1. 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

2. 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).

3.  Incorporated from 10 operating utilities in 2000.  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

4. Scope of Operations

5.  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

6. DATA No of customer ( Million) Peak load (MW) Available generation (MW) Transmis sion (KM) Energy (GWH) 20003.622000 30000114000 20095.7430004500047000191000 Increase2.121000230001700077000 Growth (%) 58%95%104%57%67% GROWTH (2000 – 2009)

7. ACTIVITIESNo of Projects COST ( billion $) GENERATION 17417.3 TRANSMISSION 2919.3 DISTRIBUTION 1762.1 TOTALS 64128.7 projects Under Execution

8. Load forecast (gwatts)

9. No OF CUSTOMERS (millions) (millions)

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

11. 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.

12. 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.

15. 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.

16. 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.

17. 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. 18 IPP FUTURE OPPORTUNITIES NAME OF IPP PROJECT CAPACITY (GW) PRIVATE SECTOR SHARE % PROJECT COMPLETION QURAYYAH2802014 DHEBA1.6802015 SHUQAIQ1.6802015 ALOGAIR2.4802016 JEDDAH SOUTH 2.4802017 RAS ALZOUR2.4802019 (INVESTMENTS OF $20B) TO BUILD 12 GW

19. SAUDI NATIONAL GRID by 2018

22. 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.

23.  The growth of electrical energy demand in Saudi Arabia will continue 6-7%.  Power projects needs 80-90 billion US$ as capital investments for the next 10 years.  Private investors have the opportunity to take 30- 40% 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