acwa power annual report 2010 ( english )

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Annual report 2010

Valuable

power Water and

25% recycled content



Prince Naif Bin Abdulaziz Al Saud Crown Prince Sultan Bin Abdulaziz Al Saud

Custodian of the Two Holy Mosques

Second Deputy Premier &Minister of Interior The Deputy Premier, Minister of Defense

and Aviation and Inspector General

His Majesty HighnessKing Abdullah Bin Abdulaziz Al Saud

His Royal Highness His Royal Highness



Financials

Shareholders

Leadership Statement

How We Work

Graphical summary of performance

Preserving PreciousResources

Virtual Water and Energy

FINANCIAL PERFORMANCE

Board of Directors

Become Smart

OUR BUSINESSOperations and performance

Ingenuity during design

CONTENT

Auditor’s Report

Strategy for growth Shorter ShowersCorporate Responsibilityand Sustainability

Project Companiesand subsidiaries Our Desalination Barges

Indoor Comfortwith Integrity

CORPORATE GOVERNANCE REPORT

BOD Report

Draining prosperity

BUSINESS RISKMANAGEMENT



1. LeadershipStatement

Our performance during the past year demonstratedthat we have matured into a fully operationalcompany capable of developing, constructingand operating green eld projects; acquiringand integrating existing operational assets andperforming outside our country of origin. At yearend, our portfolio of contracted assets comprising6,485MW of power generation plants and2.32 Mm3 /day of desalinated water productionplants includes the rst asset outside the Kingdomof Saudi Arabia.

Our business development activities grew involume; range of opportunities and acrossa greater geographic footprint. Two of ourinvestments, Shuqaiq IWPP and Maraq JubailIWPP, commenced full operations during the year

and we completed the acquisition of the Barka 1IWPP in Oman. The Asset Management team wasreinforced with the recruitment of a respected andknowledgeable professional to the post of VicePresident. Our second nancial year achievedincome from main operations of SAR 168 M and anet income of SAR 110 M.

The growth in portfolio derived revenues wasdue to the strong performance of the facilitiescombined with the corporate team’s support andexpertise on resolving billing, commercial, deemedavailability issues and capturing nancial upsides asopportunites were identied.

ACWA Power Barka delivered excellent resultsduring 2010 with availability exceeding 99% forboth electricity and water. The performance wassupported by the smooth transition post transactionand exceptional safety and environmentalmanagement. The plant has completed one millionman hours without a lost time incident since PCODand its environmental responsibility credentialsreceived recognition by being awarded the rst“Oman Green Foot Print Award” presented by the

Oman Green Awards.

Maraq IWPP, the world’s largest power anddesalination plant, was delivered from initialground breaking to PCOD in just under 46 monthswhich is a signicant accomplishment for its scopeand complexity. The early production and revenuesduring 2010 were extraordinary with the facilityexporting in excess of 150 Mm3 of desalinatedwater and approximately 16 TWh of electricity bothof which were much needed and appreciated by theoff taker.

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Mr. MohammadAbdullah AbunayyanChairman

Mr. Paddy PadmanathanPresident & CEO

All three power blocks and sixteen trains ofdesalinated water units of the Shuqaiq IWPPachieved their full commercial capacity duringAugust 2010 which was eleven weeks aheadof schedule. This achievement is the rstcompletion ahead of schedule for a IWPP or IPPto be completed in the GCC and MENA region.Shuaibah IWPP, Shuaibah Expansion IWP andRabigh IWSPP are all continuing to operate as per

business plan and their offtake contracts. RabighIPP, still under construction, is on schedule.

The performance of our desalination barges hada signicant recovery after they relocated 540nautical miles with only 34 days down time. Thetwo barges produced 4.8 Mm3 of desalinated waterin the nal half of the year. NOMAC, our O&Mservice company, successfully achieved certicationto three internationally recognized performanceand quality standards (OHSAS 18001, ISO 9001and ISO 14001) in December 2010. NOMAC alsoadopted an operations and maintenance standardbased on international best practice.

We are pleased to be able to report that there wereno fatalities, nes or cases of Health, Safety orEnvironmental (HSE) incidents or other enforcementaction across our portfolio of assets during 2010.

Regrettably, however, there were six reportablehealth & safety, incidents which lead to an overallAccident Frequency Rate of 0.09 which whilebeing signicantly below European averages isnevertheless above our zero tolerance targets.

