Transcript Document
IPR in the Middle East January 2006 1 Introduction Mark Williamson 2 Middle East . . . in the IPR portfolio Our commitment to the region Contract Type - IPR Group (by net MW) PPA MW ME Net MW Al Hidd Bahrian 2,500 Net MW 2,000 Net MW under construction 1,500 1,000 500 (short/medium term contracted) 0 2001 2002 2003 2004 2005 34% Merchant Ras Laffan B Tihama Qatar Saudi Umm Al Nar Arabia UAE 35% Al Kamil IPO Set up in Shuweihat, UAE region Al Kamil, Oman 2000 66% 2006 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 29 23 9 -1 2001 1 2002 2003 2004 Only includes equity from operating assets 4 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 • Creation of new region - £29m PBIT by 2004 • Existing assets performing well • Construction is the other major regional activity • • Power and desalination ~ IPR largest private supplier of desalinated water in the world Pipeline of future projects Al Hidd Bahrain Ras Laffan B Qatar Tihama Shuweihat UAE Saudi Arabia Umm Al Nar UAE Oman Al Kamil 6 IPR in the Middle East Middle East EBIT (£m) Name Country % of ownership Al Kamil Shuweihat Umm Al Nar Tihama Ras Laffan B Al Hidd Total Oman UAE UAE KSA Qatar Bahrain 65 20 20 60 40 40 IPR Share (MW) Net Desal Capacity (MIGD) Net Steam Capacity (m lbs / hr) 185 300 310 645 410 364 2,214 20 20 24 36 100 2.7 2.7 Fuel Type End of Power Contract Gas Gas Gas Gas Gas Gas 2017 2024 2026 2026 2033 2028 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 Ras Laffan B 1,075 1,075 1,075 Tihama 1,550 1,550 1,550 Umm Al Nar extension 1,500 1,500 1,500 Shuweihat 7,000 6,570 6,000 910 Al Hidd 5,000 4,000 3,355 3,000 2,000 1,000 0 2,655 700 1,500 1,500 1,155 870 870 870 650 650 285 285 285 285 285 285 285 2002 2003 2004 2005 2006 2007 2008 285 650 (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 10 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 11 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 12 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 13 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 14 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 15 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) 16 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 17 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 18 Agenda Contract Structures Financing our Growth Desalination Coffee Break Oman Abu Dhabi Saudi Arabia Qatar Coffee Break Bahrain Summary David Wadham Peter Barlow Jaideep Sandu Tom Mackay & Kevin Cox David Barlow & Ed Metcalfe David Barlow, Jeff Wright & Steve Pedrick Tom Mackay John Hurst Ranald Spiers 19 Contract structures David Wadham 20 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 plant’s available capacity and output • Contract with sovereign/quasi-sovereign counterparty ~ state’s single buyer of power and water 21 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 22 PWPAs and PPAs • Project company responsible for: ~ ownership ~ design ~ operation ~ construction ~ commissioning ~ maintenance • 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 23 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 24 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 25 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 26 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 27 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 28 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 29 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 30 Financing our growth Peter Barlow 31 Project finance • Fundamental part of IPR’s financial strategy • Objective is to finance on a non-recourse basis at the asset level 32 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 33 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 34 International and regional debt providers • IPR’s 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 int’l 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 35 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 36 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 $1.0 billion (in negotiation) 37 Lenders appetite for future deals • Competitive pricing and increasing level of interest suggest large appetite for future IPP/IWPP deals in the region • Virtually all major international project finance lenders present in the region and display appetite for more deals • More regional players are becoming familiar with project finance through participation in loan syndications 38 Case study: Umm Al Nar • • • • • Largest IWPP in the world: ~ existing net capacity: 870 MW (power) + 162 MIGD (water) ~ after construction net capacity: 1,550 MW (2,200 MW for 2 years during construction) + 95 MIGD 23 year PWPA with ADWEA: proven contractual structure (4th such deal in Abu Dhabi, but longest tenor to date); Largest ever project finance deal at the time, when lenders appetite in the region was limited; Financing plan structured to maximise liquidity and included use of Islamic financing, short and long term conventional debt; Long-term debt tenor: 20 years; 39 Case study: Umm Al Nar Debt Facilities Amounts US$ 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 Other: 100% guaranteed by Shareholders Other: Ranking Pari-Passu with Long Term F. Tenor / Repayment: Door-to-door 20 years; 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) 1,778 40 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% 14.9% 315 698 33.0% 2,116 2,116 41 Desalination Jaideep Sandhu 42 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) 43 IPR Middle East Desalination portfolio Shuweihat S1 IWPP MSF (Fisia) Umm Al Nar MSF & MED (Fisia, IHI, Sidem, Doosan, Hitachi Zosen)* 2006 2008 100 100 181.5 95 - 60 Ras Laffan Facility B MSF (Doosan) Al Hidd, Bahrain MSF & MED (Fisia, Sidem) Total Desalination capacity Potential opportunity: Abu Dhabi Reverse Osmosis Plant 30 90 311.5 345 52.5 Assume construction 44 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 45 Multi Stage Flash Technology - 1 Vacuum Seawater Brine Vapour Vapour Steam Power Condensing Desalinated Water Vapour & Brine Droplets Vapour & Brine Droplets Brine recirculation Reject Brine 46 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 47 Multi Effect Distillation Technology - 1 Seawater 2nd Vapour Effect Vacuum 1St Effect Vapour Steam Condenser Condensate Desalinated Water Desalinated Water Reject Brine 48 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 49 Reverse Osmosis Process - 1 Chemicals Chemicals Desalination Water Potable Water Post treatment system Membrane Racks High pressure Pre treatment pump system Reject Brine 50 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 51 Integrated Power and Water Plant Combined Power and Water Plant Air Gas /Oil HRSGs Steam Turbines G G Gas Turbines Brine Return MSF/MED distillers S/W Intake 52 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 53 Middle East IWPP Desalination markets M IGD 2500 Anticipated Integrated Power and Water Plant Investment 2005 2015 2000 1500 Abu Dhabi Oman Qatar Saudi Arabia Bahrain 1000 500 $4 bn $2 bn $3 bn $12 bn $2 bn 0 Abu Dhabi Oman Qatar Bahrain Saudi Arabia 54 Oman Tom Mackay & Kevin Cox 55 Macro environment • Ruled by Sultan Qaboos since 1970 GDP growth rate (1) (3) • GDP in 2004: US $24.4 billion • Currency: Omani Rial pegged to US$ • Codified legal system, existing alongside a Sha’ria system • Oil dominated economy - proven reserves of 5.5bbl • Recent diversification utilising gas Credit rating Inflation 3.3% BBB+ (2) 1.6% Population growth(2) 2.5% (1) DOE/EIA database 2005 (2) MEED Dec 2005 (3) S&P 56 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 57 Power and Water Sector • • Peak demand 2,500 MW in 2005 growing at 6% in both power and water Facility (2004 figures) Fuel Power Water Type MW MIGD Owner Ghubrah Gas/Oil 527 42 EHC Market shares : Rusayl Gas/Oil 688 0 EHC Wadi Al Jizzi Gas/Oil 334 Al Manah Gas/Oil 280 Al Kamil Gas/Oil 285 Barka 1 Gas/Oil 427 20 AES Sohar (in construction)Gas/Oil 585 33 Suez Energy Salalah 200 0 3,326 95 Other smaller investments 24% 46% Dhofar 6% 5% IPR 13% Suez Energy 6% AES Electricity Holding Company Total Gas/Oil EHC 0 Suez Energy IPR PSEG PWP estimates 2004 58 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 59 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 60 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 61 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 62 