Public-Private Partnership (PPP) Alstom Transport’s experience Philippe Pegorier, Martin Vaujour 03/06/2011

Agenda ALSTOM GROUP ALSTOM TRANSPORT TURNKEY SYSTEMS PPP – AT’s EXPERIENCE CONCLUSION

Alstom

Three main activities 96 000 employees in 70 countries Power sector Equipment & services for power generation Grid sector Equipment & services for power transmission Transport sector Equipment & services for rail transport Alstom is a world leader in rail transport and energy infrastructures. The Company is organised in three Sectors: Transport for rail transport, and Power for power generation and Alstom Grid for electricity transmission. On June 8, 2010, Alstom and Schneider Electric finalised the acquisition of the transmission and distribution business of Areva. The transmission activity, named Alstom Grid, became the group’s third sector, alongside the Power and Transport sectors. Alstom Grid supplies all the equipment and systems for transmitting electric current and managing high-voltage electricity grids (from 52 kV to 800 kV in direct current and 1200 kV in alternating current). The Company is present in more than 70 countries and has a global workforce of 96, 000 people Alstom is chaired by Patrick Kron.  

Three main activities 3.5 €bn 13.9 €bn Transport 5.8 €bn Grid Power (2009) 19% 30% Power 13.9 €bn 51% Total sales 2009/10 : €23 bn* * Proforma figures

Alstom Transport

A worldwide presence 26 000 employees in more than 60 countries North Europe 5 800 22,1% France 8800 33,6% CEI 20 0,1% North America 1 100 4,2% Latin America 2 500 9,5% South Europe 6700 25,5% Asia Pacific 1 300 5%

Alstom Transport, the only railway multi-specialist The only manufacturer in the world to master all businesses of rail sector The most complete range of systems, equipements and services: - Rolling stock - Infrastructures - Signalling - Services - Turnkey systems N°1 in high and very high speed N°2 in urban transport (tramways, metros) N°2 in signaling N°2 in maintenance Alstom Transport’s differentiator on the market is its multi-specialist positionning. From Rolling Stock to signalling equipment & infrastructure and maintenance, our strength – and our added value in comparison to our competitors - lies in providing our customers with global solutions designed after listening to their requirements.

A wide range of products and services Rolling stock : from trams to very high speed… DISTANCE Locomotives Very high speed Regional Suburban Tram-Train Metro High speed Alstom Transport offers a range of rolling stock that combines technology, reliability, styling and comfort, using standardised components and paying particular attention to design. With its comprehensive range of high speed (Pendolino) and very high speed trains (AGV / Duplex) Alstom Transport is the market leader. Alstom Transport places comfort and travellers’ accessibility at the heart of trains’ design. Split of Rolling Stock Sales by product (2009-2010) Very high speed : 16% Regional* : 40% Tramways : 6% Metros : 32% Locomotives : 6% * including X'Trapolis, Coradia, Pendolino SPEED Tram

A wide range of products and services Infrastructure, signalling, services and maintenance SIGNALLING SERVICES AND MAINTENANCE Full Maintenance Management Spare parts management Renovation Traintracer INFRASTRUCTURE Track laying Electrification Electric power supply Electromechanical equipment Atlas Revolution in interoperable drive systems Urbalis Optimal and efficient monitoring of complex urban transport systems Infrastructures Alstom Transport proposes a complete range of sustainable solutions for track laying, electrification and electric power supply for lines, and the supply of electromechanical equipment for installation alongside tracks, in stations and in depots. Alstom Transport supplies workshops, the necessary equipment and a qualified workforce. Information Systems At the cutting edge of information solutions, Alstom Transport provides operators with the means to guarantee entirely safe and fluid transport of passengers or goods, thereby optimising productivity for networks. Services Alstom offers a range of customised services to public or private rail operators. The objective is to guarantee global, safe and optimised management of rolling stock – whether it is manufactured by Alstom or not – and equipment throughout its operating life cycle: maintenance, renovation, spare parts management, technical support and assistance… Turnkey systems Faced by projects’ growing complexity, operators often seek global answers to their needs. Alstom Transport combines all its transversal know-how as a multi-specialist manufacturer to manage complete rail systems: rolling stock, signalling, infrastructure, services…

Turnkey systems

Optimised turnkey engineering phase Alstom has a large system engineering team which guarantees Co-ordinated turnkey design team integrating each subsystem Selection of products and solutions to optimize the Life Cycle Costs Sophisticated RAMS (Reliability Availability Maintainability Safety) simulation team and tools Planning optimisation reducing construction time Our large experience allows costs optimisation Better logistics management Mutualisation of resources Optimization of site organisation

