and the need to generate local investment opportunities Abu Dhabi IWPPs have 60% holding retained by the government Al Kamil initially 100% owned by IPR, now 65% owned following a mandatory IPO on the Muscat Stock Market Ras Laffan has no direct state involvement, although QEWC

holds 55% and is in turn listed on the DSM Tihama and Bahrain owned entirely by private investors 2 Umm Al Nar Shareholders Agreement Foreign shareholder has the ability to manage the project and enjoys significant minority protection ~ coupled with government partner with shared goals as an investor Board of 7 directors (4 ADWEA and 3 foreign investors) Foreign investor appoints the Executive Managing Director ~ Ed Metcalfe Voting on all significant matters at board and shareholder level requires approval of both ADWEA and the foreign investor Government IPO provisions (Taqa was listed on the ADSM in July 2005) 2

Conclusion Long-term off take arrangements with single state buyers, guaranteed by sovereigns with investment grade ratings and a strong economic future Robust contractual terms offering secure future returns with revenue protection for supplier and offtaker defaults and for political force majeure events Projects are embedded in the region, with governments participating as co-investors or encouraging direct public ownership Key cost risks (financing and gas turbine parts and maintenance) well mitigated through long-term hedging and supply arrangements Upside remains through refinancing opportunities, the ability to reduce costs over time and merchant tail on BOO projects 3

Financing our growth Peter Barlow 3 Project finance Fundamental part of IPRs financial strategy Objective is to finance on a non-recourse basis at the asset level 3 Structure of Middle East IPPs/IWPPs Assets backed by long-term (20yrs+) Power (and Water) Purchase Agreements (PPAs/PWPAs) Contractual Structure designed specifically for non-recourse financing Clients obligations backed by Government

guarantees Predictable, long-term cashflows allow high leverage without sponsors support 3 Lenders view on IPP/IWPP risk/ country risk No merchant risk Excellent track record of project financed IPPs/IWPPs: success stories / accepted model in the banking market Loan syndication allows diversification of lending across different projects/countries: lower risk Project financed IPPs/IWPPs include security on assets and stricter covenants than corporate loans ME countries hydrocarbon-rich, financially sound and

politically stable: country risk acceptable to most international PF lenders 3 International and regional debt providers IPRs approach: mix international and regional lenders expertise International lenders particularly active in most countries in the region: UAE, Oman, Qatar and Bahrain Predominantly regional lenders in the Kingdom of Saudi Arabia (KSA) so far Recent improvements in KSA (e.g. entry in WTO) suggests increased role of intl lenders there Islamic financing further source of liquidity, of which IPR

has experience through Umm Al Nar and Shuweihat Export Credit Agencies being increasingly used 3 IPR capabilities in debt capital raising Core skill - IPR takes lead role in every project financing To date 5 IPPs/IWPPs project financed in the region Raised $3.9 billion in non-recourse bank debt IPR successfully financed first large scale IPP in Saudi Arabia Financing also achieved in potentially adverse market conditions (e.g. Shuweihat syndication launched on 12 Sept.2001; Umm Al Nar financing arranged at start of 2nd Iraq war) In 2004 successful IPO of Al Kamil on Omani stock exchange 3 IPR capabilities in debt capital raising Non recourse long-term debt Al Kamil: $100m Shuweihat: $1.2 billion (of which $100m Islamic

Tranche) Umm Al Naar: $1.1 billion (of which $250m Islamic Tranche) Tihama: $510m Ras Laffan: $663m Al Hidd $1.0 billion (in negotiation) 3 Lenders appetite for future deals Competitive pricing and increasing level of interest suggest large appetite for future IPP/IWPP deals in the region Virtually all major international project finance lenders present in the region and display appetite for more deals More regional players are becoming familiar with

project finance through participation in loan syndications 3 Case study: Umm Al Nar Largest IWPP in the world: ~ existing net capacity: 870 MW (power) + 162 MIGD (water) ~ after construction net capacity: 1,550 MW (2,200 MW for 2 years during construction) + 95 MIGD 23 year PWPA with ADWEA: proven contractual structure (4th such deal in Abu Dhabi, but longest tenor to date); Largest ever project finance deal at the time, when lenders appetite in the region was limited;