Our corporate responsibility program continues tobuild on past efforts. The Sabya General Hospital’sOptometric Center in Jizan was equipped by theShuqaiq Water and Electricity Company (SqWEC).ACWA Power was recognized for our corporateresponsibility and sustainability track record as atop ten nalist from 120 entrants at the 201 0 SaudiArabian Responsible Competitive Index (SARCI).

ACWA Power’s pledge to meet the higheststandards of corporate governance is characterizedby the commitment of the Board of Directors,the management and employees. Corporatemanagement effort during 2010 was focused ondeveloping and starting the implementation offormal corporate governance and risk managementpolicies and procedures. A Corporate GovernanceCode which is based on Saudi Arabian and

international standards was prepared and approvedby the Board of Directors and its implementationwill continue into 2011. The Board InvestmentCommittee was established and is now fullyfunctional. A Nomination & RemunerationCommittee and a Board Audit Committee are bothalso fully functional.

Our long term goals fundamentally remainedunchanged with our commitment to expanding ourportfolio to achieve a capacity of 30,000MW ofpower including at least 1,500MW of renewableenergy and 5 Mm3 /day of desalinated waterproduction capacity by 2014. The focus is stillon expanding into countries with a stable sociopolitical fundamentals combined with a record ofhonoring contracts and tried and tested judicialprocesses. The majority of the renewable portfolio

will come from solar power due to the immensesolar resources in the MENA and SouthernAfrican regions. During 2011, ACWA Power hassuccessfully progressed two new projects with theformal notication as the preferred bidder for the2,000MW Qurrayah natural gas red combinedcycle power plant in Saudi Arabia and theacquisition of a controlling share of Jordan's CentralElectricity Generating Company, the county's mainpower generator with an installed capacity of1706MW and a portfolio of facilities spread across

Jordan. We have also identied a merchant facilityworthy of development, a rst for ACWA Power,which is an 800MW CCGT plant, in collaborationTurkish partner to be built at a site just outsideAnkara, Turkey. In the meanwhile we will of coursemaintain our focus on the Saudi Arabian electricityand desalinated water market as the need for new

capacity shows no sign of slowing down.

Our efforts in building power generation anddesalinated water production capacity atcompetitive tariffs was generously recognized bythe Saudi Water and Power Forum when ACWAPower was awarded the 2010 Innovation Prize, allof which is a tting testament to the enthusiasm,ingenuity and sheer hard work of ou r people, whoare the foundation of our enterprise.



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Our VisionThe ingenuity and entrepreneurship of the private sector makesavailable electricity and desalinated water in a reliable manner tosupport social development and economic growth of nations.

Our MissionTo provide electricity and desalinated water in a sustainable manner atthe lowest possible cost in our target countries.



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Draining prosperity

In the UAE, 57% of the nation’s ecological footprint arises from domestic households withonly 30% coming from business and industry.

Power demand in Saudi Arabia is rising at 8% per ann um primarily driven by domesticnot industrial demand.

With 5% of the world's population, Arab countries are endowed with just 1% of theworld’s renewable fresh water resources. The increasing dependence on desalinated waterhas resulted in over 50% of the world’s desalination capacity being located in the region.

By 2028, growth in domestic power and water demand in Saudi Arabia could reduceavailable oil exports from 10 to 7 millions barrels per day.

Across the GCC, scenario planners are predicting that increasingly signicant proportionsof exportable oil that generates revenues and contributes to economic growth will beabsorbed to support unsustainable behavior and consumption patterns.

The majority of water and electricity in the MENA region is produced from treasured oilreserves that are not replaceable.

Respect precious water and electricity as if life depended on them.

Sources: • Media statement from Khalid al-Falih, the chief executive of state oil rm Saudi Aramco in 2010.• The UAE ecological footprint initiative 2011- published by EWS WWF



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Note: The structure does not describe the legal status of the entities and excludesshareholders with less than a 1% stake in ACWA Power International.

Abunayyan Group Established in Riyadh in 1960with a focus on the water andpower sectors, specializingin construction, operation,maintenance and contracting.

ACWA Holding

Founded in 2003 as Arabian Company for Water and PowerDevelopment. Diversied investments in infrastructure, utilities,manufacturing, mining, development of privately-ownedindustrial cities, real estate, facilities management and logistics.

