Portoroz, Slovenia June 2010

1. IFC in the Energy sector Portoroz, Slovenia June 2010

2. IFC – An Overview

3. IFC is a Member of the World Bank Group MIGA Multilateral Investment and Guarantee Agency IBRD International Bank for Reconstruction and Development IDA International Development Association IFC International Finance Corporation Est. 1945 Est. 1960 Est. 1956 Est. 1988 Role: To promote institutional, legal and regulatory reform Governments of member countries with per capita income between $1,025 and $6,055. - Technical assistance - Loans - Policy Advice To promote institutional, legal and regulatory reform Governments of poorest countries with per capita income of less than $1,025 - Technical assistance - Interest Free Loans - Policy Advice To promote private sector development Private companies in 182 member countries - Equity/Quasi-Equity - Long-term Loans - Risk Management - Advisory Services To reduce political investment risk Foreign investors in member countries - Political Risk Insurance Clients: Products: Shared Mission: To Promote Economic Development and Reduce Poverty

4. IFC – over $80 billion Invested in Emerging Markets since 1956 IFC’s Net Income and Net Worthy IFC FY08 Highlights S&P, Moody’s AAA Portfolio $32.4 billion Committed $11.4 billion Syndicated $3.3 billion # of companies 1,450+ # of countries 85+ # of companies with equity 800+ Net Worth (U.S. $ billions) Net Income (U.S. $ billions) Total committed IFC financing: US$14.7 billion U.S.$ billions

5. IFC Value Added • Long Term Financing • Corporate / Project / Acquisition • Foreign / Local currencies • Equity / Quasi-equity • Carbon Finance Industry knowledge Relationship with / understanding of local authorities • Capital Mobilization • B loan program • Credit enhancement (Partial Credit Gurantee) • Pre-IPO stamp of approval IFC’s Products Expertise in emerging markets Advisory Services

6. IFC in Europe & Central Asia IFC’s Europe & Central Asia (ECA) Region • Albania • Armenia • Azerbaijan • Belarus • Bosnia and Herzegovina • Bulgaria • Croatia • Estonia • Georgia • Kazakhstan • Kyrgyz Republic • Macedonia • Moldova • Montenegro • Romania • Russian Federation • Serbia • Slovak Republic • Tajikistan • Turkey • Turkmenistan • Ukraine • Uzbekistan • IFC’s regional head offices are located in Istanbul and Moscow, with representative offices in other countries • In FY09, IFC invested $ 2.99 billion in Europe and Central Asia, including $ 841 million of syndications.

7. IFC Approach to Financing

8. How We Finance Projects IFC Investment Project Type Up to 35% of project cost for IFC’s account Up to 25% of project cost for IFC’s account Up to 50% of project cost Greenfield, total costless than $50 million Greenfield, total costmore than $50 million Expansion or rehabilitation • Umbrella for participants in IFC’s syndication program: IFC lender of record, immunity from taxation and provisioning requirements. • IFC’s total financing (for its own account) must be less than 25% of total company capitalization, and IFC does not manage or have largest stake.

9. Financial Products - From Equity to Debt • Corporate and JV • Typically 5-15% shareholding (not to exceed 20% of total equity) • Long-term investor, typically 6-8 year holding period • Not just financial investor, adding to shareholder value • Usually no seat on board • Infraventures (early equity investments) Equity • Subordinated loans • Income participating loans • Convertibles • Other hybrid instruments Mezzanine / Quasi Equity • Senior Debt (corporate finance, project finance) • Fixed/floating rates, US$, Euro and local currencies available • Commercial rates, repayment tailored to project/company needs • Long maturities: 8-20 years, appropriate grace periods • Range of security packages suited to project/country • Mobilization of funds from other lenders and investors, through • cofinancings, syndications, underwritings and guarantees Senior Debt & Equivalents

10. Mobilizing Financing - Syndication “B-Loan” Structure Loan Agreement IFC Borrower A + B Loans Participation Agreement B Loan • A loan is for IFC’s own account • B loan is for the account of participant commercial banks • Only one loan agreement signed by the borrower and IFC • IFC is the lender of record for the entire loan (A+B) • Structure allows participants to benefit from IFC privileges and immunities • Better pricing/tenors than otherwise available; preferred creditor access to foreign exchange • IFC Loans exempt from withholding taxes Participants

11. IFC Advisory Services 11

12. IFC Advisory Services in Europe & Central Asia Broad reachSignificant Impact 336 laws/regulations enacted, affecting large populations $482 M in costs saved for businesses and $92 M in funds released through ADR $1 B in leasing market growth Over 27,000 entities reached by AS projects $4.2 B in investment generated Over 900,000 copies of projects manuals, reports, guides, etc 5 M Tons of GHG emissions avoided IEG 2009: “IFC should pursue more programmatic AS interventions”

13. Cross-cutting approach to Climate Change in FY11-15 Corporate Advice Sustainability Infrastructure Access to Finance • Cleaner Production • Renewable Energy • Utility efficiency • Energy Efficiency Finance • Residential EE • Small Hydro • Energy Sector • Waste Sector • Water Sector • Water Footprinting FY11-15 Targets • Avoid at least 15 million tons of lifetime GHG emissions • Generate $1 billion in climate change related investments, including from IFC • Unlock at least $20 billion in private sector participation in areas such as renewable energy, cleaner production, residential energy efficiency, water and waste management 13

14. IFC in the Energy Sector

15. IFC’s Track Record in Power Projects: • 120 projects in 40 emerging markets countries • 21,733 MW private generating capacity • 94 generation projects • 7 transmission projects • 19 distribution companies Financing: • $ 5 billion committed in generation, T & D • $ 2.5 billion raised through syndication • $ 22 billion aggregate project values Renewables: • 19% of generation investments in hydropower • $0.9bn in 30 renewable energy projects (20 hydro, 2 wind, 2 geothermal & 6 other) US$5 billion committed in power US$4 billion committed in generation

