BUSINESS OPPORUNITIES IN SAUDI POWER SECTOR US-Saudi BUSINESS OPPORTUNITIES FORUM CHICAGO April 28-29, 2010 Ali Albarrak President &C E O Saudi Electricity Company

Electricity Industry in Saudi Arabia  Starts as 100%private ownership and operation.  Late 70`S consolidated into four major power co (SCECO).  The government involved as major shareholder.  Mid 2000 All operating entities merged in one company Saudi Electricity Company (SEC).

 Incorporated from 10 operating utilities in  Largest electric entity in the region in terms of capacity,market capital and shareholder’s equity.  Owns 85% generation and 100% transmission, distribution and retail.  Total assets over 50 billion US$.  Annual revenues 6 Billion US$.  Annual growth 6%.  74% directly owned by the Government. SAUDI ELECTRICITY COMPANY

Scope of Operations

 High growth in demand ( 7- 8%).  Operate in a very supportive environment.  High credit rating (AA~ ).  Invest in productive assets.  Reliable and secured fuel supply.  government support. SEC credit strength

DATA No of customer ( Million) Peak load (MW) Available generation (MW) Transmis sion (KM) Energy (GWH) Increase Growth (%) 58%95%104%57%67% GROWTH (2000 – 2009)

ACTIVITIESNo of Projects COST ( billion $) GENERATION TRANSMISSION DISTRIBUTION TOTALS projects Under Execution

Load forecast (gwatts)

No OF CUSTOMERS (millions) (millions)

Generation Capacity generation capacity installed should meet the expected 7% increase in peak demand and a reserve margin. Generation capacity (GW)

POWER SECTOR CHALLENGES  High annual growth in demand ( will continue 6-7%).  Extremely sharp daily and yearly load curve (air- conditioning).  Replacement of inefficient old generating units.  High capital investment for expansion.  The need for private sector investment.

HOW TO MEET THE CHALLENGES ?  More investment in power generation,T&D.  Encourage the developers for more IPP.  Introduce the smart grid transmission system.  Promote energy conservation and load management.  Invest in renewable energy.

IPP PROGRAM IN SEC  SEC will Continue to encourage private investors to invest in Future Generation projects.  30 – 40 % of Future generation will be IPP(BOO).  SEC partnership will be 10%-50% in the equity.  Long term power purchase agreements (20years) With reasonable return on investment.

WHY IPP?  Providing Financial Option for Highly Capital Intensive Generation Projects.  Helping To Re-Direct Available Funds To T&D (Monopoly Activities)  Reallocation Expenditure From CAPEX To OPEX.  Avoiding Mismatch Between Medium Term Financing and Long Life PP Projects.

SUCCESSFUL IPP ROJECTS Two IPP Projects in process: 1. Rabigh Power Plant (closed financialyJuly last yea) 1200 MW / HFO IPCOD APRIL 2012 Investment US$ 2.4 billions 2. Riyadh Power Plant 11 (financial close next month) 1800 MW / GAS IPCOD APRIL 2013 INVESTMENT US 1.5 billions.

18 IPP FUTURE OPPORTUNITIES NAME OF IPP PROJECT CAPACITY (GW) PRIVATE SECTOR SHARE % PROJECT COMPLETION QURAYYAH DHEBA SHUQAIQ ALOGAIR JEDDAH SOUTH RAS ALZOUR (INVESTMENTS OF $20B) TO BUILD 12 GW

SAUDI NATIONAL GRID by 2018

BUSINESS OPPORTUNITIES  Material and Equipment supply.  As an EPC contractor.  Local manufacturing.  Participate in IPP projects.  Opportunity in consultation and engineering.  Invest in future energy retail.

 The growth of electrical energy demand in Saudi Arabia will continue 6-7%.  Power projects needs billion US$ as capital investments for the next 10 years.  Private investors have the opportunity to take % of the generation projects as a BOO projects.  US companies have the opportunity to take part both in EPC and IPP.  There are oportunities in Consultation, Engineering and Services in power sector. Conclusion