Al Muhaidib Group

Formed in 1950 in Dammamwith a presence across theMENA region. Concentrateson construction, engineering,manufacturing, food,retail, nancial and serviceindustries.

MADA Group

Founded by Al-Rajhi Groupas an SPV for strategicinvestments. A signicant

Saudi Arabian businessconglomerate that has adiversied portfolio includingthe largest Islamic nancialinstitution in the world.

Shareholders Strategic Saudi Investors

Al-Mutlaq Group based in Riyadh since 1960 with a large stakein several sectors including manufacturing, furniture retail, agriculturalequipment, automotive components and industrial heat exchangers.

Al-Subaei Group was established in Jeddah in 1934 to providenancial services. Diversied into building materials, real estate, industrialmaintenance, textiles, furniture, and the manufacture of prayer carpets.

Omar Kassem Alesayi Group was founded 64 years ago in Jeddah and has interests in real estate, civil engineering, construction, hotelsand malls, electronics, clothing, manufacturing and the automotive sector.

Al-Fozan Group established in 1970 in Al-Khobar with a focus onoil and gas, construction, architectural and interior design, engineering

consultancy, distribution of building materials and pharmaceutical products.

Al-Mojel Group founded in Jeddah 23 years ago with investments inthe building materials market, manufacture of plastic products and the fastfood and leisure sector.



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Board of

Directors

ACWA Power’s Board of Directors currently comprises seven respected businessmen with vast regionaland international experience and solid reputations. Five Members from the 2009 Board were joinedby Mr. Salah Brahimi and Mr Izzaddin Idris who took up the positions of Independent Members of theBoard in March 2010 and November 2010 respectively.

Mohammad Abdullah Abunayyan,Chairman

President & CEO of Abdullah Abunayyan Group of Companies,Board member of several large joint stock companies in SaudiArabia and member of the Advisory Board of the Saudi SupremeEconomic Council.

Sulaiman A. K. Al-Muhaidib,Board Member

Chairman of the Board of A. K. Al-Muhaidib & Sons Group ofCompanies and Chairman of Savola Group. He is also Boardmember of the Saudi British Bank, Al-Toukhi Company forIndustry & Trading, Council of Competition Protection and TheCentennial Fund.

Ahmed Sulaiman Al-Rajhi,Board Member

Chairman of the Boards of Al-Arrab Contracting, The LandHolding Company, Injaz Real Estate, Gulf Packaging Industrialand the Chamber of Commerce & Industry - IndustrialCommittee, Central Province, Saudi Arabia and Board member of

Riyadh CSR Committee.

Rasheed A. Al-Rasheed,Board Member

President & CEO of ACWA Holding, Member of the SaudiOrganization for Certied Public Accountants, Saudi EconomicsOrganization and Family Business Organization in the GulfCooperative Council.

Tariq M. Al-Mutlaq,Board Member

Managing Partner and Board Member of Almutlaq Group,Chairman of the Board of Shuaa Capital (Saudi Arabia), andSorouh International, Vice Chairman of the Arabia InsuranceCompany and Board member of several petrochemical andnancial organizations.

Mohd Izzaddin Idris,Board Member

Group MD/CEO of UEM Group Berhad, Deputy Chairman ofPLUS Expressways Berhad and previously CFO/ Senior VP (GroupFinance) of Tenaga Nasional Berhad, Malaysia.

Salah Brahimi,Board Member

President/Partner of IFAS and Partner of Empire Capital Partners,Previously; Advisor, CGIAR at The World Bank, President of TII,Board Director at Solman and Partner and Board Director andTreasurer at EPI North Africa.



18 19

Preserving

ResourcesPrecious

In the late 1970s, humanity’s annual ecological footprint exceeded for the rst time, the Earth’sannual biocapacity. Humankind is demanding resources faster than ecosystems can regenerateand produced more pollutants than can be absorbed.

The latest ecological footprint from WWF’s Living Planet Report of 2010 illustrates that globaldemand has continued to increase. In 2007, the average ecological footprint per person was2.7 gha which is 50% more than the Earth’s biocapacity of 1.8 gha per person. In other words,people used the equivalent of 1.5 planets in 2007 to support their activities.

UN projections based on population growth, consumption and climate change indicate that by2030 humanity will overshoot the Earth’s capacity by 100%.

For example, if everyone in the world lived like an average resident of the United States or theUnited Arab Emirates, then a biocapacity equivalent to more than 4.5 Earths would be requiredto keep up with humanity’s consumption and CO2 emissions. Conversely, if everyone lived likethe average resident of India, humanity would be using less than half the planet’s biocapacity.

