1 IPR in the Middle East January 2006. 2 Introduction Mark Williamson.

1

IPR in the Middle EastJanuary 2006

2

IntroductionMark Williamson

3

Our commitment to the region

Creating value through core skills • Project development and

construction• Offtake contract design and

execution • Project financing • Plant operation - both power and

desalination

34%66%

PPA

Merchant (short/medium

term contracted)

Contract Type - IPR Group(by net MW)

0

500

1,000

1,500

2,000

2,500

2001 2003

Net MW

2002 2004

Net MWunderconstruction

200620052000

Set up in

region Al

Kamil, Oman

Shuweihat,UAE

Umm Al NarUAE

TihamaSaudi Arabia35% Al

Kamil IPO

Ras Laffan BQatar

Al HiddBahrian

MW ME Net MW

Middle East . . . in the IPR portfolio

4

Contribution to IPR from the region

Only includes equity from operating assets

2001 2003

EBIT

2002 2004

Middle East EBIT (£m)

1-1

9

22 23

54

29

85

Equity

Middle East . . . in the IPR portfolio

5

OverviewRanald Spiers

6

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 ~ three currently in bid/negotiation

UAE

UAE OmanSaudiArabia

Qatar

Bahrain

Al HiddAl Hidd

Al KamilAl Kamil

Ras Laffan BRas Laffan B

TihamaTihama

ShuweihatShuweihat Umm Al NarUmm Al Nar

7

IPR in the Middle East

FuelType

IPRShare(MW)

Al Kamil

Shuweihat

Umm Al Nar

Tihama

Ras Laffan B

Al Hidd

Total

Net SteamCapacity

(m lbs / hr)% of

ownershipCountryName

End ofPower

ContractOman

UAE

UAE

KSA

Qatar

Bahrain

65

20

20

60

40

40

185

300

310

645

410

364

2,214

Gas

Gas

Gas

Gas

Gas

Gas

-

-

-

2.7

-

-

2.7

2017

2024

2026

2026

2033

2028

Net DesalCapacity

(MIGD)-

20

20

-

24

36

100

Middle EastEBIT (£m)

2002 2003 2004

9

2329

8

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2002 2003 2004 2005 2006Al Kamil

Umm Al Narextension

Shuweihat

Tihama

650 MW retires at the end of 2008

285

2008

Ras Laffan B

(1)

2007

Al Hidd

Umm Al Nar

MW

870 870 870 650 650 650

1,500 1,5001,500 1,500 1,500

7001,550 1,550 1,550

1,075 1,075 1,075

1,025900600

910910 910

285 285 285 285 285 285

1,155

2,655

3,355

6,5706,870 6,995

(1)

285

The Middle East - a growing asset portfolio

9

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

10

Key markets

Primary target markets:

• UAE

• Qatar

• Saudi Arabia

• Oman

• Bahrain

• Kuwait

11

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

12

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

13

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

14

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

15

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

16

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)

17

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

18

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

19

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 HurstSummary Ranald Spiers

20

Contract structuresDavid Wadham

21

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

22

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

23

PWPAs and PPAs

• Project company responsible for:~ design~ construction~ 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

~ ownership~ operation~ maintenance

24

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

25

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

26

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

27

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

28

Shareholding structure

• 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

The advantages of a government shareholding and the need to generate local investment opportunities

29

Umm Al Nar Shareholders’ Agreement

• Foreign shareholder has the ability to manage the projectand 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)

30

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

31

Financing our growthPeter Barlow

32

Project finance

• Fundamental part of IPR’s financial strategy

• Objective is to finance on a non-recourse basis at the asset level

33

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

34

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

35

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

36

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

37

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)

38

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

39

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

40

Case study: Umm Al Nar

Debt FacilitiesAmounts

US$ million Main Features1) Equity Bridge Facility 441 Tenor / Repayment: Bullet repayment on July 2008Of which: Islamic Tranche 291Of which: Conventional Tranche 150 Other: 100% guaranteed by Shareholders

2) Short Term Facility 232 Tenor / Repayment: July 2006 to July 2008Of which: Islamic Tranche NilOf which: Conventional Tranche 232 Other: Ranking Pari-Passu with Long Term F.