16. Addressing Climate Change is one of IFC’s 5 Strategic Prioritities • IFC has committed to expand Renewable Energy and Energy Efficiency investments threefold (3x) to over US$3bn in FY09-11 • IFC is piloting shadow pricing analysis to incorporate climate change considerations into all investments • IFC is developing its response to support its clients in their efforts at adapting to climate change

17. IFC’s Generation Investments are Prioritized Accordingly PROMOTE RENEWABLE GENERATION with direct equity/debt, financial intermediaries, integrated carbon finance, and advisory services. 1. PROMOTE USE OF LESS CARBON INTENSIVE FOSSIL FUELS (gas): finance infrastructure (terminals ,T&D) and efficient generation. 2. IMPROVE EFFICIENCY OF INSTALLED GENERATION BASE 3. 4. PROMOTE HIGH EFFICIENCY USE OF COAL IN GREENFIELD PROJECTS (facilities in top quartile of country’s generation efficiency): • Super Critical, Ultra-Super Critical & IGCC where scale allows • -In all cases, verify proposed technology is most appropriate taking into account fuel availability, economic factors, and GHG considerations PRIORITIZATION FINANCE OIL POWER PLANTS WHERE IT IS THE ONLY OPTION: small countries dependent on import, remote communities, emergency situations 5.

18. And IFC has strong and differing role in supporting each renewable technology Hydro Wind Biomass Solar Geo EE • Established and cost competitive technology • Large hydros have long development time • Dams offer baseload • Potential for local E&S issues • Established technology • Economics very site specific • Variable generation • Dependent on suitable regulatory support • Technology risk varies with fuel type • Long-term access to low cost fuel essential • Opportunities for co-firing and co-generation • PV still expensive but costs declining quickly • CSP w/ storage offers potential for low cost base load • Potential for grid and distributed generation • Established and cost competitive baseload technology • High exploration risks and long lead times to develop steam fields • Profitable opportunities exist in generation, T&D and end use • Opportunities can be diffuse and require identification and aggregation Characteristics • Taking construction risk • Providing long-tenors to match asset life • Innovative bundling for small hydros • Ensuring best practice E&S • Supporting projects in new markets & new regulations • Structuring to support intermittent generation & merchant risk • Supporting supply chain expansion to reduce costs • Structuring fuel supply agreements to enable project finance • Understanding technology risk • Supporting supply chain expansion to reduce costs • Supporting projects in new markets and new regulatory regimes • Coordinating concessionary funding to buy down costs • Early stage equity and concessionary funding to share exploration risk • Sector expertise and innovative structuring to enable project financing • Identifying and incorporating EE opportunities in all projects • Coordinating concessionary support to identify and package opportunities for clients IFC Role & Comp. Adv

19. Bulgaria Poland AES Kavarna Moldova $58,000,000 Loan Financing ESCO Polska UF Moldova $2,000,000 Loan Project Financing Russia $40,000,000 Loan Project Financing Lender August 2008 Ukraine Mosenergo Macedonia Ukraine $20,000,000 Loan Project Financing Lender September 1999 AESKyivOblenegro Lender 2001 and 2009 $30,000,000 Loan Project Financing ESM Macedonia AES RivneEnergo $55,330,000 Loan Project Financing $15,000,000 Loan Project Financing Lender June 1998 Hungary Lender June 2005 ESCO Hungary Lender April 2008 Lender June 2005 $3,000,000 Loan Project Financing Lender November 1999 Balkans Region Turkey Turkey SENCAP ENTEK Enerjisa EUR60,000,000 EquityProviding EUR51,500,000 Loan Financing EUR513,000,000 Loan Financing Mandated Lead Arranger June 2008 Shareholder February 2008 Lender May 1998 Investments in the power sector in Southern and Eastern Europe

20. IFC in Power- today and tomorrow • Istanbul regional hub for investments, Belgrade and Almaty for advisory services- global knowledge combined with stronger presence on the ground • Strong track record in project finance, proven ability to attract commercial bank funding accompanied by appetite to invest in new market segments Track record: • Post-privatization financing of distribution companies in Moldova and Macedonia • Wind projects in Bulgaria and Turkey, with additional mandated deals in the pipeline expected to reach financial close in 2009 • First solar deal in the region expected to reach financial close in 2009 • Lead arranger in a JV between a multinational expanding into a new market and a committed local sponsor

21. IFC Infrastructure Advisory- 2nd pillar • Typically advising the Government on broad sector issues or working on select transactions whose aim is to attract private sector investments with repetition potential • Two transactions in Albania have reached financial close- privatization of the distribution segment (OSSH) and concession of a HPP on the Drin river (Ashta) • Several active mandates (primarily HPP’s) in the energy sector- Macedonia and Montenegro • Improve regulatory framework to enable SHPP market- active mandates in Bosnia, Albania and Macedonia with a primary goal to eliminate legal barriers in the sector and enhance access to finance.

22. Working with IFC

23. Working with IFC • Long term financing partner able to offer a wide array of instruments- equity, mezzanine, debt (including syndication), early-stage venture capital in select markets like Bosnia and Moldova (i.e. “infraventures”) • Ability to finance smaller projects by teaming up with financial institutions (i.e. providing credit lines, funded or un-funded risk sharing facilities) • Established track-record of working with leading multinationals, JV’s, local sponsors, and as of recently state-owned enterprises (“sub-national finance programme”)

24. Thank you! Contact: Aleksandar Mihajlovic Investment Officer Phone: 381.11.3023.750 Mail: amihajlovic@ifc.org