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Power Summit – 2008, Kathmandu

Power Summit – 2008, Kathmandu. Developer’s perspectives; Road Ahead for Hydro Power Project implementation in Nepal. Key Highlights. 1. GMR : Leading Infrastructure Player . 2. Airports. Power. 3. 4. Urban Infrastructure & Highways. 5. Strong Management.

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Power Summit – 2008, Kathmandu

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  1. Power Summit – 2008, Kathmandu Developer’s perspectives; Road Ahead for Hydro Power Project implementation in Nepal

  2. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  3. GMR Group : A Diversified Conglomerate • The GMR Group was established in 1976 and is a listed company on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). • GMR Group has rapidly expanded into infrastructure and other businesses: Energy Airports Roads Infrastructure Agro based Business • GMR Industries Ltd • Sugar plant in Sankili in AP having cane crushing capacity of 5000 • tonnes per day • Constructing an integrated Sugar complex in Haliyal having cane crushing • capacity of 3500 tonnes per day • GMR Varalakshmi Foundation • The Foundation has been working with communities in the quest of • improving lives and livelihoods since 1991 • It focuses on Education, Health, Hygiene and Sanitation, Livelihood and • Empowerment and Community Development Corporate Social Responsibility • The Group was also engaged in the Banking (ING Vysya) & IT (iGate), which were divested with shift in focus to infrastructure.

  4. GMR Infrastructure : India’s Leading Infrastructure Company • Flagship company of the GMR group • Infrastructure Developer, Owner & Operator of Airports, Power, Roads and SEZs • Assets with exclusive concessions ranging from 15-60 Years • Balanced Revenue Model – blend of stable and volume driven growth streams • Current Market capitalization of Rs. 2,900 bn (US$ 7 bn) AIRPORTS • Delhi Airport Development • Hyderabad Airport • Istanbul Airport Modernization ENERGY • Power Projects (10 Nos) • Operational (3 Nos) • Under development (7 Nos) • Gross Capacity of 4097.625 MW HIGHWAYS Key financials • Road Projects (6 Nos; 444 km) • Operational (2 Nos;152 km) • Under construction (4 Nos; 292 km) • FY08: Gross Revenue – Rs. 270 bn; PAT(After MI) – Rs. 21 bn Net Revenue ( FY08) EBITDA ( FY08) URBAN INFRASTRUCTURE • 3,300 acres SEZ in Tamil Nadu • 250 acres Aviation specific SEZ on eastern side of Hyderabad Airport • 250 acres Multiproduct General SEZ on western side of Hyderabad Airport Total = Rs. 67 bn Total = Rs. 229 bn

  5. 1 • Key player in the Indian Infrastructure story: • Over US$ 500 bn investments planned over next five years • PPP model to play significant role in the Infrastructure sector • GMR is well positioned to benefit from this large growth opportunity • Entry in the MSCI India index reinforces the company’s credentials in infrastructure development 2 3 4 5 6 • Broad Based Infrastructure player: • Significant presence across high growth sectors like airports, power and roads • Consistently enjoyed early mover advantage in all the business segments • Strong track record & established Player: • Extensive experience of developing and executing projects • Established a reputation of reliability and timely project completion • Balanced revenue mix: • Healthy mix of fixed and variable revenue streams across airports, power and roads • Strong Management Team: • Experienced management team backed by strong global partnership • Significant Growth Opportunities: • Plans to tap into new opportunities in India and Abroad in the infrastructure space GMR Infrastructure : A Compelling Growth Story

  6. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  7. Passenger Traffic : Growth In Leading Indian Airports PAX (Dom+Int) distribution in FY2008 (Total PAX = 116.87 mm) In Mn Delhi and Hyderabad airports control 27% of the passenger traffic Traffic Growth ( % ) • FY 08 • FY 07 Delhi Airport accounted for the highest growth in air passengers movement in the world in 2006 (Source: TOI)

  8. Delhi International Airport: Modernization and development of one of the busiest airports in the sub-continent Financing Plan (Phase I) Consortium Partners Project Overview

  9. Delhi International Airport: Glimpses of Phase 1A Domestic Departure International Terminal Domestic Arrival

  10. Delhi International Airport: Glimpses of Phase 1B Terminal 3

  11. Hyderabad International Airport: Development of fastest growing airport in India Project overview Consortium partners Catchment area Hyderabad Uniquely positioned to capitalize on the current growth Phase I Development completed . . . . . . • Emergence of Hyderabad as a major IT& ITeS destination • Centrally located with respect to India, South-East Asia and Middle East • Catchment area of 75mm people • Growth in the passenger traffic - 40% over the past 2 years (2005-07) • First Airport in the country to get ‘Leeds’ Certificate for leadership in Energy & Environmental Design • Airside & Landside works contractor: Larsen & Tubro Hyderabad International Airport • Phase I Development completed on 23rd March 2008 Source: AAI website, Company

