1. FINANCING WIND POWER PROJECTS

2. Project Financing is the financing of long term projects based upon a complex financial structure where project debt and equity are used to finance the project rather than the balance sheet of the project sponsors. Corporate Financing is the financing where past financial statements of borrower, especially balance sheet, is evaluated for the repayment of the loan.

3. Environmental Aspects Design/Construction/Commissioning Inputs Performance O&M and Staffing Financing Political & Regulatory Environment Equipment/Technology Technology Supplier Pot. Contractual Frustration Quality of planning by developer Compliance with: Current local regulations Equator Principles Changes in regulations and public perception Likely ramp up of production Performance during steady state of operation for the production of electricity Life span of assets Production Unit Sale of Production Demand Duration of PPA contract Fixed price vs Revisable Price Payment conditions Credit worthiness of purchaser Depending on the nature (wind, solar, hydro) Resulting from human activity (by product of other production or specific production) Health & Safety Support from Suppliers Contractual Agreements Availability of Equipments Quality of organisational chart CVs of key management personnel Training programmes Lenders’ Perspectives on a Project

4. Financing:  Structure of debt financing required o Currencies, amounts maturities o Hedging (interest rates, biofuel contracts)  Credit enhancement mechanisms o Covenants on debt, including minimum debt service coverage ratios o Contingency funding for delay in start up o Possibility to use free cash flows above debt service to repay debt in advance, rather than to distribute dividends o Guarantee of part of all of debt by project developer or other entity, backed by assets of cash flows  Sources of financing available based on appetite, regulations, timing of transaction.*** o Local banks o International banks with project finance desks and knowledge of the renewable energy sector o Export agencies which guarantee up to 85% of the debt used to buy equipment and/or services from their home country o Dedicated funds *** Especially important for large projects, since the bank initially providing the funding will then syndicate most of the debt to retain only partial exposure

5. Lenders’ Perspectives on a Project Political & Regulatory Environment:  Political Stability  Minimization of Contingencies  Transparency of Regulatory Environment  Reliable Long Term Tariff  Governmental Obligations and Local Laws

6. Project Finance Steps for Wind Power Projects Wind Consultancy(Reliability of Wind Data) Equipment/Technology Consultancy Environmental Consultancy Insurance Consultancy Local Legal Consultancy International Legal Consultancy Financial Consultancy

7. Main Contractor Purchaser Regulator Project Facilitator Government O&M Contractor EPC Contractor Guarantor Technology Supplier Project Company Project Finance Scheme

8. ZORLU ENERGY PAKISTAN 49.5 MW WIND FARM PROJECT

9. 9 Pakistan Power Sector – Total Installed Capacity

10. 10 Peak Demand Projection 2007–2030

11. First Wind Power Project in Pakistan. Located at District Thatta, Jhimphir (app. 100 km east of Karachi) 49,5 MW capacity consisting of 34 WTGs. Indigenous Electricity Generation 125 Mio USD expected costs. Zorlu Energy Pakistan Wind Power Project

12. LOI received Land allocated to ZORLU Pre- and Final Feasibility study completed Soil study completed Seismic study completed EIA study completed Transportation study completed Grid study completed Generation License received Tariff agreed Construction on going 60,000 HOUSHOLS IN PAKISTAN WILL BE USING ENERGY OF THE WIND BLOWING IN PAKISTAN TOTALY : INDIGENEOUS RENEWABLE GREEN ProjectStatus Project Status

13. Why Invest in Pakistan in Wind Farm ?  Because Pakistan !  No Hostile Environment for Foreign Investors  Friendly and Efficient Government Bureaucracy  Independent Regulator  Attractive Demand and Supply Scenarios  Level of Commitment for Higher Use of Renewable Energy  Government Strategy to Utilize Indigineous Resources  Available Infrastructure

14. The system AEDB, NEPRA and WAPDA designed is very suitable for project financing... InvestorAEDBWAPDANEPRALender Regulatory Policy-maker Tariff Structure LoanPower Purchase Agreement Government of Pakistan Regulated Market With State Control

15. -Non-escalable Energy Component -Debt Service: the principal and interest payments expressed in PKR of the part of total project debt libelled in foreign currency. -Return on Equity: the dividend expected to be distributed each year of the project before payment of the withholding tax, in order to achieve a 15% IRR over the life of the project post withholding tax -Escalable Energy Component -O&M Costs – Local: the amount of cash outflows linked to operations and maintenance taking place directly in PKR and expected to take place -O&M Costs – Foreign: the amount of cash outflows linked to operations and maintenance expressed in PKR but effectively taking place in foreign currency and expected to take place -Insurance Tariff Structure

16. Possible Concerns for Investors  In General:  Regional Risks  Political Unstability  State of Unrest/Violence in The Country  Economic Problems  In Particular:  Land Ownership Claims  Possible Delays in Due Payments by NTDC  Security  Timely Grid Connection  Reliable Wind Data  Unrealistic Loan Conditions Accepted in The Tariff

17. Complications in Financing the Project Being the first wind power project in Pakistan Political risks in Pakistan Increase in perceived riskiness of Pakistani debt on financial markets Obligatory interest rate(LIBOR+3%) for financing the Project

18. Thank you very much for your kind attention...