London 10th december UK-Algeria – Trade & Investment Forum 2014 Electricity & Gas distribution Prospects in Algeria By Mr Noureddine Boutarfa Chairman & CEO SONELGAZ

London 10th december Plan I.Presentation of Sonelgaz Groupe II.Development prospects for the periode III.Industrial Development Strategy IV.Partnership V.Conclusion

London 10th december I.Presentation of Sonelgaz Groupe

London 10th december I. Presentation of Sonelgaz Groupe (1/7)  Sonelgaz, historical operator in the field of generation, transmission and distribution of power as well as transport and distribution of gas by pipelines, has been restructured from a vertically integrated company to a holding driving an industrial group consisting of several companies and various trades.  These companies undertake all operational activities.  The holding ensures the steering through the definition and implementation of the strategy of development of its subsidiaries and the activities that are devolved upon them.

London 10th december I. Main fields of activity of the Sonelgaz Groupe companies (2/7) Research, Engineering, Construction and Services Generation, transmission and distribution of electricity Transport and distribution of gas by pipeline Equipment manufacturing Development of electricity and gas works

London 10th december I. Subsidiaries by activities and equity participations of Sonelgaz (3/7) Energy Indusrial Activities 08 J-S Company - GRTE - GRTG - OS - SKB - SKD - SPE - SKT - SKTM Indusrial Activities & Construction 12 J-S Company - AMC - CEEG - ETTERKIB - INERGA - KANAGHAZ - KAHRAKIB - KAHRIF - MEI - RE - SOPIEG - GE.AT - HYENCO Electricity-Gas Distribution & Associated Technologies 08 J-S Company - SDA - SDC - SDE - SDO - CREDEG - ELIT - IFEG - SMT Services 11 J-S Company - CAMEG - FOSC - HMP - MPV - SAT INFO - SKMK - SWAT - SOR - SAT - SAH - TRANSMEX Participations 10 J-S Company - SKS - SKH - AEC - NEAL - AETC - ALGESCO - AOMc - BAOSEM - TMBT - SAFIR 39 S ≥ 50%10 S ≤ 50%

London 10th december I. Electricity networks in Algeria (4/7) Isolated Networks Interconnected Network Adrar Region Network Electrification rate : 99%

London 10th december I. Electricity Transmission Network (5/7)

London 10th december I. The 400 kV Network (6/7)

London 10th december I. Algerian Gas Transport Network (7/7) Penetration rate of Natural gas 51%

London 10th december II. Development Prospects over the periode

London 10th december II. Evolution of the energy infrastructures during the periode and 2024 prospects (1/5) Parameters Installed capacity in Conventional Power Generation (MW) Installed capacity in Renewable (MW) Electricity Transmission Network (Km) Power Substations [400, 220 & 60 KV] (Unit) Gas transport Network (Km) Electricity Distribution Network (Km) Gas Distribution Network (Km) Number of Electricity Customers (thousands) Number of Gas Customers (thousands) The national energy supply system has undergone tremendous growth driven by strong demand for electricity and natural gas

London 10th december II. Infrastructure needs in the period 2014 – 2024 (2/5) Electricity Generation :  MW in conventional technology;  MW in Renewable. Electricity distribution grid :  km of lines;  substations, and;  connections. Gas distribution network :  km of pipelines, and;  connections.

London 10th december II. Renewable capacity dedicated for the domestic Market : MW (3/5)  MW of Renewable capacity to be installed over the period as follow :  : MW  : MW

London 10th december II. Installed capacity dedicated for the domestic Market (4/5) TechnologyUnit CSPMW WindMW PVMW TotalMW

London 10th december II. Renewable Capacity dedicated for exportation : MW (5/5)  MW could be exported under reserve :  Access to the European market for the electricity generated in Algeria;  Conditions to ensure the required investements and a sufficient profitability.

London 10th december III. Industrial Development Strategy

London 10th december III. Industrial Development Strategy (1/3)  Strategy: being part of a comprehensive approach to meet local energy needs.  Principle : Localize in Algeria the manufacture of capital goods.  Objective : To build an energy industrial system integrating the whole chain of manufacturing equipment, construction and maintenance services.

London 10th december III. Industrial Development Strategy (2/3)  Concrete actions :  Development of a national Engineering and building partnership in retail engineering;  Introduction of the realization of energy projects in splitted batches,  Resort to national capacities for research, manufacturing and construction,  Building partnerships for the construction and operation of manufacturing facilities for RE equipments in order to satisfy the domestic market and regional markets,

London 10th december III. Industrial Development Strategy (3/3)  Concrete actions (continued) :  Introduction of training focused on new jobs,  Mobilization of national capacities for research and development,  Development of Research to support the manufacturing industries by promoting national and international partnerships by bringing together the different stakeholders (researchers, industrial and technologies operators).

London 10th december IV. Partnerships

London 10th december IV. Finalized Partnerships (1/7)  Creation with the partnership of an Engineering, Procurement and Construction Company (HYENCO) able to realize :  Conventional Power Plant, Steam Turbines, Gas Turbines and Combined Cycle  CSP, Wind and PV Plants.

London 10th december IV. Finalized Partnerships (2/7)  Creation with the partnership of a company for Power plant equipments manufacturing (GE.AT) : Gas Turbine unit between 100 and 250 MW, Steam turbine unit ranging 50 to 250 MW, Alternators, Systems of Control command.  being currently created in partnership aiming the manufacture of : Recovery boilers, High-voltage Transformers.

London 10th december IV. Partnerships in progress (3/7)  Building a factory to manufacture PV panels of MWc /year with commissioning by 2016.

London 10th december IV. Wished Partnerships (4/7)  Training in the areas of management, science and technology:  Adopting a strategy capable of insuring the transfer of knowledge and expertise in the areas of interest of the Group Companies.  Creating a renowned Management School offering classes in English.

London 10th december IV. Wished Partnerships (5/7)  The Fabrication of silicon in Algeria which is essential to mastering upstream risk for PV industry based on silicon.  Construction of a manufacturing factory for the CSP equipments :  Mirrors,  Storage equipments,  Power Block.

London 10th december IV. Wished Partnerships (6/7)  Construction of a manufacturing factory for Wind equipments.  Wind turbine masts, rotors, nacelles…  Set up a certification center for renewables equipments.

London 10th december IV. Other fields of Partnerships (7/7)  Emergence of local manufacturing industries supported by national companies associated or not with foreign partners for :  Transformers for Medium and low voltages,  Cables for medium and Low voltage,  Electric switchboards High and medium voltage,  Special cables,  Spare parts.

London 10th december V. Conclusion

London 10th december V. Conclusion (1/2)  Algeria puts Industry at the heart of its energy and economic policies.  Two major objectives are to achieve :  Technology expertise,  The establishment of a local manufacturing Industry of equipements.

London 10th december V. Conclusion (2/2)  This strategy should allow local manufacturing of:  Equipments for Generation, Transport and Distribution of electricity activities.  Services in maintenance of gas Transport pipelines. The development of a partnership is whished to achieve these objectives.

London 10th december Thank you for your attention