Power and electricity are key components of the planetary supply and demand model that mustbe skillfully consumed and cherished.

Sources:Extracts from WWF Living Planet Report 2010



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ACWA Power International Annual Report 2010 Our Business

OURBUSINESS

ACWA Power's business is developing and acquiringelectricity generation and water desalination facilitiesand acting as a holding company for subsidiaries,

joint ventures and associated companies. We arean Independent Water and Power Producer (IWPP)and our principal activities are the development oracquisition, and operation of electricity and waterdesalination facilities. The principal activities aresupported by staff functions including nance,technology, construction and management ofassets (refer to diagram on page 20). The companyadministers its interests in the subsidiaries, jointventures and associated companies through theboards of the individual projects and the assetmanagement function at the corporate ofce.

ACWA Power was established in mid 2008 andacquired an effective 100% interest in ACWA PowerProjects which had carried out the company’s initialdevelopment efforts. ACWA Power Projects wasfounded in 2004 by the Abdullah Abunayyan Group,the A. K. Al-Muhaidib & Sons Group, and the MADAGroup for Industrial & Commercial Investment (pleaserefer to page 14 for details on shareholders). As perthe bylaws and articles of association, ACWA Power’srst scal year commenced on the date of ministerialresolution, July 5th, 2008, and ended on December31st, 2009, therefore the results of the year 2009covered more than 12 months. Enclosed is the secondannual report of the company which covers the periodfrom 1st January to 31st December 2010.

ACWA Power’s 2010 performance supports the overallmessage that the business has matured with thecompany’s successful transition into an internationalorganisation. Business development activities havecontinued in full swing with the nature and range

of prospects expanding both geographically andtechnologically. The Asset Management team wasstrengthened by hiring a Vice President (VP) anda number of highly experienced and competentprofessionals. Internal business managementprocesses and systems were developed with emphasisbeing given to nancial and corporate governance.

Our investments achieved remarkable performanceduring the year with Shuqaiq IWPP and Maraq

Jubail IWPP commencing full operations duringthe year (Maraq Jubail IWPP and Shuaibah IWPPprojects also achieved commercial operations underthe project and lending documents covenants). Wealso completed our acquisition of the Barka 1 IWPPin Oman on August 18th, 2010 and the results fromthe date of acquisition are part of the consolidated

nancial statements. The year also saw the notableturnaround in performance of our project, Bowarege,which coincided with the take over of the operationsand maintenance by our Operation and Maintenance(O&M) company, NOMAC. The operations stabilizedand business has continued to achieve sustainableand protable operations. The overall result was asignicant increase in our asset portfolio’s revenuessupported by tight control on costs as presented in thefollowing sections.

Greeneld development andacquisitions

Over 20 viable opportunities were explored andpursued during the year by the Bu siness Development

team. ACWA Power closed the acquisition ofthe Barka 1 IWPP that was initiated in 2009. Thesuccessful nancing was due to the acquisition team’sconcentrated efforts over several months.

The bids submitted for Riyadh P11 IPP in Riyadh,Saudi Arabia and Barka 3/Sohar 2 in Oman were notsuccessful. Comprehensive lessons learnt and lookback reviews where undertaken and the team hasincorporated these experiences into the current bidsin progress. Early indications in 2011 are positive thatthe team has regained the competitive advantage ithad consistently demonstrated in the early years.

Power from Renewables

ACWA Power started developing business

opportunities in renewable power generation projectsin 2008. We bid for the Shams 1 ConcentratedSolar Power (“CSP”) IPP tendered by MASDAR ofAbu Dhabi. The submission was in partnership withIberdrola Renovables from Spain. Our consortiumdelivered the second lowest bid, and establishedACWA Power as the rst serious regional contender tobe involved in mega renewable solar energy projects.

Operationsand

performance



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ACWA Power International Annual Report 2010 Our Business

ACWA Power has committed to 5% of its powercapacity being in renewable power within 5 years.The majority of the renewable portfolio will comefrom solar power due to the immense solar resourcesin the MENA and Southern African regions. During2010, we built a short list of feasible and fundableprojects in our target markets. The projects include a75MW CSP project in South Africa, a 1 60MW CSPproject in Morocco, several CSP and PV opportunitiesin Jordan and the Kingdom of Saudi Arabia. We

continue to play an integral role in shaping the SaudiArabian renewable energy sector (a market that isestimated to be around 15,000MW in the coming10 years) by lobbying the authorities and supportingresearch and development.

