Energy & Climate Change – the BSTDB Experience 6th Annual International Scientific Conference On Energy & Climate Change October 2013

BSTDB At A Glance Headquarters: Thessaloniki, Greece First Operation: November 1999 Employees: 100 Shareholders: 11 countries of the Black Sea Region Authorized Capital: EUR 3.5 billion (doubled in 2008) Cumulative Portfolio: EUR 2.7 billion (257 projects) Active Portfolio: EUR 1.27 billion (106 projects) Credit Ratings: A3 by Moody’s (August 2013) A-/A-2 from S&P (October 2013).The ratings are 5 notches higher that the average rating of the shareholders. BSTDB is the best rated financial institution in the Black Sea region.

Shareholding Structure

Outstanding Operations by Country (at 31/12/2012)

Sectoral Distribution of Projects (Outstanding Operations at 31/12/2012)

Operations by Product Type (Outstanding Portfolio at 31/12/2012)

Energy & Infrastructure Portfolio (at 31/12/2012)

BSTDB: Energy & Infrastructure Primary Type of Transactions: Project Finance Up to 35% Sponsor equity of about 30% and remainder co-financed Corporate Finance Well established Corporates with a strong record of healthy IFRS audited financials All projects must: Have a solid business plan & IFRS statements Pass KYC, Corporate Governance, and Creditworthiness checks of Sponsor / Borrower Pass due diligence checks (market, financial, technical, EHS, legal, etc.)

BSTDB Energy Portfolio (1) BU: Maritza East I Construction of 600MW lignite-fired power plant, owned by AES Participant in EUR 1.1b debt facility BU: Suvorovo Wind Farm Construction of 60MW wind farm, with Spanish sponsor Participant in EUR 62m debt facility RO: Petrom Corporate loan to largest Romanian oil & gas group to finance various components of strategic environmental program Participant in EUR 275m debt facility

BSTDB Energy Portfolio (2) TU: Koprubasi Construction of 74MW Hydro Power Plant Participant in USD 28m debt facility

BSTDB Energy Portfolio (3) UA: Alfa Nafta Finance expansion of gas filling station network USD 36m debt facility UA: Chornomornaftogaz Support development of existing oil & gas reserves on Black Sea USD 21m debt facility UA: Galnaftogaz USD 44m debt facilites UA: Gas Transit Construction of compressor on existing Ananyev-Izmail gas pipeline. Participant in EUR 97m debt facility

BSTDB Experience Energy & Climate Change Conventional Energy European energy demand is increasing What does it mean for BSTDB - projects Conventional Energy Limited number of projects with very long lead times and greater environmental hurdles Renewable Projects Explosion of new projects some with questionable viability We have reviewed numerous projects in BU, GR, RO, RU, TU, UA Energy Efficiency Sometimes and add-on to existing projects

BSTDB Renewable Energy Experience (1) EU and the 20/20/20 Objective By 2020 the EU should produce 20% of energy from renewable sources & 20% more energy efficiency. Support Mechanism: FiT vs. GCs vs. Market Feed in Tarrifs (e.g. BU, GR, UA etc) Green Certificate Schemes (e.g. RO, PL) Market (i.e. TU – min. Tariff for Government offtake) Reality: Price Increases, Demonstrations, Elections, and Uncertainty Demonstrations in BU & RO. Regulatory changes in RO. Need of restructuring by all parties. Size of Differential between Subsidy & Market An important element for bankability

BSTDB Renewable Energy Experience (2) BU: NEK payment delays Need of restructuring by all parties and will affect all. GR: FiT too lucrative to believe Difficult to believe will remain the same after 2012 Debt default and arrears in RES Account. RO: GCs with market mechanism Trying to create GC market with market discipline Recent regulatory changes too much for many to absorb thus creating further uncertainty TU: Minimum price guarantee on spot market.

BSTDB Renewable Energy Experience (3) ‘If tariffs are too good to be true’ ......they definitely won’t last in the long term!

Thank You! Roman Matkiwsky Director, Energy & Infrastructure E: ei@bstdb.org