Financing plan structured to maximise liquidity and included use of Islamic financing, short and long term conventional debt; Long-term debt tenor: 20 years; Optimal utilisation of operating cash flow for project funding 3 Case study: Umm Al Nar Debt Facilities Amounts US$ million Main Features

1) Equity Bridge Facility Of which: Islamic Tranche Of which: Conventional Tranche 441 291 150 Tenor / Repayment: Bullet repayment on July 2008 2) Short Term Facility Of which: Islamic Tranche Of which: Conventional Tranche 232 Nil 232 Tenor / Repayment: July 2006 to July 2008 3) Long Term Facility Of which: Islamic Tranche Of which: Conventional Tranche

1,105 250 855 Total Debt Facilities 1,778 Other: 100% guaranteed by Shareholders Other: Ranking Pari-Passu with Long Term F. Tenor / Repayment: Door-to-door20years; Profiled repayments: Jan 2009 to Jul 2023 Other: "True-Up Advance": Drawdown at end of availability period to repay part of EBF and achieve 80:20 gearing (subject to cover ratio covenants) 4

Case study: Umm Al Nar Amounts US$ million Capital Structure Total Funding Requirements: 2,116 Of which: Acquisition Purchase Price Of which: EPC Contract Sources of Funds Short Term Facility Long Term Facility Equity Bridge Facility Equity Injection Cash Flow From Operations Total Sources of Funds: Before "Refinance"

US$m % 231 10.9% 978 46.2% 440 20.8% 0 0.0% 468 22.1% 2,116 1,000 736 After "Refinance" US$m % 0 0.0% 1,102 52.1% 0 0.0% 315 14.9% 698 33.0% 2,116

2,116 4 Desalination Jaideep Sandhu 4 Introduction Removal of salts from seawater ~ suitable for human consumption, agriculture or industrial use Desalination Processes ~ Thermal Distillation Processes - Multi Stage Flash (MSF) - Multi Effect Distillation (MED) ~ Membrane Processes - Reverse Osmosis - Electro Dialysis ~ Hybrid Plant (Thermal with RO) 4

IPR Middle East Desalination portfolio 2006 Shuweihat S1 IWPP MSF (Fisia) Umm Al Nar MSF & MED (Fisia, IHI, Sidem, Doosan, Hitachi Zosen)* Ras Laffan Facility B MSF (Doosan) Al Hidd, Bahrain MSF & MED (Fisia, Sidem) Total Desalination capacity Potential opportunity: Abu Dhabi Reverse Osmosis Plant 2008 100 100 181.5 95

- 60 30 90 311.5 345 52.5 Assume construction 4 Typical Power/Water Revenue Split Dependant on power and water capacities and load factors Power/Water capacity ratio of 15:1 (1,500 MW/100 MIGD) ~ e.g. Shuweihat, water contributes around 40% of the revenue and profit

Power/Water capacity ratio of 5:1 (1,000 MW/100 MIGD) ~ e.g. UAN, water contributes around 68% of the revenue and profit 4 Multi Stage Flash Technology - 1 Vacuum Seawater Brine Vapour Vapour Steam Power Condensing Desalinated Vapour & Water Brine Droplets

Vapour & Brine Droplets Brine recirculation Reject Brine 4 Multi Stage Flash Technology - 2 Well proven track record Large capacity units Low O&M cost High quality product water Used in IWPPs where adequate steam and power is available Technology - Doosan, Hitachi Zosen, HHI/Sasakura and Fisia 4

Multi Effect Distillation Technology - 1 2 nd Vapour Effect Vacuum Seawater 1 Effect St Vapour Steam Condenser Condensate Desalinated Water Desalinated

Water Reject B 4 Multi Effect Distillation Technology - 2 Well proven track record Mid-size units Low O&M cost High quality product water Used in IWPPs where adequate steam is available but may be some constraints on power Technology - Sidem, Weir Techna, IDE and Doosan 4 Reverse Osmosis Process - 1 Chemicals