3) Long Term Facility 1,105 Tenor / Repayment: Of which: Islamic Tranche 250Of which: Conventional Tranche 855 Other:

Total Debt Facilities 1,778

Door-to-door 20 years; Profiled repayments: Jan 2009 to Jul 2023"True-Up Advance": Drawdown at end of availability period to repay part of

EBF and achieve 80:20 gearing (subject to cover ratio covenants)

41

Case study: Umm Al Nar

Capital Structure Amounts US$ million

Total Funding Requirements: 2,116Of which: Acquisition Purchase Price 1,000

Of which: EPC Contract 736

Sources of Funds

US$m % US$m %Short Term Facility 231 10.9% 0 0.0%Long Term Facility 978 46.2% 1,102 52.1%Equity Bridge Facility 440 20.8% 0 0.0%Equity Injection 0 0.0% 315 14.9%

Cash Flow From Operations 468 22.1% 698 33.0%Total Sources of Funds: 2,116 2,116 2,116

Before "Refinance"

After "Refinance"

42

DesalinationJaideep Sandhu

43

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)

44

100

181.5

-

30

311.5

52.5

IPR Middle East Desalination portfolio

Shuweihat S1 IWPPMSF (Fisia)

Umm Al NarMSF & MED (Fisia, IHI, Sidem, Doosan, Hitachi Zosen)*

Ras Laffan Facility B

MSF (Doosan)

Al Hidd, BahrainMSF & MED (Fisia, Sidem)

Total Desalination capacity

Potential opportunity:Abu Dhabi Reverse Osmosis Plant

100

95

60

90

345

Assumeconstruction

2006 2008

45

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

46

Multi Stage Flash Technology - 1

Steam

Condensing

Brine

Vapour &Brine Droplets

Vapour

DesalinatedWater

Vapour &Brine Droplets

Vapour

Brinerecirculation

Power

RejectBrine

Seawater

Vacuum

47

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

48

Multi Effect Distillation Technology - 1Seawater

Reject Brine

Steam

Condensate

1St EffectVapour

2nd Effect

Vapour

Condenser

DesalinatedWater

DesalinatedWater

Vacuum

49

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

50

Reverse Osmosis Process - 1

Reject Brine

Chemicals

PotableWater

Posttreatment system

MembraneRacks

DesalinationWater

Pre treatmentsystem

Chemicals

Highpressure

pump

51

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

52

Integrated Power and Water Plant

Combined Power and Water Plant

G

GasGas/Oil/Oil

AirAir

G

Gas TurbinesGas TurbinesGas TurbinesGas Turbines

HRSGsHRSGsHRSGsHRSGs

Steam TurbinesSteam TurbinesSteam TurbinesSteam Turbines

MSFMSF/MED/MED distillersdistillers

MSFMSF/MED/MED distillersdistillers S/W IntakeS/W IntakeS/W IntakeS/W Intake

Brine Return

53

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

54

0

500

1000

1500

2000

2500

MIGD

AbuDhabi

Oman Qatar Bahrain SaudiArabia

20052015

Middle East IWPP Desalination markets

Anticipated Integrated Powerand Water Plant Investment

Abu DhabiOmanQatarSaudi ArabiaBahrain

$4 bn$2 bn$3 bn

$12 bn$2 bn

55

OmanTom Mackay & Kevin Cox

56

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 Sha’ria system

• Oil dominated economy - proven reserves of 5.5bbl

• Recent diversification utilising gas reserves of 29TCF - mainly LNG sales

DOE/EIA database 2005

MEED Dec 2005

S&P

GDP growth rate

Credit rating

Inflation

Population growth

3.3%

BBB+

1.6%

2.5%

(1)

(3)

(2)

(2)

(1)

(2)

(3)

57

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

58

Power and Water Sector • Peak demand 2,500 MW

in 2005 growing at 6% in both power and water

• Market shares :

953,326Total

PSEG0200Gas/OilSalalah

Suez Energy33585Gas/OilSohar (in construction)

AES20427Gas/OilBarka 1

IPR285Gas/OilAl Kamil

Suez Energy0280Gas/OilAl Manah

EHC334Gas/OilWadi Al Jizzi

EHC0688Gas/OilRusayl

EHC42527Gas/OilGhubrah

OwnerWaterMIGD

PowerMW

FuelType

Facility(2004 figures)

PWP estimates 2004

ElectricityHoldingCompany46%

13%

Suez Energy

IPR5%

6%Dhofar

Other smallerinvestments

6%

AES

24%

59

Al Kamil asset overview

Location: Sharquiya region

Gross capacity: 285 MW OCGT

Fuel: Gas with oil back-up

Employees: 30 plant and 7 Muscat office

Configuration: Dual fuel plant using GEframe 9E turbines (3 units)

Operational: Q4 2002

UAE

SaudiArabia

Oman

Al Kamil

60

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 subsidiary backed by 9 yr GE LTSA

61

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

62

Al Kamil creating valueOperation• Maintenance of high availability and control of direct costsFinancing• 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

