Rabai Case Study. May, 2009

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1 Rabai Case Study May, 2009

2 Location The Project is a 90MW Fuel Oil fired power plant located at Rabai, 20 km inland from the port of Mombasa. The site is adjacent to the KPLC high voltage substation. Rabai Location

3 Kenya Macroeconomic Overview Kenya is generally regarded, notwithstanding the recent civil unrest, as the business hub of East Africa and one of the more stable business environments on the African Continent. Over the last few years the country has enjoyed sustained growth benefiting from a pro business, pro private sector Government. Subject Descriptor Units Scale Gross domestic product Annual percent change 4.60% % 7% 2.50% 3.40% Gross domestic product per capita U.S. dollars Units Inflation, average consumer prices Annual percent change 11.60% 10.30% 14.40% 9.76% 12.34% 7.01% Population Persons Millions International Monetary Fund, World Economic Outlook Database, April GDP /Capita

Subject Descriptor Units Scale 2004 2005 2006 2007 2008 2009 Gross domestic product Annual percent change 4.60% 5.8 6.10% 7% 2.50% 3.40% Gross domestic product per capita U.S. dollars Units 495 572 670 845 860 921 Inflation, average consumer prices Annual percent change 11.

4 Artist s Impression

5 Recent Photograph

6 Rabai Timing - the Elections in Kenya Rabai was recognized by both Project Finance International and Project Finance Magazine as Africa Power Deal of the Year Why is this Project of interest? It was structured in the midst of a period of considerable unrest in Kenya Following the Dec 2007 Presidential elections a dispute over the result led to violence which resulted in the deaths of over 1,000 people and the displacement of over 300,000 people At this time we had to work closely with our financing partners to determine the conditions upon which they would continue with the transaction There was much discussion with the Government of Kenya regarding risks associated with political violence The financing was firmed up following the announcement of a power sharing deal brokered by Kofi Annan

1,000 people and the displacement of over 300,000 people At this time we had to work closely with our financing partners to determine the conditions upon which they would continue with the

7 Rabai Timing-the Global Financial Crisis The Project reached Financial Close on October 8 th 2008 This was less than one month after the collapse of Lehman Brothers The debt terms including margin were unaffected by the crisis The project was to some extent insulated from the crisis by the nature of its lenders The Development Finance Institutions lending to Rabai were prepared to continue The success of the financing to some extent also reflects the extent to which Africa has been insulated from some of the effects of the crisis Growth in many parts of Africa has moved from the 7%pa to the 5%pa range This is in contrast to the negative growth being experienced in much of the developed world

Institutions lending to Rabai were prepared to continue The success of the financing to some extent also reflects the extent to which Africa has been insulated from some of

8 Reasons for Success Clear transparent process Built on a platform of a reformed energy sector New Electricity Act enabling private sector participation An independent pro-investment Energy Regulatory Commission A cost reflective tariff A track record; success breeds success Use of standard documentation reflecting risk allocation designed to facilitate project financing Clear decisive leadership within the Energy Sector Co-operation and full involvement of officials from the Attorney General s Office and the Ministry of Finance Development Finance Institutions being somewhat less affected by the banking crisis

reflecting risk allocation designed to facilitate project financing Clear decisive leadership within the Energy Sector Co-operation and full involvement

9 Reasons for Success II Recognition of the need for Government Support A willingness to learn from previous deals inside and outside Kenya Government Support Guarantees Requested Comfort Letter Requested Sector Reform

previous deals inside and outside Kenya Government

10 Private Sector Participation Government does, however, have the option to complete projects in the Public Sector Public Amount of cash is finite and is required for uses such as health and education The utility has to be in a position to raise the capital required to complete any given project Public projects have a tendency to run over time and over budget Private Funds are readily available for well structured projects The utility has only to pay electricity and not to raise the capital for any given project Performance levels are typically high The private sector takes performance risk

Public projects have a tendency to run over time and over budget Private Funds are readily available for well structured projects The utility has

11 Equity and Debt Participants Equity Aldwych FMO BWSC IFU Debt 34.5%( 9.2m) 20%( 5.3m) 25.5%( 6.8m) 20%( 5.3m) DEG FMO EAIF Proparco EFP Rabai Power Holdings UK 15% ( 12.0m) 100% (99% Prefs. 1% Ords.) 25% ( 19.8m) Rabai Power Ltd. 25%* ( 19.8m) 25%* ( 19.8m) 10%* ( 7.8m) * Both EAIF and Proparco are investing in senior and subordinated debt $2.8m each

0m) 100% (99% Prefs. 1% Ords.) 25% ( 19.8m) Rabai Power Ltd. 25%* ( 19.8m) 25%* ( 19.

12 Project Contractual Structure Lenders Financing Agreements Government of Kenya Government of Kenya Letter Rabai O&M Co. Operations and Maintenance Agreement KPLC Power Purchase Agreement, Direct Agreement & Sub Lease Fuel Supplier Fuel Supply Agreement Rabai Power Ltd. Aldwych Const. Kenya Construction Period Management Agreement BWSC EPC Contract (onshore and offshore) a Spare Parts & Technical Services Agt.

Operations and Maintenance Agreement KPLC Power Purchase Agreement, Direct Agreement & Sub Lease Fuel

13 Sector and Customer Information Sector Overview Ministry of Energy Policy Licence Policy Direction Recommend Licence Issue Energy Regulatory Commission Ken Gen Imports KPLC Retail Customers IPPs Enforce Licence Requirements PPA & Bulk Tariff Approval Retail Tariff Approval Customer Complaints R E G U L A T I O N

Ken Gen Imports KPLC Retail Customers IPPs Enforce Licence Requirements PPA &

14 Rabai Power Holdings Limited Aldwych International Ltd. A joint venture of Burmeister & Wain Scandinavian Contractors A/S Joint Developers Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. and The Industrialization Fund for Developing Counties 84,600,000 Project Financing facility for Rabai Power Limited Emerging Africa Infrastructure Fund Lead Arrangers Deutsche Investitions- und Entwicklungsgesellschaft mbh Promotion et Participation pour la Coopération économique Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. Bank of New York Mellon Facility Agent And Security Trustee Barclays Kenya Limited Kenyan Security Trustee Allen & Overy LLP Lenders Legal Advisor Trinity International LLP Sponsor Legal Advisor

and The Industrialization Fund for Developing Counties 84,600,000 Project Financing facility for Rabai Power Limited Emerging Africa Infrastructure Fund Lead Arrangers Deutsche

PRESS RELEASE FOR IMMEDIATE RELEASE

PRESS RELEASE FOR IMMEDIATE RELEASE Bujagali Wins Africa Power Deal of the Year for 2007 Kampala, Uganda, 11 March 2008. Bujagali Energy Limited (BEL) today announced that its Bujagali Hydropower Project