Chemicals Desalination Water Potable Water Post treatment system Membrane Racks High pressure Pre treatment pump system Reject Brine 5 Reverse Osmosis Process - 2 Preferred option for

stand alone water plants Low capacity units Easy O&M Lower installation cost Higher O&M Cost Standardisation of membranes 5 Integrated Power and Water Plant Combined Power and Water Plant Air Gas /Oil G HRSGs HRSGs Steam

SteamTurbines Turbines G Gas GasTurbines Turbines Brine Return MSF/MED MSF MSF/MED /MED MSF/MED distillers distillers S/W S/WIntake Intake 5 Growth potential Driven by increasing scarcity of fresh water resources

coupled with increases in population, urbanisation, and industrial development In parts of the region and around the world, development of desalination plants essential for survival Currently 75% of Global Desalination capacity in 10 countries, mainly focussed in Saudi Arabia 17.5%, UAE 16.5%, USA 16%, Kuwait 6.5% The efficient Integrated Power and Water Projects becoming a standard in the Middle East IPP process ~ sets a good precedent for development elsewhere 5 Middle East IWPP Desalination markets MIGD 2500

2000 2005 2015 1500 Anticipated Integrated Power and Water Plant Investment Abu Dhabi Oman Qatar Saudi Arabia Bahrain 1000 500 $4 $2 $3 $12 $2

bn bn bn bn bn 0 Abu Oman Qatar Bahrain Saudi Dhabi Arabia 5 Oman Tom Mackay & Kevin Cox 5 Macro environment Ruled by Sultan Qaboos since 1970 GDP in 2004: US $24.4 billion Currency: Omani Rial pegged to US$ Codified legal system, existing alongside a Sharia system

Oil dominated economy - proven reserves of 5.5bbl Recent diversification utilising gas GDP growth rate (1) Credit rating Inflation (3) 3.3% BBB+ 1.6% (2) (2) Population growth 2.5% (1)

DOE/EIA database 2005 (2) MEED Dec 2005 (3) S&P reserves of 29TCF - mainly LNG sales 5 Market structure Electricity and Water Sector deregulated in 2003 ~ separation of generation, transmission and distribution/supply Independent Regulator overseas power and water sector Transmission Company (Transco) dispatches plant based on economic merit order and system requirements Government owned Power and Water Procurer (PWP) is sole purchaser of power and water - then onsells to Distribution companies

Government owned Electricity Holding Company (EHC) - holds shares in 100% government owned companies pending privatisation Real commitment to privatisation with Government completely divesting its interests in privatised entities 5 Power and Water Sector Peak demand 2,500 MW in 2005 growing at 6% in both power and water Dhofar 6% 5% IPR Gas/Oil 527

42 EHC Rusayl Gas/Oil 688 0 EHC Wadi Al Jizzi Gas/Oil 334 EHC Al Manah Gas/Oil 280 Al Kamil

Gas/Oil Electricity Barka 1 Gas/Oil Holding 46% Company Sohar (in construction) Gas/Oil 285 Salalah 13% Suez Energy 6% AES Fuel Power Water Type MW MIGD Owner Ghubrah Market shares :

Other smaller investments 24% Facility (2004 figures) Total Gas/Oil 0 Suez Energy IPR 427 20 AES 585 33 Suez Energy 200 3,326

0 PSEG 95 PWP estimates 2004 5 Al Kamil asset overview Location: Sharquiya region Gross capacity: 285 MW OCGT UAE Al Kamil Fuel: Gas with oil back-up Employees: 30 plant and 7 Muscat office Saudi Arabia Oman Configuration: Dual fuel plant using GE

frame 9E turbines (3 units) Operational: Q4 2002 5 Al Kamil commercial overview Publicly listed on Muscat Securities Exchange IPR own 65%, balance held by local shareholders 15 year PPA and GSA expiring April 2017 ~ backed by Oman Government guarantees PPA is US$ and PPI linked with capacity payments based on availability Original investment of $133m, funded 80/20 debt/equity O&M subcontracted to an IPR 6

Al Kamil performance Commercial availability of 99.9% No lost time accidents Excellent maintenance and inspection record with 3 inspections carried out on time and within budget Fully compliant with all environmental requirements Successful in exceeding Omanisation targets with 45% Omani staff Excellent relations with all relevant Governmental agencies 6 Al Kamil creating value Operation Maintenance of high availability and control of direct costs Financing IPO in August 2004 of 35% of equity at 1.7x par value Renegotiated Senior Debt in November 2005, extending maturity, lowering margins and back-ending repayment profile