Public-Private Partnership AT’s experience in railway projects

PPP & Concession : General Definition A PPP & Concession’s Project is a project which includes through a single contract : the construction of all or part of a railway transport system the financing of all or part of the construction by the private sector the operation and/or maintenance of the railway transport system the revenue, taking into account (part of) the traffic risk and/or performance risk (availability, reliability , …)

PPP & Concession: Alstom Definition A  PPP or Concession’s Project  (BOT, BOO, DBFOM, DBFM…) is a project where Alstom : has its usual role of contractor / supplier / maintainer + acts as shareholder of a Special Purpose Company (SPC) mobilizes private fundings (equity, limited recourse financing) to implement the Project and secure its scope of works

Substitute Capex by Opex PPP typical structure & benefits PPP contractual scheme : Main benefits for the customer : Conceding Authority Users Risk transfer Capital subsidy PPP contract Operating subsidies Budget control Loan contract Lenders Special Purpose Company Shareholders Debt service On-time delivery Engineering, Procurement and Construction (EPC) contract (turnkey) O&M contract Substitute Capex by Opex Consortium Construction Consortium (Exploitation) & Maintenance

Example: Three possible schemes for a High Speed PPP project: Investment scope Operational scope Civil works Electro-mecanic Rolling Stock Construction Operation Maintenance Benefits Drawbacks Examples 1/ Global project setting up X No interface to deal with Private sector totally responsible Well-adapted to tramway projects Financial flow too important for high speed projects TAV Brazil 2/ PPP for infrastructure only - Facilitating multiple operation Private sector totally responsible of the line Possible segmentation into portions Lead to hold a precise preliminary referential for operation by third operators Not much adapted to tramway or metro RFF France California Spain 3/ PPP for superstructure only (or for selected portions) Multiple operation facilitated Direct control on civil works by the customer Private sector committment to the system Possible segmentation into portions or trades Reducing risk transfer (interfaces) Not much adapated to tramway or metro HSL Zuid Nthlds

Unique expertise as a railway system integrator: Why is Alstom involved in a PPP ? Unique expertise as a railway system integrator: Life cycle cost: long-term performance maintening from the conception phase to the operational phase Industrial Alstom share in a PPP, up to: 20% for high speed, 30% for metros, 80% for tramways Being minority shareholder in the SPC, Alstom fulfils its global committment towards the Customer and the shareholders Mid-term & long-term balance between customers’ and Alstom’s interests

What each one brings What each one gets PPP projects: Private sector Risk sharing Turnkey solution On-time delivery commitment Better budget control PPP project Private sector Passengers Public sector Design & construction Contract Financing Contracts Dividends Operation & Maintenance Contract Design & construction Grounds Operation & maintenance Laws context Subsidies Financing Banks Rights Capital Service Quality Farebox Income

RISK SHARING MATRIX Alstom views – Subject to negotiation Land acquisition Design & Construction Modification of standards and norms Operation and maintenance Exchange rate Ticket price Inflation Change orders Level of service Traffic Interest rate Technology New competition modes Political risks Conceding Concessionaire

PPP: Major Success Factors Sustained political support to the project Adequacy of legal concession frame with international standards Realistic assessment of the investment cost and/or of the revenues of the passenger traffic at the ‘feasibility’ stage Past experience of the country for such projects The conceding authority must have the financial capacity to support the project Well-balanced risk sharing between the conceding authority and the concessionaire Strong committed , experienced, international and local partners for construction, operation, and financing Limited number of partners at Concession and EPC levels

Alstom’s References Arlanda Reims Barcelona Arlanda Airport Link - Sweden 1994 45-year concession; 40 km line/7 EMU trains Barcelona LRT Ph 1- Spain 2000 28-year concession; 16km/19 Citadis LRV’s Barcelona LRT Ph 2 - Spain 2003 25-year concession; 14km/18 Citadis LRV’s Jerusalem LRT Line 1- Israel 2004 30-year concession; 14km/46 Citadis LRV’s Florence LRT Lines 2&3 – Italy 2005 25-year concession; infrastructure Milan metro Line 5 – Italy 2006 32-year concession; infrastructure Milan metro Line 5 extension – Italy 2010 32-year concession; infrastructure Reims LRT Line 1 – France 2006 30-year concession; 11km/18 Citadis LRV’s Nottingham Tramway Phase 2 - UK 2011 23 years concession, turnkey/22 Citadis LRVs Arlanda Reims Barcelona

Conclusion

General Key Messages The State have to create upstream adequate political and legal frame A too complex environment does not attract investors A direct investment from public authority is a must Allow use of Export Credit from Supplier to leverage additional support Part of the payment (including revenues) to be considered in strong currency (or to provide Forex guarantees) The risk matrix should be discuss locally and take into consideration the local environment as well

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