GEO STRATEGIC LOCATION 2

3 Deutsche Bank 3 Power Sector has attracted around $14 billion of FDI and 65 power projects were completed in the past two decades owing to lucrative policy incentives offered by GOP

4 Population 188 million 15-39y old youth population39% Net FDI Inflows $3 billion Exports $ 25.2 billion Imports $ 41.7 billion Inward Remittances $ 15.8 billion KSE 100 Index (11 th May, 2013)19,916 (17 th Sep, 2014)30,137 On road to progress: Expected to achieve annual economic growth of over 7% within the next few years (currently over 4%) Youth: One of the biggest youth population in the world. Educated, skilled and trained workforce available KSE: Stock Index was among world’s top 5 performers in 2013 – Over 100% growth in the past 18 months. ECONOMIC INDICATORS ( )

5 INVESTMENT CLIMATE Investor Protection Protection of Economic Reform Act, 1992, protects foreign capital entering in Pakistan Legal cover through the Foreign Private Investment (Promotion and Protection) Act, 1976 Signatory to the New York Convention; Recognition and Enforcement (Arbitration Agreements and Foreign Arbitral Awards) Act, 2011 Investor Friendly Regime 100% foreign ownership allowed Full repatriation of profits, capital gains and dividends allowed Lower Costs Low corporate tax and income tax rates Special economic zones with exemptions on custom duty and taxes on import of capital goods and income tax for a period of ten years Industrial estates with fully developed infrastructure Efficient, skilled, and low-cost labor

6 Exemption from Corporate Income Tax, Sales Tax and Import Tariff. GOP Guarantees obligations of power purchaser and provinces GOP provides protection against Political Force Majeure, change in law and Change in duties & taxes GOP allows 20% ROE for indigenous coal based Power Projects, and 17% ROE on all other Power Projects (IPPs) Tariff adjustments for variation in currency exchange rates and fuel pricesTariff indexation for inflation (US CPI & Pak WPI) Government ensures conversion of Pak Rupee & remittance of foreign exchange for project-related payments INCENTIVES FOR DEVELOPMENT OF POWER PROJECTS

7 Public Sector MW % Hydel 6, Thermal 4, Nuclear Total 12, Public Sector MW % Hydel 6, Thermal 4, Nuclear Total 12, PAKISTAN POWER SECTOR TOTAL INSTALLED CAPACITY Private Sector MW % IPPs 8, KESC 2, Total 11, Private Sector MW % IPPs 8, KESC 2, Total 11,011 47

8 CountryDistressed/Cancelled Projects (% of investment) Malaysia24% Indonesia13% Vietnam8% India3% Pakistan3% POWER SECTOR INVESTMENTS Source: World Bank PPI Database –

Expected International Investment Pipeline in Hydropower IPPs International Investment in Hydropower IPPs (Examples) China International Water and Power Company (China) – 1,100 MW Kohala HPP Korea Water Resource Corporation (K-Water) and Daewoo E&C Co (Korea) – 665 MW Lower Palas Valley HPP China Three Gorges International Corporation (China) – 720 MW Karot HPP K-Water and Daewoo (Korea) – 147 MW Patrind HPP China International Water and Power Company (China) – 1,100 MW Kohala HPP Korea Water Resource Corporation (K-Water) and Daewoo E&C Co (Korea) – 665 MW Lower Palas Valley HPP China Three Gorges International Corporation (China) – 720 MW Karot HPP K-Water and Daewoo (Korea) – 147 MW Patrind HPP New Bong Escape HPP – 84 MW Run of River Project First hydropower IPP commissioned in Mar 2013 Financed by ADB, IDB, IFC, and Proparco (France) Registered CDM project by UNFCCC for carbon credits First hydropower IPP commissioned in Mar 2013 Financed by ADB, IDB, IFC, and Proparco (France) Registered CDM project by UNFCCC for carbon credits

10 International Competitive Bidding will be carried out for the services and supplies with utmost transparency. Procurement of equipment and services of around $8 billion is expected in the project. Government is considering a Special Purpose Investment Vehicle for the development of the project. SPV will also own Ghazi Barotha Hydropower Project, a 1,450MW ROR project commissioned in 2002 with a cost of $2.3 billion generating over 7,000 GWh/annum. International Competitive Bidding will be carried out for the services and supplies with utmost transparency. Procurement of equipment and services of around $8 billion is expected in the project. Government is considering a Special Purpose Investment Vehicle for the development of the project. SPV will also own Ghazi Barotha Hydropower Project, a 1,450MW ROR project commissioned in 2002 with a cost of $2.3 billion generating over 7,000 GWh/annum. DIAMER BASHA DAM PROJECT

11 There is a board based consensus in Pakistan for private sector to undertake all economic projects and government to limit its role to regulation. All small and large-scale power projects are supported by all political and other stakeholders. Pakistan provides some of the highest dollar based rate of return on power projects of at least 17%. Compare this to our bond issue which paid 8.25% Government of Pakistan is open to public-private partnerships for development of large infrastructure projects with international investors There is a board based consensus in Pakistan for private sector to undertake all economic projects and government to limit its role to regulation. All small and large-scale power projects are supported by all political and other stakeholders. Pakistan provides some of the highest dollar based rate of return on power projects of at least 17%. Compare this to our bond issue which paid 8.25% Government of Pakistan is open to public-private partnerships for development of large infrastructure projects with international investors KEY TAKEAWAYS

Pakistan will be among the fastest growing economies in the next few years Power, telecom and manufacturing sectors have attracted significant investments in the past two decades despite the regional situation Political stability, improved security and good governance are putting Pakistan on the track of rapid development and progress Pakistan will be among the fastest growing economies in the next few years Power, telecom and manufacturing sectors have attracted significant investments in the past two decades despite the regional situation Political stability, improved security and good governance are putting Pakistan on the track of rapid development and progress KEY TAKEAWAYS Board of Investment Board of Investment