Medium term Expansion of plant as local load grows Extension of PPA or exploitation of merchant tail Use of non-OEM parts or renegotiation of LTSA terms Further potential for future refinancing 6 Future prospects / outlook Regional and international finance available for Omani Power deals New project opportunities: ~ 685 MW Rusayl / 550-700 MW, 30 MIGD Barka II IWPP, bid due 27th March 2006 ~ future privatisation of Ghubrah (527 MW and 42 MGD) and Wadi Al Jizzi (334 MW) ~ expansion of Al Kamil ~ standalone IWP programme in Oman 6 Summary Economically and politically stable

Committed to privatisation programme Well structured, low risk business at Al Kamil Excellent technical and commercial performance Real potential to enhance returns of existing business and add additional projects 6 Abu Dhabi David Barlow & Ed Metcalfe 6 Macro environment UAE - federation of 7 Emirates ~ political power Abu Dhabi GDP growth rate (1) GDP in 2004: $103bn Credit rating (2) 6.4%

A1 Inflation 3.4% Currency: UAE Dirham pegged to US$ (1) Population growth 6.0% Oil: 98 bbls proven reserves (3) (1) ~ 8% of proven world reserves Source: MEED, 2004 (1) Gas - 212 TCF proven reserves (3) - 5th largest in world (2) Moodys, Dec 2004 (3) Oil & Gas Journal, 2005

Codified legal system ~ existing alongside a Sharia system 6 Abu Dhabi Power & Water Sector Abu Dhabi Water & Electricity Authority (ADWEA) Regulation & Supervision Bureau Abu Dhabi Water & Electricity Company (ADWEC) ~ single procurer and seller of electricity and water Abu Dhabi Transmission Company ~ transmission of both power and water Abu Dhabi Distribution Company and Al Ain Distribution Company Generation of IWPPs and ADWEA owned Companies 6 Abu Dhabi IWPPs Middle Easts most successful privatization programme ~ six projects ~ in excess of US$ 5 billion invested Contractual structure ~ 60% government ownership guarantees stability

and fair treatment for the project company Long-term off-take arrangements backed by ~ robust demand growth for power and water ~ significant oil reserves and a strong economy 6 Demand growth Abu Dhabi Power Demand Forecast 2005-2015 Abu Dhabi Power Demand 1993 - 2004 8000 12000 7000 10000 5000 Power, MW Power, MW

6000 4000 3000 2000 8000 6000 4000 2000 1000 0 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Installed Power Capacity 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Year Year

Peak Power Demand Installed Power Capacity Required Power Capacity 6 Demand growth Abu Dhabi Water Demand Forecast 2005 - 2015 900 500 800 700 400 600 Water, MIGD Water, MIGD

Abu Dhabi Water Demand 1993 - 2004 600 300 200 500 400 300 200 100 100 0 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year Water Capacity 2005 2006

2007 2008 2009 2010 2011 2012 2013 2014 2015 Year Water Demand Installed Water Capacity

Required Water Capacity 7 Umm Al Nar asset overview Location: Emirate of Abu Dhabi Net capacity: Present 873 MW, 162 MIGD: Final 1,550 MW, 95 MIGD Fuel: Gas (CCGT)/desalination Employees: Present 500: Final 160 Configuration (final): 5 GE 9FA gas turbines; 2 x295 MW UAE Umm Al Nar Saudi Arabia Oman

7 Umm Al Nar 7 Umm Al Nar commercial overview IPR 20%, ADWEA 60%, TEPCO 14%, Mitsui 6% 23 year PWPA with ADWEC $2.1 billion investment (80% debt and 20% equity) Financing - $1,100m 20yr loan, $230m 5yr loan, $440m equity bridge facility: balance from existing plant revenues O&M ownership - 70% IPR and 30% TEPCO 7 Arabian Power Company; $2.1 billion project Purchase and operation of current Umm Al Nar, Old Existing Assets and New Existing Assets

