Contractors HSE Incentive / Deduction Program Version # 1

Contents Introduction Why do we need such a program ? Provision for HSE Incentives & Deductions Key Features of HSE Incentives Key Features of HSE Deductions Key Performance Indicators Query if any

Introduction – Group Members Mr. Adli Abu Amarah KOC Manager, Contracts Group Waleed Yagoub Al-Beaijan KNPC Manager, Operations, SHU Walid Adeeb Al Ghawas KNPC Manager, MOG KNPC Abdulhakeem Ibrahim Alesmail KNPC Manager, Quality Assurance, SHU Khalil Esmaeil KNPC Manager, Project Dept. II Wael Salmeen KPI Manufacturing Advisor Imad Abdulrahman Al-Hadlaq Manager, KPI Marketing Asia

Introduction – HSE Incentive Program HSE Performance Incentive/ Deduction provisions to be included in future Contracts (in-line with international best practices and experience adopted by K-Companies). Basic Principles: A balanced provision for HSE Incentives / Deductions in future Contracts. Incentives based on combination of Proactive Measures and Reactive Monitoring based on Company HSE Systems and Procedures Monitoring at Quarterly basis for Incentive / deduction purposes. Company to make budget provisions for Incentives purposes. Cancellation of whole provision for a Contractor in case of fatality.

Introduction – Objective In view of our Corporate Vision & Mission (achieving highest HSSE standards, social responsibility towards our workforce and people of Kuwait), this Incentive Program is proposed to enhance HSE Performance of Contractors with an objective of avoiding / reducing number of HSE Incidents by; Recognizing and rewarding both Contractor and its Workforce for high standards of HSE performance & Contractor being financially and contractually responsible for poor standards of HSE performance

Introduction – Scope & Applicability All future Contracts involving site activities excluding consultancy services Work locations within Company premises Enhance commitment & positive ownership of HSEMS from Contractors. Encourage Contractors to improve HSE performance Reduce incidents and unacceptable levels of HSE performance Positive impact on the image of the Company. Benefits:

Why do we need it ? The burden of occupational injuries and diseases is significant, for both Company & its Contractors, resulting in losses from early retirements, staff absence and rising insurance premiums. Effective Management of Occupational Health & Safety in a business environment where two or more entities work together requires commitment & cooperation from each of their management.

Why do we need it ? (continued..) Unfortunately, HSE is of minimum interest to Contractors because of; Cost-cutting & profitability policies. HSE Incentive HSE incentive policies are ignorable comparing to their investment on HSE. Investment on HSE Higher impact of accidents on Company’s reputation than the Contractor.

Key Features of HSE Incentives Incentive Calculation: Provisional Sum for HSE Incentives will be the maximum amount that may be earned by the Contractor over the Contract Period.   1% of Tender Check Estimate value (for medium to large Contracts) 2% - 4% of Tender Check Estimate value (for low value Contracts)

Key Features of HSE Incentives (continued..) Criteria for incentives: Leading & Lagging HSE KPIs in distinct Quarterly Assessment Periods Performance will be evaluated on Quarterly Basis between Start of work and completion of work on Site. Base Incentive Amount shall be applicable to each Assessment Period, comprising the Provisional Sum divided by number of Assessment Periods Contractor’s HSE Performance Data (HSE records and statistics on a monthly and cumulative basis including sub-contractors if any) 50% of Incentive shared with Subcontractors /Workforce

Key Features of HSE Deductions Deductions from Contract Price made in following circumstances: - A fatality - Occurrence of frequency rates greater than norm for Industrial Disabling Injuries, Motor Vehicle Accidents or Environmental Incidents - A major HSE violation/incident   Amount of deduction increases with number of incidents Shared with subcontractors (as applicable)

Key Performance Indicators Leading KPIs Threshold Target Stretch Lagging KPIs Leadership Engagement (HSE Site Visits by Contractor / Subcontractor Senior Management)   Lost Time Injury Freq. Rate HSE Training Intensity (Contractor / Subcontractor employees) Total Accident Freq. Rate Near Miss Reporting Frequency Rate No. of Lost Workday Cases Periodic Medical Examination of employees No. of Medical Treatment Cases Timely Closure of HSE Audit Recommendations No. of recordable Fire Incidents Note: - 1 HSE Incentive is applicable only in case of Contractor’s quarterly performance meets the target of all the 10 KPIs. Note: - 2 Base Incentive Amount will NOT BE APPLICABLE in case of Contractor’s quarterly performance on any one KPI has gone ≤ Threshold level. Note: - 3 Provisional Sum of HSE Incentive will not be applicable in case of any fatality.

Q & A   ? ? ? ?

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