  12. Hyderabad International Airport: Glimpses

  13. Hyderabad International Airport: Glimpses

  14. Hyderabad International Airport: Glimpses

  15. Sabiha Gokcen International Airport – Turkey Overview

  16. SabihaGokcen International Airport Development plan for the Sabiha Gokcen International Airport in Istanbul Car Park Area New International Terminal Existing Int’l + Domestic Terminal Hotel

  17. Sabiha Gokcen International Airport

  18. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  19. GMR has successfully implemented and operationlized Power Assets • Barge-mounted power plant • One of the largest operational Independent Power Producer (IPP) in Karnataka • ISO 14001, ISO 9001 and OHSAS 18001 certified • Evaluating the options for relocation Post PPA GMR Energy Limited • ISO 14001 and OHSAS 18001 compliant • Dr. M.S. Swaminathan Award for being an environment friendly project GMR Power Corporation Pvt. Ltd. • Company’s third Greenfield power project • PPA got extended from 15 to 23 years • Expansion plan for additional 700 MW capacity • Operating on diverted gas made available by GAIL as per the directive from Andhra Pradesh Power Coordination Committee Vemagiri Power Generation Ltd.

  20. Strong pipeline of power projects under development Power assets under development Chattisgarh (Coal) Orissa (Coal) Uttaranchal (Hydro) Facility 3 1 2

  21. Strong pipeline of power projects under development Power assets under development Nepal (Hydro) Arunachal Pradesh (Hydro) Himachal Pradesh (Hydro) Nepal (Hydro) Facility 6 7 8 5 7

  22. Towards securing fuel supply for Power Plants Coal mines in South Africa and Indonesia Acquisition of 50% shareholding in Intergen • GMR has acquired 5% stake in Homeland Mining and Energy, a South African Subsidiary of Homeland Energy Group Ltd, Canada • GMR has the option to acquire additional 45% stake of Homeland South Africa. • Homeland South Africa owns Mining Licenses for Kendal (74% share - Reserve 34m ton), Eloff (50% share with option to increase to 74% - Reserve 382m ton) and North Field (100% share – Reserve 1m ton ) with total reserves of 417m ton. • Production from Kendal mine would be 1.8m tpa. Eloff mine would produce 6m tpa in phase 1 which would increase to 12m tpa in phase 2. • Intergen is a global Power generation Utility with over 12000 MW of Power Projects in 5 different continents around the world • Over 8000 MW out of the above is operational in the following countries: • Mexico • United Kingdom • Holland • Australia • Philippines • GMR’s newly acquired footprint in all these diverse locations shall help achieving its burgeoning international growth ambitions • This is the largest international acquisition by an Indian Co. in the Power Utility sector. • This acquisition has catapulted GMR as the largest power generation company from India

  23. Power projects: Continued focus on diversification of revenue, fuel mix and expansion of geographic presence 4,097.625 MW of power projects spread across the country Diversified fuel mix 1 Alaknanda 300 MW1 Fuel type - Hydro CoD - 2013 Bajoli Holi 180 MW Fuel type - Hydro CoD - 2015 • Projects distributed across all the fuel types – Hydro, thermal & Gas • Tied up fuel for most of the plants Upper Marsyangdi 250 MW Fuel type - Hydro CoD – 2015 Upper Karnali 300 MW Fuel type - Hydro CoD – 2015 Talong 160 MW Fuel type - Hydro CoD - 2014 Total capacity = 4,097.625 MW Chattisgarh 1,050 MW Coal power CoD- 2012 Diversified revenue mix 2 Orissa 1,050 MW Fuel type - Coal CoD – 2012 • Mix of short-term & long-term Power Purchase Agreements (PPAs) • Exiting 3 projects have long term PPAs tied up • Fixed revenue stream from the Mangalore & Chennai plant • Availability of gas for the Vemagiri project to create future revenue growth potential • New projects (other than the Orissa project) have the flexibility to choose between short-term/long-term PPAs • Distribution of total capacity • PPA - 1390 MW, Merchant Power – 2,707.625 MW Mangalore 220 MW Fuel type – Naphtha PPA – 7 years till 2008 (85% PLF) Vemagiri 387.625 MW Fuel type – Gas PPA – 23 years till 2019 (80% PLF) Chennai 200 MW Fuel type – Sulphur PPA – 15 years till 2014 (min. offtake at 68.5% PLF) Operating assets Under implementation 3 projects 7 projects (807.625 MW) (3,290 MW) Note: 1Capacity to be increased to 300 MW subject to approval of project development plan by CEA