Construction of Umm Al Nar New Plant Extension and integration with New Existing Assets Closure of old existing assets in 2008 7 Old Existing Assets Capacity payments - generous availability targets UAN East Station (commissioned in 1979-84); ~ 4 Gas Turbines, total 250 MW ~ 6 MSF Desalination units, total 41.7 MIGD UAN West Station (commissioned in 1981-86) consists of; ~ 10 Steam Turbines, total 790 MW ~ 10 MSF Desalination units, total 53.2 MIGD Decommissioned 2008 7 New Existing Assets UAN West B Station (commissioned in 2002/3); ~ 5 x 12.5 MIGD Desalination plant (MSF) ~ 2 x 3.5 MIGD Desalination plant (MED)

7 UAN New Plant Extension Net capacity ~ 1,500 MW Power ~ 25 MIGD Water ~ Integration of New Existing Assets Full commercial operation 2006 7 Contractor for UAN Plant Extension Mitsui single EPC Contractor Toshiba power plant (Toshiba main sub-contractor) Hitachi Zosen Desalination Plant TM T&D 400kV switchyard COD expected Q3 2006 7 O&M Agreement IPR/TEPCO experienced management team Existing highly skilled staff IT infrastructure implemented to IPR standards Environmental standard ISO 14001

12 year Contractual Service Agreement with GE 7 Shuweihat asset overview Location: Emirate of Abu Dhabi Gross Capacity: 1,500 MW, 100 MIGD Fuel: Gas (CCGT)/desalination Employees: 130 staff UAE Shuweihat Configuration: 5 x Siemens V94.3A2 Gas Turbines 2 Siemens steam turbines Saudi Arabia Oman

8 Shuweihat 8 Shuweihat commercial overview IPR 20%, CMS 20%, ADWEA 60% 20 year PWPA with ADWEC $1.6 billion investment - 80% debt and 20% equity Financed $950m 20 yr commercial tranche, $250m 20 yr Islamic tranche, $350m equity bridge loan O&M IPR/CMS JV (50:50 ownership) 8 Abu Dhabi - new projects ADWEA Planned Projects 52.5 MIGD reverse osmosis desalination plant ~ IPR and Mitsui in discussion with ADWEA 1,500 MW, 100 MIGD Shuweihat S2 IWPP Potential Projects

New Abu Dhabi Island developments ~ potential demand of 4,000 - 7,000 MW IWPP to supply Aluminium smelter - up to 2,000 MW Fujairah F2 IWPP 1,000 MW + 70 MIGD 8 Saudi Arabia David Barlow, Jeff Wright & Steve Pedrick 8 Macro environment Saudi ruled by the Al-Saud family (1) GDP $251bn Oil dominated economy: GDP growth rate (1) Credit rating Inflation

(2) 5.3% A/Baa2 0.2% (1) (1) Population growth 2.7% (3) 262 bbls oil reserves, 25% (3) of proven world total Gas reserves: 235 TCF (1) Source: MEED, 2004

(2)S&P / Moodys (3) Oil & Gas Journal, 2005 proven, worlds 4th largest 8 Power and water industry Ministry of Water and Electricity Saudi Electricity and Cogeneration Regulatory Authority Saudi Electricity Company ~ existing power generation, transmission and distribution ~ responsible for new build IPPs Saline Water Conversion Company ~ existing desalination capacity Water & Electricity Company ~ jointly owned by SEC and SWCC ~ responsible for new build IWPPs 8 Power and water industry Country installed capacity (2001, MWE figures) ~ diesel fuel: 450 MW

~ gas fuel: 15,500 MW ~ oil (HFO/crude): 10,000 MW ~ 1,470 MIGD Demand growth ~ 6% forecast growth rate for power, 8% forecast for water ~ peak demand 24.5 GW in 2001, installed capacity 26 GW ~ growth from population increase and industrial diversification 8 Tihama Power asset overview Location: Eastern Province Gross capacity: 4 plants under construction, total capacity 1,085 MW, 4,400,000 lbs/hr steam Fuel: Gas (Cogen) supplied FOC by Saudi Aramco Employees: 140 total Configuration: 3 sites each: 2 x GE 7FA 1 site: 2 x GE 7EA

