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Enel Romania: Effective Liberalization for Investors

Enel aims to be the most efficient, market-driven, and quality-focused provider of power and gas in Romania. With a substantial position in the country's energy sector, Enel is ready to invest in generation and contribute to the development of the electricity industry. This article provides an overview of Enel's history, its core investments in Romania, and the outlook for the electricity industry in the country.

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Enel Romania: Effective Liberalization for Investors

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  1. Effective liberalization: an investor's perspectiveMatteo CodazziCountry Manager and CEO ENEL Romania • “Sectorul eniergei electrice” • Bucharest – 2007, 5 June

  2. One of the leading players in Europe Generation capacity (GW) Customers (mn) EBITDA (€bn) (1) (1) EDF 131 EON 40 EDF 14 (1) Eon 54 EDF 40 EON 11 Suez Enel Enel 52 34 8 (1) ()2 RWE RWE Enel 30 7 51 (1) (2) Centrica Endesa Endesa 23 7 48 (1) Endesa GDF RWE 23 5 46 Iberdrola 19 Vattenfall 5 Vattenfall 33 (1) (2) GDF 14 Suez 5 Iberdrola 30 Gas Natural Iberdrola 11 4 CEZ 14 Vattenfall Centrica 11 3 EDP 13 EDP CEZ 10 2 British Energy 12 Enel aims to be the most efficient, market driven, quality focused provider of power and gas, creating value for customers, shareholders and people Source: company reports. Data refer to 2006 unless otherwise stated. FY_05 Include Energy Only 1

  3. Romaniaa core investment in Enel’s Portfolio Substantial Position to Sustain Investments Ready to Invest in Generation Early Entrant inElectricity Distribution & Sales • came at the time of initial setting of the regulatory framework • 2005: acquired majority of Electrica Banat & Electrica Dobrogea • 2006 tender award of Electrica Muntenia Sud • 2.5 million customers, 110.000 km of network, 5.500 employees * • 380 mil euro of investments in Banat and Dobrogea to improve network in the next five years • Bringing new technology (Telecontrol, Digital Meter, etc.) • Renewables • Nuclear • Conversions to coal • Lignite Enel is a long-term industrial partner with a clear investment strategy for Romania * including EMS

  4. History and Development of the Company Monopoly Privatization Liberalization Internationalization 1962-1992 1992-1999 1999-2002 2002-2006 • Nationalization of approximately 1,250 private power companies • Enel established in December 1962 as a state-owned entity with the aim of providing low cost electricity to support the development of the country • Monopoly regime • Transformation into a joint stock company • Bersani Decree(from a highly regulated market to a liberalized one) • Unbundling: creation of separate subsidiary companies and dispatching activities spin-off (GRTN) • IPO (31.74%) • Diversification • Investing in TLC (Wind) • Acquisition of Electra de Viesgo (Spain), several independent gas distributors (Italy) and renewables power plant (North, Central and South America) • Disposal of generation (Elettrogen and Eurogen) and distribution companies • Focus on core business • Divesting of no-core business (Real Estate, TLC) • Organization into Divisions and Business Areas • Disposal of generation (Interpower) and distribution companies • Terna IPO (current share ownership is less than 5%) • IPO of 4th tranche Enel • Push on International expansion with acquisitions in Bulgaria, Romania, Slovakia

  5. 1996 2005 Evolution of main generator’s market share 1996-2005 (data in %) -1 +10 Italy is the Country where the main operator recorded the biggest decrease. In many other Countries the incumbent remains substantially stable or even increases its market share -13 -42 -9 -3 (*) 2004 data (British Energy)

  6. Sixth market in Europe as regional market 2005 Internal demand (TWh) Total internal demand (TWh) Germany Albania 556 6 Macedonia 8 France 482 11 Bosnia UK 343.3 16 A regional market of significant size made up of small and highly interconnected national markets Croatia Italy 330 32 Bulgaria 41 Spain 252 Serbia Romania 52 South-East Europe 221 52 Greece Installed capacity (GW) Installed capacity (GW) Germany 114.9 Albania 1.7 1.4 Macedonia France 116.7 3.7 Bosnia UK 78.5 3.8 Croatia Italy 79.5 8.7 Bulgaria 9.5 Spain Serbia 66.1 12.9 Romania 52 South-East Europe 10 Greece

  7. Romania as a EU CountryElectricity Industry Outlook • Regulatory framework fully in line with EU • Retail competition well on its way, but… • …Wholesale competition to be promoted by bringing liquidity to the market • Investments in Generation required to balance fuel mix, improve cost competitiveness and decrease dependancy on specific fuel sources. • Security of Supply – further develop interconnection and transport capacity • Strategically located on a regional basis Romania has the potential to become an energy hub for the region

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