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 63 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 64 Abu Dhabi David Barlow & Ed Metcalfe 65 Macro environment • • UAE - federation of 7 Emirates ~ political power Abu Dhabi GDP in 2004: $103bn GDP growth rate (1) (2) Credit rating Inflation • Currency: UAE Dirham pegged to US$ • Oil: 98 bbls proven reserves (3) ~ 8% of proven world reserves A1 (1) 3.4% Population growth(1) • Gas - 212 TCF proven reserves - 5th largest in world(3) • Codified legal system ~ existing alongside a Sha’ria system 6.4% 6.0% (1) Source: MEED, 2004 (2) Moody’s, Dec 2004 (3) Oil & Gas Journal, 2005 66 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 67 Abu Dhabi IWPPs • Middle East’s 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 68 Demand growth Abu Dhabi Power Demand Forecast 2005-2015 Abu Dhabi Power Demand 1993 - 2004 8000 12000 7000 10000 Power, MW Power, MW 6000 5000 4000 3000 8000 6000 4000 2000 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 69 Demand growth Abu Dhabi Water Demand Forecast 2005 - 2015 600 900 500 800 700 400 600 Water, MIGD Water, MIGD Abu Dhabi Water Demand 1993 - 2004 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 70 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 UAE Configuration (final): 5 GE 9FA gas turbines; 2 x295 MW Toshiba steam turbines; 2x12.5 MIGD Hitachi Zosen, 5x12.5 MIGD Doosan MSF, 2x3.5 MIGD Sidem MED Saudi Arabia Umm Al Nar Oman 71 Umm Al Nar 72 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 73 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 74 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 75 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) 76 UAN New Plant Extension • Net capacity ~ 1,500 MW Power ~ 25 MIGD Water ~ Integration of New Existing Assets • Full commercial operation 2006 77 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 78 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 79 Shuweihat asset overview Location: Emirate of Abu Dhabi Gross Capacity: 1,500 MW, 100 MIGD Fuel: Gas (CCGT)/desalination Employees: 130 staff Configuration: 5 x Siemens V94.3A2 Gas Turbines 2 Siemens steam turbines 6 x 16.7 MIGD Fisia Italimpianti desalination units UAE Shuweihat Saudi Arabia Oman 80 Shuweihat 81 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) 82 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 83 Saudi Arabia David Barlow, Jeff Wright & Steve Pedrick 84 Macro environment • Saudi ruled by the Al-Saud family (1) GDP growth rate (1) • GDP $251bn Inflation • Oil dominated economy: 262 (3) bbls oil reserves, 25% of proven world total (3) • Gas reserves: 235 TCF proven, world’s 4th largest (2) Credit rating 5.3% A/Baa2 (1) 0.2% Population growth(1) (1) 2.7% Source: MEED, 2004 (2) S&P / Moody’s (3) Oil & Gas Journal, 2005 85 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 86 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 87 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: Tihama Saudi Arabia UAE Oman 3 sites each: 2 x GE 7FA 1 site: 2 x GE 7EA 88 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 89 Saudi Aramco Saudi Oger • The client, off-taker and fuel supplier • • Owned 100% by Saudi Government Established in 1978 Saudi Oger is an international construction company based in Saudi Arabia • Number of employees 52,500 • • World’s leading producer and exporter of oil ~ circa 3 billion barrels per annum Background in construction but business diversification strategy into power and telecoms well underway • Turnover $1.8 billion per annum • World’s top exporter of natural gas • Number of employees liquids 26,000 90 Saudi Aramco 3rd party cogen program Project contractual structure Sponsors International Power 60% General Electric Saudi Oger 40% Contractual Services Agreement Sub-Contract Packages Civil Mechanical HHI Main Contractor EPC Contract Mitsui Tihama Facility Agreement Electrical C&I Fire Protection Shareholder’s Agreement Usufruct Agreements Energy Conversion Agreements Saudi Aramco Ancillary Services Agreements Banque Saudi Fransi SAMBA Arab Bank Banks Owner’s Engineer PB Power Riyadh Bank Saudi Hollandi Etc. 91 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 92 Uthmaniyah - GE 7FA 93 Shedgum - GE 7FA 94 Ras Tanura - GE7EA 95 Ju’aymah - GE 7FA 96 Tihama Power Generation Company Ltd. Saudi Aramco 3rd Party Cogeneration Project NTP Feb 26 2004 Q2 04 Uthmaniyah 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 Ju’aymah 312 MWe Gross Q4 06 22 months 97 IWPP structure 98 IWPP and IPP programme Project Sponsor Power Water Shoaiba(1) 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 Riyadh PP10 (extn) SEC 1,725 MW (1) Closed Dec 2005(2) 150 MIGD Ras Al Zour Qurayyah II Yanbu II Subukh Rabigh II Muzahimiyah Shoaiba Al Jubail Riyadh PP10 Saudi Shuqaiq III Arabia Shuqaiq UAE Oman Launched Dec 2005 99 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 • Ma’aden ~ IWPP supply for Aluminium smelter, mining extraction projects • Saline Water Conversion Company ~ new build desalination driven projects • Privatisation of existing SEC and SWCC assets 100 Qatar Tom Mackay 101 Macro environment • Country ruled by the Al-Thani family following independence from UK protectorate in 1971 GDP growth rate (1) • GDP in 2004: US $28.4 billion Inflation • (2) Currency: Qatari Rial pegged to US$ Population growth • (3) Credit rating Codified legal system alongside a Sha’ria system • Oil related economy: 15.2 bbls reserves • Gas dominated economy: proven reserves of 910 TCF - 3rd largest proven reserves in the world (2) 7.0% A+ 4.7% 2.6% (1) DOE/EIA 2005 (2) MEED, 2005 (3) S&P 102 Installed capacity Power Water MW MIGD 970 55 Owner Gas 609 33 QEWC Gas 376.5 0 QEWC RAF B2 Gas 567 29 QEWC Gas 756 40 AES/QEWC/ QP/GIC Gas 1025 60 4304 217 QEWC/IPR/ Chubu Electric Current market share is as follows: Facility RAFASAT • QEWC at 76% Power RAF B • IPR at 9.5 % Power RAF B1 Fuel Type Gas (1) • AES at 9.6% Power Ras Laffan A • Other smaller shareholders 4.9% Power Ras Laffan B (1) Total QEWC 2005 figures from Kahramaa Under Construction (1) 103 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 104 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 IWPP’s in Qatar ~ Ras Laffan A (AES +EMP) 750 MW, 40 MIGD ~ Q Power (QEWC/IPR/Chubu Electric) 1,025 MW, 60 MIGD 105 Ras Laffan B asset overview Location: Ras Laffan Industrial City Gross Capacity: 1,025 MW, 60 MIGD 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 Operational from: 2006 Ras Laffan B Qatar UAE Saudi Arabia UAE Oman 106 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 (stateowned 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 107 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 108 Ras Laffan B 109 Ras Laffan B 110 Ras Laffan B 111 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$3 billion in offers 112 Bahrain John Hurst 113 Macro environment • Political ~ stable, liberal, and the most democratic of the Gulf States GDP growth rate Inflation 4.9% • Currency pegged to the US$ Population growth 1.5% • Legal structure very similar to that of the UAE (1) Credit rating 7% A- (1) S&P 114 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) 115 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 116 Al Hidd 117 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 118 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 119 Summary Ranald Spiers 120 Middle East Regional IWPP markets Country Capacity New capacity 2004 required by 2014 Demand growth % (per year) UAE 8,000 MW 8,000 MW 7% Oman 3,000 MW 2,000 MW 6% Saudi Arabia 26,000 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% 121 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+ 122 Middle East Region - short term prospects 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 Bahrain • 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 123 Desalination - growth potential MIGD • • Scope for further desalination projects in the Middle East Operating desalination plants - a key skill for IPR 2500 2000 2005 2015 1500 Abu Dhabi Oman Qatar Saudi Arabia Bahrain 1000 500 • Ability to capitalise on the ME experience elsewhere (Australia, USA) Anticipated integrated power and water plant investment $4 bn $2 bn $3 bn $12 bn $2 bn 0 Abu Oman Qatar Bahrain Saudi Dhabi Arabia 124 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 125 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 126