63

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

64

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

65

Abu DhabiDavid Barlow & Ed Metcalfe

66

Macro environment

• UAE - federation of 7 Emirates ~ political power Abu Dhabi

• GDP in 2004: $103bn

• Currency: UAE Dirham pegged to US$

• Oil: 98 bbls proven reserves ~ 8% of proven world reserves

• Gas - 212 TCF proven reserves- 5th largest in world

• Codified legal system~ existing alongside a Sha’ria system

Source: MEED, 2004

Moody’s, Dec 2004

Oil & Gas Journal, 2005

GDP growth rate

Credit rating

Inflation

Population growth

6.4%

A1

3.4%

6.0%

(1)

(2)

(1)

(1)

(1)

(2)

(3)

(3)

(3)

67

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

68

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

69

Demand growth

Abu Dhabi Power Demand 1993 - 2004

0

1000

2000

3000

4000

5000

6000

7000

8000

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Year

Po

wer

, M

W

Installed Power Capacity Peak Power Demand

Abu Dhabi Power Demand Forecast 2005-2015

0

2000

4000

6000

8000

10000

12000

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Po

wer

, M

W

Installed Power Capacity Required Power Capacity

70

Demand growth

Abu Dhabi Water Demand Forecast 2005 - 2015

0

100

200

300

400

500

600

700

800

900

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Year

Wat

er,

MIG

D

Installed Water Capacity Required Water Capacity

Abu Dhabi Water Demand 1993 - 2004

0

100

200

300

400

500

600

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

Wat

er,

MIG

D

Water Capacity Water Demand

71

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 Toshiba steam turbines; 2x12.5 MIGD Hitachi Zosen, 5x12.5 MIGD Doosan MSF, 2x3.5 MIGD Sidem MED desalination units

Umm Al Nar asset overview

OmanSaudiArabia

UAE UmmAl Nar

72

Umm Al Nar

73

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

74

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

75

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

76

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)

77

UAN New Plant Extension

• Net capacity~ 1,500 MW Power~ 25 MIGD Water ~ Integration of New Existing Assets

• Full commercial operation 2006

78

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

79

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

80

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

Shuweihat asset overview

OmanSaudiArabia

UAEShuweihat

81

Shuweihat

82

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)

83

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

84

Saudi ArabiaDavid Barlow, Jeff Wright& Steve Pedrick

85

Macro environment

• Saudi ruled by the Al-Saud family

• GDP $251bn

• Oil dominated economy: 262 bbls oil reserves, 25% of proven world total

• Gas reserves: 235 TCF proven, world’s 4th largest

Source: MEED, 2004

S&P / Moody’s

Oil & Gas Journal, 2005

GDP growth rate

Credit rating

Inflation

Population growth

5.3%

A/Baa2

0.2%

2.7%

(1)

(2)

(1)

(1)

(1)

(2)

(3)

(1)

(3)

(3)

86

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

87

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

88

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

TihamaUAESaudi

ArabiaOman

89

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

90

Saudi Aramco

• The client, off-taker and fuel supplier

• Owned 100% by Saudi Government

• Number of employees 52,500

• World’s leading producer and exporter of oil~ circa 3 billion barrels per annum

• World’s top exporter of natural gas liquids~ circa 6.7 billion cu.ft./day

• Established in 1978 Saudi Oger is an international construction company based in Saudi Arabia

• Background in construction but business diversification strategy into power and telecoms well underway

• Turnover $1.8 billion per annum

• Number of employees 26,000

Saudi Oger

91

General Electric

Sponsors

International Power 60%

Saudi Oger 40%

Tihama Saudi Aramco

Mitsui

BanksOwner’s Engineer PB Power

Contractual Services Agreement

Shareholder’s Agreement

Usufruct Agreements

Energy Conversion Agreements

Ancillary Services Agreements

EPC ContractHHI Main

ContractorFacility Agreement

Sub-Contract Packages

Civil

Mechanical

Electrical

C&I

Fire ProtectionBanque Saudi Fransi

SAMBA

Arab Bank

Riyadh Bank

Saudi Hollandi

Etc.