Asset Management

Throughout the year the asset management teamworked with the Engineering, Procurement andConstruction (EPC) contractors and the Barka 1team to seamlessly integrate this new acquisitionbesides the additional 3,600MW and 1 Mm 3 /day ofcapacity that achieved commercial operation into thecompany’s asset portfolio. Efforts were concentratedon developing and implementing common standardsand guidelines for implementation across the group.

An Operations and Maintenance standard based oninternational best practice was adopted and is used byboth operational facilities and development projectsto dene ACWA Powers minimum standards.

The appointment of the Vice President AssetManagement provided additional expertise andknowledge to the team. Prior to joining ACWA Power,he held the post of Senior Technical Advisor at theWater and Electricity Company for 5 years and bringsto ACWA Power over 40 years of sector experience.The growth in portfolio derived revenues was due

to the strong performance of the facilities combinedwith the corporate team’s support and expertise onresolving billing, commercial and deemed availabilityissues. Technical consultancy was made availableto subsidiaries and at site to improve heat rates andoverall production efciencies. HSE resources wheredeployed to ensure compliance with national securityrequirements and our own HSE standards.

Service Agreements have been concluded withthe majority of subsidiaries and facilities that have

enabled fair and equitable costs to be recoveredfor services rendered. Service related revenuesare forecast to increase over the next few years asthe entire portfolio enters commercial operationwith a need for ACWA Power to provide specialistcommercial, contractual, tax and HSE services.

Executive Management Team

The Executive Management team is led by thePresident & CEO who has been appointed by theChairman of the Board. The President & CEO issupported by a functional organization representingthe six areas of Finance & Risk, Project Legal,Business Development, Asset Management, CorporateServices and Technology.

We are in progress with lling the two vacant VPpositions, one of which is being covered by theCEO. All the VPs have considerable competence andexperience for their respective roles.

Our key risks and opportunities arise from ourmain functions of business development and assetmanagement. An overview of our priority businessrisks is presented in the following section which isaligned with our overall business cycles and model.

Business developmentThe identication and limitation of material risksduring this rst phase of our business cycle leads to asubstantial reduction in risks over the whole life of theasset that is commensurate with the benets. The keyrisks during this cycle are as follows:

Selection of contractor and technology The selection of a competitive Engineering,Procurement and Construction (EPC) contractor isfundamental to our winning strategy and is considered

and evaluated against the right technology that canprovide the optimized solution for the plant.To manage and mitigate contractor pricing andconstruction risk, we partner with competitive,experienced and creditworthy EPC contractors. Whenselecting the technology for a greeneld project,

we go to great lengths to ensure that the chosentechnology has an extensive history of operationsand commercial service in the region, is suited to theplant and operational specications supplied by theoff-taker and provides on the whole the most viablesolution for the transaction.

Funding and nancing risk The business, being in a capital intensive industry,requires signicant amounts of corporate and projectlevel borrowing or issuance of share capital to fundthe equity and debt requirement for investments.

BUSINESSRISK

MANAGEMENT

Risk management is an inherent and integral partof our business. We manage it through variousprocesses that have been set up to identify andassess the issues and then take action to reduceor mitigate the exposure and limit the potentialunfavorable consequences. We are continuallyrening and improving our risk managementstrategies to achieve a ne balance betweeneffective control and entrepreneurial spirit. We arealso in the process of implementing an EnterpriseRisk Management framework.



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ACWA Power International Annual Report 2010 Risk Managment

To fund the capital needs in projects, having anunderleveraged balance sheet, we have the ability toraise debt or issue corporate notes secured againstthe available free cash ows from our businesses oraccess further share capital from shareholders. At theproject level we generally nance our debt needs byraising limited or non-recourse debt thus minimizesthe exposure at the corporate level to the amount ofequity invested in the project.

We do provide credit support to the projectcompanies in the form of parent company guarantees

and letters of credits or guarantees arranged fromnancial institutions to support the requirements ofproject development or equity contributions in thebusiness (especially where the contribution is in theform of an Equity Bridge Loan). Additionally, whenwe venture into merchant markets, we may be insome cases required to provide credit support for ou rtrading activities.

