Innovative technology solutionsgyfor sustainability

ABENGOA

I i t i f t t l i f i

Project Finance: the most suitable tool to faceglobal water challenges through PPP

Improving water infrastructure learning from experience

Aranzazu MencíaVP Business Development

Houston (TX), October 2014VP – Business Development

Once upon a time

PPP and Project Finance, the new old friends

Despite Public Private Partnerships and smart private financial tools as

Th d b t P3 i th iddl

Despite Public-Private Partnerships and smart private financial tools as Project Finance become more popular nowadays and seem very trendy…

There are records about P3 since the middle ages

The use of “Project Finance” has existed for centuries

h li h i d l f b ldi• In 1299 the English Crown negotiated a loan from Frescobaldi, Florentine merchant bank, for which payment was to be made in the form of output from the Devon silver mines for one year

I F th ki j t fi d d d b id i XVII• In France the king project financed roads and bridges in XVII century

• In 1777 Perrier brothers got the permission to collect and distribute water to households in parts of Paris for 15 yearsdistribute water to households in parts of Paris for 15 years

• Many roads in the USA during XIX century were working under the P3 model

and they work where other instruments

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… and they work where other instruments and management models have proved to be unsuccessful.

Timeline

Project Finance evolution

The PF had a new rise since 70’s of 20th century because of the 1973 oil crisis. But was in the 90’s when PF definitely was established and spread out to diverse sectors.

• Electricity plantsOil fi i• Oil refining

• Toll roads• Water treatment

• Heavy industry, petrochemical• Bridges, tunnels, airports• Telecomunications• Theme parks

• Oil and gasOil i li• Oil pipelines

• Mining• Toll roads, transports (planes, boats)

1960 1970 1980 19903

How to make a PPP

Framework for building successful PPP

S i f li i l Security of politicalchampions

Build stakeholder support

PoliticsPolitics Assess and manage social & environmental impacts

Foster a stable and supportive

Ensure sound economicfundamentals – PPP cannot create economic

EconomicsEconomics ExecutionExecution

ppregulatory environmentmiracles

Structure a partnershipthat optimizes cost, q alit and in estorsquality and investorsreturn

Use a disciplined approach – Time and complexity are your enemies

Secure the right mix of global and local expertise

4

Source: Florizone R, Carter L Support a trasparent, competitive bid process

Plan for ongoing monitoring and review

PPP maturity level

Not all the countries are the same

Source: World Bank Group

Abengoa has been successful to develop PPP projects under challenging conditions

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Abengoa has been successful to develop PPP projects under challenging conditions

Integrated Product projects

1. Advantages for the public side

Externalized management Externalized management

No specific finance is needed from the utility

Required investment is taken out from the client balance sheet

Technical risk is assumed by private partner

Joint management of the users necessities

No increase of water price due to a more efficient private management

2. Advantages for private side

o Assets with regulated revenues with long term sales contracts or price agreements

I i P3 i f j i h i h h lo Investment in P3 infrastructure projects with in-house technology as a competitive advantage

o Shared financial risk: both public and private partners

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o Allows both parties to take part in “bigger than expected projects”

Risks are always allocated in the scope of the most suitable partner

Abengoa´s PPP track record

Achievement of a ~€ 4 bn portfolio by 2016 expected with current backlog plans

In Operationin 2014 Key Highlights

250 MW in South Africa

In Operationin 2016

1 503

Total AbengoaEquity 2016

CSPCSP250 MW in South Africa

New projects in Israel, Chile & US

1,863 MW1,503 MW

2,239 M€

Electric Transmission

Electric Transmission

5,783 km new in Brazil

355 km new in Peru

12,400 km

1,234 M€2,768 km

Cogeneration & Other

Cogeneration & Other

2 additional wind farms totalling 120 MW in Uruguay

470 MW

350 MW 244 M€

WaterWater

2 water desalination projects in Algeria and Ghana

2 water transmission projects in USA* and Mexico

820 Ml/day

560 Ml/day 252 M€

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USA and Mexico

3,969 M€3,969 M€*confidential

Abengoa´s assets at a glance

Diversified portfolio by geography and sector reaching critical mass of operating projects

10%

Total # assets (construction & operation)

32%21%

y se

cto

ry

sect

or

37%

+41 assets in 41 assets in

By

By

~ 18 assets expected to

t t

~ 18 assets expected to

t t+operation*operation*10%17%

rap

hy

rap

hy

start operations up to 2016

start operations up to 2016

41%

32%

By

geo

gr

By

geo

gr

North America South America Spain RoW

8(*) Operating portfolio as of 2013 FY and projects with construction substantially completed as of March 2014

How water projects are financed?

Contract models: private financing vs. traditional models

Source: GWI reuse tracker (2009)

Source: McKinsey

There is a growing trend of private financing in water projects that

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There is a growing trend of private financing in water projects that mostly involves PPP and Abengoa has capitalized on this

Project Finance structure

SPV Outline

ABENGOA

Construction (EPC)

Partners

Construction (EPC)-Turn key-

Operation and

EquityEquity

SPE

Maintenance (O&M)

Special – Purpose VehicleSPE

Debt Refund Insurance Prime

p p(SPV)

Debt Refund

Financial Entities Insurance Companies

Insurance Prime

SPV Sales

p

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Water Project Finance References

Integrated product experience: Abengoa Water P3s

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Water Project Finance References

Integrated product experience: Abengoa Water P3s

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Water Project Finance References

Abengoa Water P3: new references

Desalination

Transportation and pdrinking water

treatmentAgadir

MoroccoMorocco

Agadir

Mexico

Mexico

El Zapotillo

ONEE

Financial closure

Comisión Nacional del Agua (CONAGUA)

In construction

20 years

82 M€

20 años

82 M€

25 years25 years

Water treatment

$ 566 million566 M USD

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82 M€ $ 566 million

328,000 m3/d

Leadership through technology

The virtuous path in Abengoa

Asset base

1,223 MW solar power

348 MW ti348 MW cogeneration

1,723 km of electricitytransmission lines

102.1 ML/year

transmission lines

R&D+i allows Abengoa to develop competitive advantages as compared to its

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R&D+i allows Abengoa to develop competitive advantages as compared to its competitors to keep PPP market leadership through attractive technology based products and services

Our business

Abengoa’s business structure allows to make it real

Engineering and construction

• 70 years of experience in energy infrastructures

1 We perform these three activities in two high-growth sectors

We can do it• Proprietary know-how

• Leading international contractor in T&D

Energy Environment

Concession-type infrastructures

• Solar, transmission lines, desalination, cogeneration and others

2

We can handle it…• Very low market risk

• Average contract term: 25 years

R h D l t d i tiIndustrial production

• Biofuels

• High growth markets

3

and we will do iteven better

Research, Development and innovation

• Knowledge to develop new technology

• Support for industrialization of the technologies

4

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• High-growth markets

• Market leaderseven bettertechnologies

• Technology strategy aligned with business strategy

Innovative technology solutionsgyfor sustainability

Thank you!

Water solutions for a sustainable world