1. 1 SEC Distribution Field Force Overview Distribution Contractors Day with Saudi Electricity Company October 28 th, 2015

2. 2 The contracting phase consists of two main elements: tendering process and contracting process PrequalificationContractingOperation Key levers 1.1 Ceiling distribution & coverage assurance 2.1 General terms & conditions Key elements 1.2 Bidding mechanism2.2 Performance management 1.3 Pricing mechanism2.3 Others 1. Tendering2. Contract 12

3. 3 Key Changes' 1.Prequalification model: new prequalification process and criteria to assess contractors 2.Coverage model: model will be used on office level to help match supply to demand in all offices across the Kingdom 3.Tendering strategy: will include the number of required contractors in each electricity department and how their ceilings will be defined 1.Pricing mechanism: reference prices along with an improved pricing mechanism are expected to yield more accurate prices 2.Contract ceiling: contract ceiling is distributed based on contractors’ work capacities, prequalification scores and bids 3.Awarding strategy: will determine who gets awarded a contract, and what their ceiling will be. If contractor refuses to sign, his ceiling is given to the next in line contractor (cascading) 1.Guarantees: Bid bonds are required from contractors. These are refundable unless contractor confirms intent to sign contract. Bank guarantees are 5% of contract ceiling. 2.Contract duration: new UR contract term is reduced to 2 years with 1 optional year 3.Payment terms: 50% payment upon completion of work is incorporated to allow better liquidity 4.KPIs: KPIs are integrated in the contract to objectively measure contractor's performance, and linked to SEC’s evaluation sheet 5.Incentives & penalties system: the building blocks for a future incentive & penalty system are put in place TenderingContracting 23 A number of key recommendations are implemented in Phase 1 Prequalification 1

4. 4 PREQUALIFICATION TOOLS CONTRACTING & TENDERING TOOLS 12+ operational tools are developed to facilitate the operationalization of the new process CONTRACTING GUIDE UPDATED CONTRACT CLAUSES KPI EVALUATION PRICE UNIFORMIZATION COVERAGE ANALYSIS MODEL VALUE ALLOCATION & COMMITMENT INSTRUCTIONS FOR BIDDERS WORK ORDER ALLOCATION TOOL

5. 5 TenderingPrequalContracting Bids from last tendering process are entered into model Model applies appropriate inflation factor New price uniformization methodology is applied to bids Final historic reference prices are generated Historic bids entered to be compared against new contract bids An inflation factor based on a detailed contractor cost model is applied to historical bids New contract bids are uniformized on a line item level using a standard deviation methodology Bids are compared to historic reference prices and final prices are calculated Initiation includes developing historic reference prices to gauge contractor bids

6. 6 SEC WILL DETERMINE TOTAL COVERAGE REQUIRED IN EVERY OFFICE …AND DISTRIBUTE IT ACCORDINGLY TO CONTRACTORS Note: This data pertains to the Madinah office only Source: SEC data Demand EXAMPLE OF MADINAH OFFICE Supply x 150% ~ x 40% Contractors’ bids and prequal scores will be used in determining the contract ceilings TenderingPrequalContracting

7. 7 CONTRACT SAFETY REQUIREMENTS ARE UPDATED TO INTEGRATE 5-STAR SYSTEM TenderingPrequalContracting 5 star safety system is now a mandatory system that all contactors must abide by CONTRACT SAFETY REQUIREMENTS ARE UPDATED TO INTEGRATE 5-STAR SYSTEM Safety KPIs are incorporate in contractor performance measurement: - Number of Type 1 (First Aid) Incidents per 1 M work - Number of Type 2,3,4 (Injury, Handicap, Death) Incidents per 1 M work - Percentage of times that work site complied with SEC safety standards 12% of the points in the prequalification scoring pertains to safety record & HSE systems Safety performance averaged over the last three months will be reflected in work allocation through KPIs Contract addendum enforces the 5-star safety system in performance Safety systems will be checked in post-signing stage. Contract is subject to termination if standards are not met Non-compliance on safety requirements for trenches subject contractors to a penalty of 200 SAR

8. 8 Timely Work Performance 1. Percentage of WOs completed within time (count) Total work orders completed on time compared to total number of WOs completed 2. Percentage of WOs completed within time (value) Value of all work orders completed on time compared to all work value performed under URC 5. Average delay on delayed WOs (count) The average number of delayed days for all work orders that have delays 7. Density of contractor workAverage work value for a given contractor's work orders Safety Performance 9. Number of Type 1 (First Aid) Incidents per 1M SAR work Number of type 1 incidents that happen with a given contractor compared to his value of work 10. Number of Type 2,3,4 (Injury, Handicap, Death) Incidents per 1M SAR work Number of type 2, 3, 4 incidents that happen with a given contractor compared to his value of work 12. Percentage of times that work site complied with SEC safety standards Number of contractor site visits that complied with SEC safety standards compared to total number of site visits Collaboration & Responsiveness 18. Average number of days to accept work order Response time of contractor when a work order is issued 20. Number of emergency and maintenance rejected WOs* Number of emergency and maintenance rejected work orders in a given month 21. Number of construction rejected WOs Number of construction rejected work orders in a given month CATEGORYKPIDESCRIPTION TenderingPrequalContracting ~10 KPIs were developed based on current situation & best practices

9. 9 KPI DASHBOARD TO BE GENERATED MONTHLY… … AND AUTOMATICALLY LINKED TO EVALUATION USING WEIGHTS TenderingPrequalContracting New evaluation system will the building block for a future incentive & penalty scheme We have developed a new dashboard for KPIs linked to the standard evaluation form