Tihama Saudi Arabia UAE Oman 8 Tihama Power commercial overview Owner / operator structure 60% IPR, 40% Saudi Oger 20 year ECAs with Saudi Aramco $612m investment (80% debt and 20% equity) Lenders ~ Bank Saudi Fransi ~ Samba ~ Arab Bank ~ Riyadh Bank ~ International Banks 8 Saudi Aramco

Saudi Oger Number of employees 52,500 Established in 1978 Saudi Oger is an international construction company based in Saudi Arabia Worlds leading producer and Background in construction The client, off-taker and fuel supplier Owned 100% by Saudi Government exporter of oil ~ circa 3 billion barrels per annum Worlds top exporter of natural gas liquids ~ circa 6.7 billion cu.ft./day

but business diversification strategy into power and telecoms well underway Turnover $1.8 billion per annum Number of employees 26,000 9 Saudi Aramco 3rd party cogen program Project contractual structure Sponsors International Power 60% General Electric Sub-Contract

Packages Civil Mechanical Saudi Oger 40% Contractual Services Agreement HHI Main Contractor Mitsui Fire Protection Tihama Facility Agreement Electrical C&I

EPC Contract Shareholders Agreement Usufruct Agreements Energy Conversion Agreements Saudi Aramco Ancillary Services Agreements Banque Saudi Fransi SAMBA Arab Bank Banks Owners Engineer PB Power

Riyadh Bank Saudi Hollandi Etc. 9 Tihama Power O&M arrangements IPR / Saudi Oger Management Experienced staff recruited from Middle East and Asia Extensive staff training IT infrastructure and systems implemented to IPR standards 20 year technical services agreement with IPR 12 year contractual services agreement with General Electric 9 Uthmaniyah - GE 7FA 9

Shedgum - GE 7FA 9 Ras Tanura - GE7EA 9 Juaymah - GE 7FA 9 Tihama Power Generation Company Ltd. Saudi Aramco 3rd Party Cogeneration NTP Project Feb 26 2004 Q2 04Uthmaniyah 311 MWe Gross

Q1 06 21 months Q3 04 Shedgum 311 MWe Gross Q2 06 22 months Q4 04 Ras Tanura 152 MWe Gross Q3 06 22 months Q1 05 Juaymah 312 MWe Gross Q4 06

22 months 9 IWPP structure 9 IWPP and IPP programme Sponsor Power Water Shoaiba(1) Project WEC 900 MW 195 MIGD

Shuqaiq(2) WEC 700 MW 24 MIGD Ras Al Zour WEC 2,500 MW 176 MIGD Al Jubail WEC 1,100 MW 75 MIGD Muzahimiyah

SEC 1,725 MW Rabigh II SEC 2,400 MW Qurayyah II SEC 3,600 MW Subukh SEC 1,725 MW Yanbu II

SEC 2,400 MW 150 MIGD Shuqaiq III SEC 600 MW 23 MIGD SEC 1,725 MW Riyadh PP10 (extn) (1) Closed Dec 2005 (2)

150 MIGD Ras Al Zour Qurayyah II Yanbu II Subukh Al Jubail Rabigh II Riyadh Muzahimiyah PP10 Shoaiba Saudi Shuqaiq IIIArabia Shuqaiq UAE Oman Launched Dec 2005 9 Saudi Arabia - other opportunities Marafiq

~ 2,500 MW + 176 MIGD at Jubail (bids due in April 2006) ~ 600 MW Yanbu Aramco ~ possible expansion of existing Tihama assets ~ other cogeneration opportunities Maaden ~ IWPP supply for Aluminium smelter, mining extraction projects Saline Water Conversion Company ~ new build desalination driven projects Privatisation of existing SEC and SWCC assets 1 Qatar Tom Mackay 1 Macro environment Country ruled by the Al-Thani family following independence from UK GDP growth rate (1)

protectorate in 1971 (3) Credit rating GDP in 2004: US $28.4 billion Inflation (2) Currency: Qatari Rial pegged to US$ Population growth Sharia system Oil related economy: 15.2 bbls reserves A+ 4.7% (2) Codified legal system alongside a 7.0%

