1. London 10th december 2014 1 UK-Algeria – Trade & Investment Forum 2014 Electricity & Gas distribution Prospects in Algeria By Mr Noureddine Boutarfa Chairman & CEO SONELGAZ

2. London 10th december 2014 2 Plan I.Presentation of Sonelgaz Groupe II.Development prospects for the periode 2014-2024 III.Industrial Development Strategy IV.Partnership V.Conclusion

3. London 10th december 2014 3 I.Presentation of Sonelgaz Groupe

4. London 10th december 2014 4 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.

5. London 10th december 2014 5 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

6. London 10th december 2014 6 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%

7. London 10th december 2014 7 I. Electricity networks in Algeria (4/7) Isolated Networks Interconnected Network Adrar Region Network Electrification rate : 99%

8. London 10th december 2014 8 I. Electricity Transmission Network (5/7)

9. London 10th december 2014 9 I. The 400 kV Network (6/7)

10. London 10th december 2014 10 I. Algerian Gas Transport Network (7/7) Penetration rate of Natural gas 51%

11. London 10th december 2014 11 II. Development Prospects over the periode 2014-2024

12. London 10th december 2014 12 II. Evolution of the energy infrastructures during the periode 1999-2013 and 2024 prospects (1/5) Parameters 199920132024 1 Installed capacity in Conventional Power Generation (MW) 5 55515 05934 125 2 Installed capacity in Renewable (MW) 2282533 285 3 Electricity Transmission Network (Km)13 55525 40051 000 4 Power Substations [400, 220 & 60 KV] (Unit)147 283814 5 Gas transport Network (Km)4 30315 93328 750 6 Electricity Distribution Network (Km)185 878279 651470 200 7 Gas Distribution Network (Km)15 38469 135162 750 8 Number of Electricity Customers (thousands)4 389 7 748 11 918 9 Number of Gas Customers (thousands)1 332 3 967 8 092 The national energy supply system has undergone tremendous growth driven by strong demand for electricity and natural gas

13. London 10th december 2014 13 II. Infrastructure needs in the period 2014 – 2024 (2/5) Electricity Generation :  25 240 MW in conventional technology;  3 260 MW in Renewable. Electricity distribution grid :  205 400 km of lines;  80 940 substations, and;  2 733 200 connections. Gas distribution network :  104 270 km of pipelines, and;  4 070 550 connections.

14. London 10th december 2014 14 II. Renewable capacity dedicated for the domestic Market : 12 000 MW (3/5)  12000 MW of Renewable capacity to be installed over the period 2011 - 2030 as follow :  2011-2024 : 3 880 MW  2025-2030 : 8 120 MW

15. London 10th december 2014 15 II. Installed capacity dedicated for the domestic Market (4/5) TechnologyUnit20242030 CSPMW3505 700 WindMW4302 000 PVMW3 1004 300 TotalMW3 88012 000

16. London 10th december 2014 16 II. Renewable Capacity dedicated for exportation : 10 000 MW (5/5)  10 000 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.

17. London 10th december 2014 17 III. Industrial Development Strategy

18. London 10th december 2014 18 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.

19. London 10th december 2014 19 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,

20. London 10th december 2014 20 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).

21. London 10th december 2014 21 IV. Partnerships

22. London 10th december 2014 22 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.

23. London 10th december 2014 23 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.

24. London 10th december 2014 24 IV. Partnerships in progress (3/7)  Building a factory to manufacture PV panels of 200 - 400 MWc /year with commissioning by 2016.

25. London 10th december 2014 25 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.

26. London 10th december 2014 26 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.

27. London 10th december 2014 27 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.

28. London 10th december 2014 28 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.

29. London 10th december 2014 29 V. Conclusion

30. London 10th december 2014 30 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.

31. London 10th december 2014 31 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.

32. London 10th december 2014 32 Thank you for your attention www.sonelgaz.dz