1. 1 The new EU energy policy and EBRD’s priorities Sofia, 24 February 2009 Milko Kovachev Senior Adviser, Energy and Natural Resources

2. 2 A network of 33 offices in 30 countries EBRD: Regional Leader

3. 3 EBRD: Committed and Growing AAA-rated international financial institution founded in 1991, owned by 61 national and two supranational shareholders Asset base: over 2,000 transactions worth €37 bn signed through 2007 Capital base: €20 bn dedicated exclusively to CEE and FSU Special mandate: facilitate the transition to market economies € billion

4. 4 EBRD: Foundations of Operations Apply sound banking principles to all projects – We do not subsidize Advance the transition to a full market economy – Priority to promote private sector involvement and market expansion Support, but not replace, private investor: additionality – Act as a catalyst for higher and riskier involvement of financiers Achieve environmentally sound and sustainable development

5. 5 EBRD: Leveraging commercial finance Catalyst for commercial investment: Every €1 invested or lent by the EBRD mobilises €3.1 from other sources Equity: by investing with majority sponsor we reduce the equity burden and add value through partnership Debt syndication: The EBRD can syndicate all or part of the senior debt under A/B structure Debt co-financing: The EBRD will work with or alongside other commercial banks as part of the debt package

6. 6 Primary Energy sector Objectives Support sector reforms that enable energy sectors to function according to market principles (e.g., competition, market liberalization, private ownership) Strengthen frameworks for regionalisation (trans-border transmission lines, energy trading) Prioritise environmental, energy efficiency and renewable energy investments

7. 7 €3.3 bn EBRD financing to power and energy utilities projects with €15.2 bn total value Privatisations: Made key investments in power and gas privatisations in Bulgaria, Moldova, Poland, Romania and Slovakia IPPs are a key focus: Maritza East I, II and III, Pak, Belchatow, Turceni Renewables* represent 8% of existing portfolio, including EnerCap and St. Nikola wind farm Russia: First IFI to participate in equity of newly unbundled Gencos, supporting reputable strategic investors (OGK-5, TGK-9) Financing the power sector Source: EBRD data, as of November 2008 100% = € 3.3 billion Power and Energy Utilities Financing 1995-2008 Regional coverage * Representing 3% of total PEU financing in 1995-2008

8. 8 Benefits of working with the Power team Flexible deal structure Debt finance to both public and private sector Syndication under preferred creditor status Catalyst to access additional debt Strong, internationally recognized partner with long term perspective Mitigation of political and regulatory risks Policy dialogue with Government and Regulators Grant-funded technical assistance Finance and operations monitoring Support of strategic investors Perception of quality investment Sector expertise through Board of Directors Good corporate governance Catalyst to access additional equity Positioning as neutral party Shareholder’s Value EBRD value-added Equity Financing LT Debt Financing Shareholder Value - EBRD Value-added Equity Debt

9. 9 Country Specific Value Added Regional expertise means key structuring skills Good relationship with Governments, regulators EBRD positioning as a neutral party Mitigation of political and regulatory risks Access to policy dialogue Strong local presence Catalyst to access additional equity, debt and trade finance Risk sharing through equity participation Flexible deal structures

10. 10 - Albania Rehab (€24mn) - BiH Distribution Reconstruction (€55mn) - FYROM ESM Efficiency (€35mn) Broad and extensive support for SEE Generation Transmission Distribution Technical/ Policy Dialogue Western Balkans Bulgaria Romania Regional - Saint Nikola Wind Farm (€70mn) - Turceni Rehab (€100mn) - E.ON Energie (€11mn) - E.ON Gaz Romania (€33mn) - Vez Svoghe Hydro (€34mn) - NE Discos (€17mn) - Distrigaz Sud (€31mn) - Maritza East 1 (€96mn) - Albania Vlore TPP (€40mn) - Transelectrica (€13mn) - Maritza East 2 (€22mn) - Bulgaria/Macedonia Interconnection (€41mn) - Serbia EPS (€60mn) - Maritza East 3 (€28mn) - NPGC (€33mn) - BiH Power Reconstruction (€68mn) - Serbia EPS Reconstruction (€100mn) - Monitoring of privatisation process of Albanian Disco - CCS transport and storage dialogue - Wind power strategic environmental assessment - Network analysis for wind power integration - Active participant in the ECT process - Creation of Coordinated Auction Office to trade transmission capacity Note: Selected projects after 2000; figures shown are EBRD financing - NEK upgrade (€41mn) - Romania/Hungary Interconnection (€12mn)