  24. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  25. GMR Group Road Projects implemented/under implementation Annuity Toll Under Construction Already Operational Mobilizing all resources and harnessing the best practices in all aspects of project implementation to ensure that the four Road projects under implementation are commissioned on schedule

  26. Progress of Construction Jadcherla Road Ambala – Chandigarh Road Pochanpalli Road Ulundurpeth Road

  27. Krishnagiri Special Economic Zone – Recent Foray Project overview Land Acquisition by December, 2008 Planned Action for next 12 months

  28. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  29. GMR has an experienced and dedicated team of individuals across hierarchy managing projects across sectors GMR Holding Board GMR Infra Board • G. M. Rao • Srinivas Bommidala • G. B.S. Raju • G. Kiran Kumar • B.V. Nageswara Rao • K.Balasubramanian • O B Raju • Arun K. Thiagarajan • K.R. Ramamoorthy • Prakash G. Apte • R.S.S.L.N. Bhaskarudu • T. R. Prasad • Udaya Holla • Uday M. Chitale G Kiran Kumar Chairman - Airports Srinivas Bommidala Chairman -Urban Infrastructure & Highways K. Balasubramanian Member Group Holding Board GM Rao Group Chairman GBS Raju Chairman – Corporate & International Business B V N Rao Chairman – Energy & Agro P M Kumar Member Group Holding Board Management team Airport Energy Urban Infrastructure & Highways Strategic Finance • B. S. Shantharaju – CEO • Andrew Harrison – COO • Shirish M Navlekar – CFO • I Prabhakara Rao – VP – Project Development • Phua chai Teck – VP - Planning & Develop • Sudhir Mathur –Chief – Commcl .Officer • Rajgopalsamy – CFO • P Sripathy – Head -Project Mgmnt. • Ashutosh Agarwala – CFO • Rajan Krishnan – COO • D R Santhana Krishna – CFO • V Jayaraman – COO – Property Devlp. • Raajkumar – CEO • G.K. Raghunandanan – CFO • G Subba Rao – President – Hydro • R. K Goel – VP – Transmission • K V V Rao – Director & President • S N Barde – VP – O & M • Ashish Basu – VP – Commercial & Contracts • I V Srinivas Rao – VP – Finance • V K Sharma – VP – Hydro • Harvinder Manocha – Head Nepal Projects Corporate Services • O Bangaru Raju – COO - Strategic Initiatives & Central Procurement • Y M Shivamurthy – President, Legal • A, Subba Rao, EVP – CIG • A.S. Cherukupalli, EVP – Company Sec. • Vijay Vancheswar – Head,Corp.Comm. • P M Kumar - ED – Group Corporate Development • R. Ram Mohan – EVP – GCM’s office International Development • Ranjit Muregesan , CEO • Madhu Terdal, EVP • Cenk – CEO – Turkey

  30. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  31. Status of Project Development in Nepal – 300 MW Upper Karnali HEP • Project MoU executed with MoWR • JVA executed with NEA • Foreign Investment approval received from Dept. of Industries (DoI), Govt. of Nepal • JVC (Public Company) incorporated in Nepal • Survey License obtained from DoED • Certificate of commencement of operations obtained from DoI • Project establishment at Surkhet finalised • Project team is in place; Engineering office operational at Kathmandu • Site is presently inaccessible due to heavy rains and landslides • EIA Consultants appointed – M/s SchEMS and data collection process started • Public Consultations for ToR and Scoping documents are being taken up • Topographical Survey agency finalised and activities will commence immediately after monsoon • DPR preparation started; Review of past studies undertaken by NEA (through CIWEC) are on • CSR activities are being taken up after the current year monsoon • At the time of DPR and Investigations stage itself