Counterparty risk We manage our credit exposure to our off-takecounterparties by entering into long-term off-take agreements with investment grade off-takers.

Furthermore, most of our projects have invoice andtermination payments guaranteed with credit supportprovided by the Ministry of Finance of the country.In relation to borrowings from or deposits withnancial institutions, the exposure is limited to globalor regional banks with investment grade rating. Themanagement team regularly monitors the credit ratingof such institutions.

Availability and selection of development partnersACWA Power develops projects as a lead or jointlead developer, by partnering with carefully selected

strategic and nancial partners. These partnershipsenable us to share the project risks. Each partner isrequired to inject cash equity, or support its pro rataEBL with acceptable credit support or arrange a standby letter of credit to back stop its commitment toinject future equity obligations.

Regulations, compliance, legal and tax structuring We are subject to changes in regulations thatcould affect our business especially with regard toadjustments in taxation policy, competition law,environmental, health and safety legislation andother regulations. Most of the projects are structured

to offer protection against a change of law (for achange in law occurring in the country where theproject is based), that could adversely affect nancialperformance.

Legal risk arises due to the company’s activities andunintended or unexpected consequences from aviolation of law, civil claims arising from litigation orany other disputes. We identify, manage, and monitorlegal risks through our strong and experienced teamof in-house legal counsels.

We develop tax efcient structures through multiple jurisdictions with the tax assumptions being on localtax regulations when the investments are made inthe underlying projects. We continuously managethe risk of the possibility of a change in tax structuresby selecting stable and internationally recognized

jurisdictions as well as monitoring the changes inlocal regulations.

Country and political risksThe decision to invest in a project is highly dependenton the country and political risk assessment of thatcountry and the region. This risk can be minimizedbut cannot be eliminated through the project’s lifecycle. Where possible, we try and seek protectionunder the agreements for such risks. We do realize theimportance of good relationships throughout the lifeof the project with our counterparties and ensure thatthis remains a key objective for the management andshareholders alike.

Asset management

One of our core business strategies is to add valueby delivering competitive and reliable operationsand maintenance services. ACWA Power’s long termsustainability hinges on our effective management ofthe operational risks and thereby optimizesthe income streams from our power generationand desalinated water production facilities. Severalfacilities are administered by our subsidiary NOMAC,an O&M service provider, and therefore we have arobust assurance, monitoring and control presence tosupervise risk management at an operational level.

Construction and commissioning In the construction phase, we ensure that the EPCcontracts are structured to transfer the majority of theconstruction and design risks to the EPC contractor,and include protection against cost overruns, delaysor performance shortfalls through liquidated damages.During the commissioning phase, the EPC contractoris expected to meet the performance targets of poweroutput, availability and efciency by complying witha comprehensive testing regime conducted beforecompletion and at the time of handover by the EPC

contractor to the project company.

Tariff Due to the tolling nature of the agreements, all theprojects in our portfolio have limited exposure tovolumetric or price risk as they realize both capacityand production payments. The capacity paymentsare structured to meet a project’s capital investments,nancing payments, xed operation and maintenance(O&M) costs and the equity sponsor’s required rateof return. The production revenues are linked to thevariable O&M costs that the project incurs. Typically,xed O&M capacity and production payments areescalated at ination over the life of the purchaseagreement. ACWA Power will however be exposedto market forces on the determination of electricityand fuel prices and market demand as we invest inmerchant markets.

Insurance risk As we are in a highly capital intensive business,insurance is a vital requirement to protect assetsagainst foreseeable risks. All the projects in ourportfolio have comprehensive and detailed industrystandard insurance packages throughout theconstruction and operational phases.

Fuel supply risk Our plants run on fossil-based fuels with most of theplants contracted on a tolling arrangement (whereinthe fuel costs and volume risks are borne by theoff-taker for the full term of the power purchaseagreement). The fuel for the projects is suppliedindirectly or directly by creditworthy suppliers andincremental costs of backup fuel are transferred to

the off-taker. As per normal industry practices, thefacilities are subject to heat rate penalties which arecarefully monitored in order to avoid uctuation incash ows.