11. 11 Supporting Renewables Small hydro: Investor in small hydro assets in Bulgaria, Georgia and Armenia. In addition the Bank is proactively supporting development in the region through developing Strategic Environmental Assessment to support planning for new projects Wind: Financing of a major windfarm in Bulgaria and Poland. Cornerstone investors in a €95 mn wind energy focused fund, Enercap, with projects across Central Europe. Have mandates to finance wind projects in Poland, Mongolia and the Baltics Geothermal: Have invested in a pioneering large scale geothermal plant in eastern Russia Biomass: Currently reviewing pipeline opportunities  Financing to 5 projects since 2006 representing 8% of EBRD’s existing portfolio* Study in Russia on RE support Study in Ukraine on tariffs for renewables  Policy Dialogue * Representing 3% of total PEU financing in 1995-2008

12. EBRD SUSTAINABLE ENERGY INITIATIVE (SEI) The Sustainable Energy Initiative (SEI) responds to the specific needs of the energy transition in the EBRD countries of operations, as well as to the call of the G8 at the 2005 Gleneagles Summit for the IFIs to scale-up climate change mitigation investment. SEI was launched in 2006 with the objective to: –double investments in sustainable energy to €1.5 billion in 2006-08 within a total project volume of €5 billion; –mobilize €100 million for technical assistance and grants to support its investment activity; –achieve diversification across SEI sectoral areas; –ensure appropriate geographic distribution of SEI activities; and –strengthen the organisation to scale up delivery and “mainstream” energy efficiency in the Bank’s operations.

13. SEI RESULTS 2006 – 2008 EBRD SEI 2006-2008 investments reached € 2.66 billion exceeding the original three-year target by 77% through 166 projects. Total project value reached € 14 billion although not all directly linked to SEI. Reflecting the strategic integration and mainstreaming of energy efficiency and climate change into Bank operations, the share of SEI activity increased from 15% of total EBRD investment in 2006 to close to 20% in 2008. SEI Phase 1 activity is estimated to lead to: 21 million tonnes of annual CO2 emission reductions; and over 8 million toe in annual energy savings. This is equivalent to over three times the total annual energy consumption of Albania.

14. CARBON MARKET DEVELOPMENT The SEI promotes and facilitates the development of the carbon market in the EBRD region of operations complemented by two funds: the Multilateral Carbon Credit Fund (MCCF) a joint EBRD/ EIB initiative ( € 190 million); and the Netherlands Carbon Fund ( € 23 million - fully committed)

15. SEI HIGHLIGHTS SEI has impacted all areas of the Bank ’ s operations: Projects range from a Bulgarian family that insulated and triple-glazed their apartment for € 5,000 to the largest energy saving project to date in the Russian steel industry for € 600 million. SEI instruments have not only saved energy, but allowed companies to become more competitive, e.g. new heating systems improved factory environment allowing the company to get ISO 9001 quality certification and add a third shift per day. SEI is not just focussed on the demand side In the power sector, reduction of energy intensity in generation and distribution has reduced losses and improved service levels. Rehabilitation of district heating has replaced oversized and leaking pipes and equipment, reducing losses and improving services.

16. SEI RESULTS BY SECTORS 2006 - 2008 CATEGORY CUMULATIVE SEI RESULTS 2006-2008 SIGNED (€ MILLION) % SHARE NUMBER OF PROJECTS % SEI 1 INDUSTRIAL ENERGY EFFICIENCY67925%5634% SEI 2 SUSTAINABLE ENERGY CREDIT LINES36214%3119% SEI 3 CLEANER ENERGY PRODUCTION101038%1911% SEI 4 RENEWABLE ENERGY2279%148% SEI 5 MUNICIPAL INFRASTRUCTURE ENERGY EFFICIENCY 38815%4628% TOTAL2665100%166100%

17. 17 EBRD Contact Milko Kovachev Senior Adviser Energy and Natural resources Group, EBRD +44 (0)207 338 6627 kovachem@ebrd.com