Saudi Aramco 3rd party cogen programProject contractual structure

92

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

93

Uthmaniyah - GE 7FA

94

Shedgum - GE 7FA

95

Ras Tanura - GE7EA

96

Ju’aymah - GE 7FA

97

Tihama Power Generation Company Ltd.Saudi Aramco 3rd Party Cogeneration Project

NTP

Feb 26 2004 Q1 06 Q2 04Uthmaniyah 311 MWe

Gross

Q2 06Q3 04 Shedgum 311 MWe Gross

Q3 06Q4 04 Ras Tanura 152 MWe Gross

Q4 06 Q1 05 Ju’aymah 312 MWe Gross

21 months

22 months

22 months

22 months

98

IWPP structure

99

Closed Dec 2005 Launched Dec 2005

IWPP and IPP programme

SEC

SEC

SEC

SEC

SEC

SEC

SEC

WEC

WEC

WEC

WEC

Sponsor

195 MIGD900 MWShoaiba

24 MIGD700 MWShuqaiq

176 MIGD2,500 MWRas Al Zour

75 MIGD1,100 MWAl Jubail

150 MIGD2,400 MWYanbu II

150 MIGD2,400 MWRabigh II

3,600 MWQurayyah II

23 MIGD600 MWShuqaiq III

1,725 MWSubukh

1,725 MWRiyadh PP10 (extn)

WaterPowerProject

1,725 MWMuzahimiyah

(1)

(2)

(1) (2)

MuzahimiyahRiyadhPP10

SubukhRabigh II

Yanbu II

Qurayyah II

Shuqaiq III

Shoaiba

Shuqaiq

Al Jubail

Ras Al Zour

UAE

SaudiArabia

Oman

100

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

101

QatarTom Mackay

102

Macro environment

• Country ruled by the Al-Thani family following independence from UK protectorate in 1971

• GDP in 2004: US $28.4 billion

• Currency: Qatari Rial pegged to US$

• 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

DOE/EIA 2005

MEED, 2005

S&P

GDP growth rate

Credit rating

Inflation

Population growth

7.0%

A+

4.7%

2.6%

(1)

(3)

(2)

(2)

(1)

(2)

(3)

103

Installed capacity

Current market share is as follows:

2174304Total

QEWC/IPR/Chubu Electric

601025Gas

Ras Laffan B

AES/QEWC/QP/GIC

40756GasRas Laffan A

QEWC29567GasRAF B2

QEWC0376.5GasRAF B1

QEWC33609GasRAF B

QEWC55970Gas

RAFASATOwner

WaterMIGD

Power MW

FuelTypeFacility

2005 figures from Kahramaa Under Construction

(1)

(1)

(1)

• QEWC at 76% Power

• IPR at 9.5 % Power

• AES at 9.6% Power

• Other smaller shareholders 4.9% Power

104

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

105

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

106

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

UAE

UAEOman

SaudiArabia

Qatar

RasLaffan B

107

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

108

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

109

Ras Laffan B

110

Ras Laffan B

111

Ras Laffan B

112

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

113

BahrainJohn Hurst

114

Macro environment

• Political~ stable, liberal, and the

most democratic of the Gulf States

• Currency pegged to the US$

• Legal structure very similar to that of the UAE

S&P

GDP growth rate

Credit rating

Inflation

Population growth

7%

A-

4.9%

1.5%

(1)

(1)

115

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)

116

Location: Manama

Gross Capacity: 910 MW and 30 MIGD, 60 MIGD under construction

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

Al Hidd asset overview

UAE

UAEOman

SaudiArabia

Qatar

BahrainBahrain

Al HiddAl Hidd

117

Al Hidd

118

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

119

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

120

SummaryRanald Spiers

121

6%5,000 MW4,000 MWKuwait

8%2,000 MW2,000 MWBahrain

9%5,000 MW2,700 MWQatar

8%30,000 MW26,000 MWSaudi Arabia

6%2,000 MW3,000 MWOman

7%8,000 MW8,000 MWUAE

Demand growth %(per year)

New capacityrequired by 2014

Capacity2004Country

Middle East Regional IWPP markets

122

Al Manah, Salalah, Al Kamil, Barka (Oman)Taweelah A2, Taweelah A1 (UAE)TOTAL PROJECT COSTS: $3bn

SADAF (Saudi Arabia); Shuweihat, Umm Al Nar (UAE); Ras Laffan A (Qatar); Sohar (Oman); Al Ezzel (Bahrain)TOTAL PROJECT COSTS: $6bn

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+

1994 - 2000

2001 - 2004

2005 - 2008

Middle East Region - growth in IPP projects

123

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 IPPQatar• Mesaieed 2,000 MW, 40 MIGD• Dukhan 1&2 3,000 MW, 60

MIGDSaudi Arabia• Shuqaiq 700 MW, 70 MIGD• Marafiq 2,500 MW, 176 MIGD• Ras Al Zour 2,500 MW, 175

MIGD

Middle East Region - short term prospects

124

0

500

1000

1500

2000

2500MIGD

AbuDhabi

Oman Qatar Bahrain SaudiArabia

2005

2015

Desalination - growth potential

Anticipated integrated powerand water plant investment

Abu DhabiOmanQatarSaudi ArabiaBahrain

$4 bn$2 bn$3 bn

$12 bn$2 bn

• 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)

125

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

126

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