2.6% (1)DOE/EIA 2005 (2)MEED, 2005 (3) S&P Gas dominated economy: proven reserves of 910 TCF - 3rd largest proven reserves in the world 1 Installed capacity Current market share is as follows: Facility RAFASAT QEWC at 76% Power RAF B IPR at 9.5 % Power

RAF B1 AES at 9.6% Power Other smaller shareholders 4.9% Power Fuel Power Water Type MW MIGD Owner Gas 970 55 QEWC (1) RAF B2 Ras Laffan A (1) Ras Laffan B Total

Gas 609 33 QEWC Gas 376.5 0 QEWC Gas 567 29 QEWC

Gas 756 40 AES/QEWC/ QP/GIC Ga 1025 s 4304 60 QEWC/IPR/ 217 Chubu Electric 2005 figures from Kahramaa Under Construction (1) 1

Power and water sector Installed capacity of some 2,712 MW and 128 MIGD ~ additional 1,592 MW and 89 MIGD under construction Qatar Electricity & Water Company (QEWC) historically developed all power generation and water projects KAHRAMAA sole purchaser and distributor of all power and water in country Electricity/water demand has growth historically 6-8% per annum 1 Attractiveness Projected demand for Electricity and Water in 2006 and 2007 is over 20% and 10% respectively Major Industrial developments in Ras Laffan and Mesaieed in the Petro-chemical, LNG expansions and Aluminium

Smelter New developments worth US$10 billion plus in 2005 ~ fuelling new expansion in the electricity and water sector Two IWPPs in Qatar ~ Ras Laffan A (AES +EMP) 750 MW, 40 MIGD ~ Q Power (QEWC/IPR/Chubu Electric) 1,025 MW, 60 MIGD 1 Ras Laffan B asset overview Location: Ras Laffan Industrial City Gross Capacity: 1,025 MW, 60 MIGD Ras Laffan B Fuel: Gas(CCGT)/Desalination Employees: 86 - 6 IPR, 4 QEWC, 2 Chubu, and during construction around 4,000 Configuration: V94.3 Siemens Gas Turbines and 15 MIGD Doosan Desalination

Units Qatar UAE Saudi Arabia UAE Oman 1 Ras Laffan B commercial overview Q Power (the project company) is owned 55% by Qatar Electricity & Water company, 40% by IPR and 5% by Chubu Electric Power and water capacity and output sold to KAHRAMAA (state- owned single buyer of power and water) ~ under 25 year BOOT Power and Water Purchase Agreement

Plant scheduled to enter commercial operation in three phases between 2006 - 2008 $900 investment - 80% debt and 20% equity Long Term LTSA signed with Siemens for Gas Turbine Maintenance 1 Ras Laffan B construction progress All three Siemens Gas Turbines are on site and are being installed. 220kV switchgear for all gas turbines completed First Doosan Desalination Unit installed and work is progressing well on its associated pumps and pipe work First HRSG with its associated equipment being erected Progress on connecting to the Seawater intake and outfall pipework in advanced stage of completion

1 Ras Laffan B 1 Ras Laffan B 1 Ras Laffan B 1 Potential future projects Mesaieed ~ 2,000 MW, 40 MIGD currently in development ~ bids to be in by 15 March 2006 Dukhan 1 & 2 ~ 3,000 MW, 60 MIGD Availability of regional and international finance ~ eg Ras Gas LNG train 2 needed US $1.5 billion received US$3 billion in offers

1 Bahrain John Hurst 1 Macro environment Political ~ stable, liberal, and the most democratic of the Gulf States Currency pegged to the US$ Legal structure very similar to GDP growth rate Credit rating 7% (1)

A- Inflation 4.9% Population growth 1.5% (1) S&P that of the UAE 1 Power and Water industry Regulatory framework ~ transmission and distribution is solely Government-owned ~ MEW is the sole offtaker for power and water backed by Government of Bahrain Guarantee International Power and Suez Energy key players in the

market Demand growth 8% power, 10% water Installed capacity ~2,000 MW (excluding Alba aluminum smelter) 1 Al Hidd asset overview Location: Manama Gross Capacity: 910 MW and 30 MIGD, 60 MIGD under construction Al Hidd Bahrain Qatar Fuel: Natural gas Employees: 2 IPR, 1 Suez, 1 Sumitomo, 198 Seconded from MEW