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ACWA Power International Annual Report 2010 Risk Managment

Operations and maintenance risksOperational risk, particularly a reduction inavailability, efciency or capacity, is one of the mostimportant issues faced by power and desalinationfacilities. NOMAC, being the O&M service provider,on the majority of our projects is compensated on theprojected xed and variable costs which are indexedto domestic and international ination rates. However,the actual cost incurred by NOMAC could be higherthan the ination adjusted cost, thereby potentiallyreducing its cash ow. Cash ow could also decline

due to any increase in maintenance and operationalcosts arising from higher than projected wear and tearor unplanned outages. To mitigate this risk, we arecommitted to delivering international standards forO&M services supported by strong and experiencedmanagement. ACWA Power and NOMAC haveestablished respectable working relationships with theOriginal Equipment Manufacturers (OEM) across oureet that enables us to keep abreast of innovation andtechnical advances and use their expertise for majorequipment maintenance and inspections.NOMAC has further adopted an international bestpractice O&M standard and successfully achievedcertication to three internationally recognizedperfomance and quality standards OHSAS 18001, ISO9001 and ISO 14001.

Economic and nancial risks

Our business is subjected to the vagaries of macro-economic risks, including foreign exchange, ination,and interest rate risks. The revenues of most of theprojects, though received in local currencies (whichare pegged to the USD), are indexed either fully or inmajority to the exchange rate movement of the USD,thus resulting in protection against volatility of theexchange rate between the two currencies. Due tothe dollarized nature of the cash ows, a removal ofthe peg between the local currency and USD, wouldminimally affect the nancial stability of our portfolio.The bulk of the O&M revenue of most of our projectsis in USD or the relevant local currency and anymovements in the USD currency against any othermajor currencies of the world has a low impact on thestability of cash ows. The xed and variable revenuesof most of the projects are typically divided into two

components, namely domestic and international. Bothrevenue streams are indexed to the ination rates ofthe respective countries and are thereby shelteredfrom exposure to ination risk.

We model and select an optimal interest rate thatresults in the highest rate of return. Long term fundingcomprises of SAR and USD debt, linked to SAIBORand LIBOR, respectively. To protect from interest ratevolatilities, SAIBOR is 100% hedged on a rollingbasis for periods of 5 years and LIBOR is substantiallyhedged (both using interest rate swaps) for periodsreplicating the tenor of the USD debt. Therefore,

although most of the projects do not have any interestrate exposure currently, our ability to maintain thestable cash ow levels will depend on future SIBORand LIBOR interest rates.

Health, Safety and Environmental (HSE) RisksInadequate HSE practices and management canlead to hazardous conditions, de-motivated staffand reduced economic performance of the plant. Tocontrol anticipated HSE risks, we specify stringentHSE management standards based on internationalstandards for all EPC and O&M service providers.We have our own HSE team who undertakeperiodic inspections and audits to monitor the HSEmanagement activities and performance. All ourprojects are designed to comply and operate withinthe local HSE standards and requirements for air andwater emissions, noise levels and soil contamination.All projects are subject to an Environmental andSocial Impact Assessment which complies with bothlocal and World Bank regulations. To ensure thehighest standards for environmental, health and safety

management NOMAC (the O&M service provider)obtained ISO 9001, ISO 14001, OHSAS 18001certications for all its service contracts.Though environmental regulations will affect ouroperations in the future, most of our power andwater purchase agreements contain protectionsagainst the change in law thus ensuring limitedexposure to additional costs arising as a result of newenvironmental regulations.

Organizational Management

Our business is a people business and succeeds onthe learning and knowledge gained by our peoplefrom transactions we undertake and the managementof our businesses. We have organized ourmanagement team on a functionally basis to ensurethat each of the functional centers of technology, assetmanagement, nance (project and corporate nance,accounting, tax, insurance, risk) and legal developand retain expertise within their teams to support themain growth engines of business development andacquisitions.

Stafng and human resource risk We hire and retain the best talent in the industryto steer our way to success. Finding and retainingthe right staff is the key difference in winning oncompetitive bids or in providing operation and

maintenance services. The implementation of our

strategic plans can be hindered by the loss of keypersonnel or failure to recruit or retain key personnel.To mitigate this concern, in addition to successionplanning, we provide competitive remuneration andbonus schemes. Our entrepreneurial environmentresults in our employees being constantly challengedto support their learning and on the job development.

Governance and management control ACWA Power has grown signicantly over the lastfew years and we have established and maintainedappropriate governance and management procedures.Our standards are based on local and internationalrequirements and management approaches. We havecontinued to build and implement nancial controlsunder the internationally accepted framework ofCommittee of Sponsoring Organizations (COSO) andhave advanced during the year to conduct internalaudits of various areas. Further details can be found

in the section ‘Report on Corporate Governance’ onpage 64.