  32. Status of Project Development in Nepal – 250 MW Upper Marsyangdi HEP • 80% shareholding taken over in Himtal Hydro Power Company • Project site establishments are in place: • Project team in place; Engineering office operational at Kathmandu • Offices at Syange (Powerhouse site) & Taal (River diversion site) are operational • Site is presently inaccessible due to heavy rains and landslides • Project access road from Besisahar to Syange – washed away due to heavy monsoon • Site visits are being undertaken through trekking and through helicopter at times • Topographical Survey completed and geo-technical Investigations are underway • Both these are being undertaken through local agencies in Nepal • EIA Consultants - M/s SchEMS from Nepal ; Data collection process completed • Approval of ToR & Scoping documents for revised capacity of 250 MW is expected shortly • Approval process was delayed due to approval from ACAP / Wild life Board • Project layout finalised and Engineering activities have started • CSR activities are being taken up after the current year monsoon • At the time of DPR and Investigations stage itself

  33. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  34. Issues in Hydro Power Project Development in Nepal • What the Hydro Project developer looks for? • Good infrastructure to and at site • Flexibility to create the same, may be on a selective basis • Availability of necessary approvals / clearances within reasonable time and efforts • Simple & clear regulations, acting as ‘FACILITATOR’ rather than ‘OBSTRUCTOR’ • Clear and simple tax regime • Decent law and order situation • Supportive and facilitating Government at the centre and also at the district level • Availability of Competitive financing options • Are all these currently available in Nepal ? • The intent and will of the Government to create this enabling mix is critical • Developers have the will to implement and execute • All they need is SUPPORT’ and an ‘ENABLING ENVIRONMENT’ • Nepal’s dream of achieving 10000 MW, requires some serious considerations on the above

  35. Key Constraints in Hydro Power Project Development in Nepal • Lack of infrastructure (Access roads, Transmission links) • Clearly defined Policy and Regulations • Should be free from any ambiguity • Long term protection against ‘Change in Law’ • Approvals and Clearances in a timely manner • Supply of construction materials & machinery • Conducive law and order situation • Adequate availability of : • Construction Agencies and Engineering / EIA Consultants • Support services like Survey and Investigation agencies etc. • Skilled Hydro Manpower Resources • Situation is likely to reach alarming proportions in coming years • Evacuation of Power: • Licensing / Right of Way for transmission lines • Connectivity with Indian Grid – Regulatory / Technical issues • Sale of Power in India: • Long term / short term Open access • Tariff mechanism

  36. Key Highlights 1 GMR : Leading Infrastructure Player 2 Airports Power 3 4 Urban Infrastructure & Highways 5 Strong Management Status of Project Development in Nepal 6 Issues in Project Development in Nepal 7 Requests to Govt. of Nepal 8

  37. Requests to Govt. of Nepal • Select few large Hydro Power Projects: • Serious development on >3000 MW of Projects - Upper Tamakoshi, Upper Karnali, Arun III, West Seti, Upper Marsyangdi, Tamakoshi II & III, Likhu etc. • Declare them as ‘National Priority Projects’ • Proactively build access roads to identified Project sites • Allow Developers to build Infrastructure before ‘Generation License’ • Create ‘Single Window Cell’ for hassle-free and expeditious clearances • Simplify Clearance procedure • Demand timely achievement of realistic and pre-agreed Project development and implementation milestones, from Developers • Proactive Govt. support on: • Land Acquisition / Right of Way • Rehabilitation and Resettlement • Availability of Explosives • Provide impetus to manufacturing inds. supplying goods to Hydro projects: • Need to explore creation of substantive indigenous capacity in Cement and Steel • Open G2G dialogue with Govt. of India: • High Voltage Transmission corridor and Grid connectivity / compatibility issues • Power exchange between countries on ‘Win-Win’ principles • Develop large Projects on PPP route 51

  38. Requests to Govt. of Nepal • Licensing policy: • Integrated Basin development - Preference for developers of large Projects for additional projects in the same basin: • Why not look at ‘Swiss Challenge’ route for such projects? • Provide Fiscal benefits to improve ‘Investor Confidence’: • VAT exemption – already proposed in current year budget – a Welcome step • Restore Tax holiday provisions in Hydro Power • Liberalize dividend repatriation provisions for foreign investment • Generation License period – increase to 45 years • Deferment of royalty to improve financeability of long gestation Projects • Provide incentives to local industries in all areas of Hydro Power Support services • Local Civil Contractors and Equipment suppliers, • Survey and Investigation agencies, Transport and logistics service providers • Provide nation-wide boost to technical education • To promote young Nepalese Engineers • Simplify banking regulations • Clarity and consistency in Customs and import policies • Strengthen Legal, accounting and taxation system • Consultations with IPPs in framing Acts, policies for Power sector 51

  39. Thank You

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