Configuration: Phase I - 2 x 13E2 + 30 MIGD water Phase II - 3 x 13E2 UAE Saudi Arabia UAE Oman 1 Al Hidd 1 Al Hidd commercial overview Hidd Power Company : IPR 40%, Suez 30%, Sumitomo 30% 22-year PWPA with Ministry of Electricity and Water; 22-year NGSA with Bahrain Petroleum Company

(BAPCO) $1.25 billion investment - 85% debt, 15% equity Lenders - JBIC, 6 MLAs led by Royal Bank of Scotland Combined Owner/O&M structure 1 Prospects / outlook IPR consortium has been operating Hidd plant from 23 Jan 2006 Financial close expected in July 2006 ~ payment of purchase price in July Immediate earnings MEW / MOF are both pragmatic and fair clients 2,000 MW IPP to be released by Government of Bahrain shortly 1 Summary Ranald Spiers

1 Middle East Regional IWPP markets Country Capacity New capacity Demand growth % 2004required by 2014 (per year) UAE 8,000 MW 8,000 MW 7% Oman 3,000 MW 2,000 MW

6% Saudi Arabia26,000 MW 30,000 MW 8% Qatar 2,700 MW 5,000 MW 9% Bahrain 2,000 MW 2,000 MW 8% Kuwait

4,000 MW 5,000 MW 6% 1 Middle East Region - growth in IPP projects 1994 - 2000 Al Manah, Salalah, Al Kamil, Barka (Oman) Taweelah A2, Taweelah A1 (UAE) TOTAL PROJECT COSTS: $3bn 2001 - 2004 SADAF (Saudi Arabia); Shuweihat, Umm Al Nar (UAE); Ras Laffan A (Qatar); Sohar (Oman); Al Ezzel (Bahrain) TOTAL PROJECT COSTS: $6bn 2005 - 2008 Taweelah B, Taweelah RO, Fujairah, Shuweihat S2 (UAE);

Ras Laffan B, Mesaieed, (Qatar), Barka 2, Ghubrah, Rusayl (Oman); Shoaiba, MARAFIQ , Rabigh, Shuqaiq, Raz Al Zhor (SaudiArabia) + ? TOTAL PROJECT COSTS: $15bn+ 1 Middle East Region - short term prospects Bahrain UAE Shuweihat S2 new build 1,500 MW +100 MIGD Fujairah F2 1000MW + 70 MIGD New Abu Dhabi island development 4,000 MW - 7,000 MW Oman Barka 2 new build 700 MW + 30 MIGD Rusayl 685 MW existing Ghubrah sale of existing 527 MW + 42 MIGD Wadi Al Jizzi 334 MW

2,000 MW IPP Qatar Mesaieed 2,000 MW, 40 MIGD Dukhan 1&2 3,000 MW, 60 MIGD Saudi Arabia Shuqaiq 700 MW, 70 MIGD Marafiq 2,500 MW, 176 MIGD Ras Al Zour 2,500 MW, 175 MIGD 1 Desalination - growth potential Scope for further desalination projects in the Middle East Operating desalination plants - a key

skill for IPR Ability to capitalise on the ME experience elsewhere (Australia, USA) MIGD 2500 2000 2005 2015 1500 Anticipated integrated power and water plant investment Abu Dhabi Oman Qatar

Saudi Arabia Bahrain 1000 500 $4 $2 $3 $12 $2 bn bn bn bn bn 0 Abu Oman Qatar Bahrain Saudi Dhabi Arabia

1 Strategic focus Extract maximum value from current projects Maintain geographic focus on Gulf States and Saudi Arabia Seek selective opportunities in North Africa (Morocco/ Egypt etc) markets with similar commercial and risk profile Target to win one project each year over the next four/five years 1 Success factors Best-in-class operation ~ assets performing in accordance with contracts World class project finance capabilities High quality people to implement and run new projects Excellent reputation

~ delivered assets on time and within budget Robust relationships with key clients, partners and contractors 1

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