We are in the process of implementing an EnterpriseRisk Management (ERM) framework which will befollowed by the establishment of the Risk Committee.The objective of the ERM is to identify, assess,mitigate, monitor and report risks in our businessto the Board and the management team. We haveengaged internationally experienced consultants toassist us in achieving our objectives and the desiredresults.



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The water or energy footprint of a product or a service is the total amount of water or energythat is required to produce it. The footprint or embodied water of manufactured goods is thetotal quantity of real water used and the virtual water passed down the production chain.

The virtual water embedded in grain imported into West Asia and North A frica is the equivalentof the annual ow of the Nile and double of the annual ow of the Euphrates (IDB, 2005).

Product QuantityGlobal averagewater footprint

(liters)Product Quantity

Global averagewater footprint

(liters)

Apple 100 g 70 Maize 1 kg 900

Apple Juice 200 ml 190 Milk 1 liter 1,000

Barley 1 kg 1,300 Orange 1 50

Beef 1 kg of meat 15,500 Paper 1 A4 sheet 10

Bread 1 slice 40 Potato 1 kg 900

Cheese 1 kg 5,000 Wheat 1 kg 1,300

Chicken 1kg of meat 3,900 Tea 1 cup 30

Coffee 1 cup 140 Sugar 1 kg 1,500

Cotton 1 cotton shirt 2,700 Rice 1 kg 3,400

Eggs 1 200 Sheep 1 kg of meat 6,100

Hamburger 1 2,400 Tomato 1 kg 180

Water and energy resources are valuable all along the supply chain necessitating end-usersmaximize the economic benets of the scarce streams and consumable products.

Virtual Water

Energy and

The Virtual-Water Chain

Farmer

VirtualWaterow

RealWateruse

RealWater

use

RealWateruse

RealWateruse

VirtualWaterow

VirtualWaterow

Food processer Retailer Consumer

Sources: AFED Water Report 2010http://www.waterfootprint.org/?page=les/home The water footprint of food, Professor Arjen Y. Hoekstra, Twente Water Centre,University of Twente, the Netherlands.

http://www.waterfootprint.org/?page=files/home

http://www.waterfootprint.org/?page=files/home



32 33

ACWA Power International Annual Report 2010 Financial Performance

Accountingclassifcation

ACWA Powereffective

ownership

Power Capacity Water Capaci ty

TotalACWAPowershare

TotalACWAPowershare

MW MW m3 ‘000 m3 ‘000

Operational Projects

Shuaibah IWPP Joint venture 30.0% 900 270 880 264

Shuaibah Expansion IWP Joint venture 29.8% - - 150 45

Rabigh IWSPP Associate 23.9% 360 86 134 32

Shuqaiq IWPP Joint venture 34.0% 850 289 212 72

Maraq IWPP Associate 20.0% 2,743 549 800 160

Barka 1 IWPP Subsidiary 41.9% 427 179 91 38Bowarege Subsidiary 64.9% - - 50 32

5,280 1,373 2,317 645

Project under construction

Rabigh IPP Joint venture 40.0% 1,204 482 - -

Total 6,484 1,855 2,317 645

FINANCIALPERFORMANCE

We currently have operational investments with atotal capacity of 5,280MW and 2.32 Mm 3 /day spreadover 7 plants and with another 1,205MW u nderconstruction. The majority of the investments areunder long term sales agreements with the fuel priceand supply risk assumed by a credit worthy off-taker.Our investments are presented in the following table

with the respective accounting classication.

We undertake a full line-by-line consolidation forall projects in which we exercise full control and doan equity consolidation (one-line consolidation) forthe projects where we either have joint control or

signicant inuence.

The nancial information presented in theconsolidated nancial statements has been preparedin accordance with all applicable SOCPA standardsand in reference to IFRS (where the SOCPA standardshad not addressed an accounting issue). For the year2010, we achieved income from main operations ofSAR 168 M and a net income of SAR 110 M.

The net income for the year was SAR 110 M

compared to a net income of SAR 230 M for theyear 2008 / 2009. The drivers of the net income aredevelopment fee income, our share of net incomefrom joint ventures and associates, and results ofoperations from our consolidated businesses.

Development fee incomeThe fall in net income was mainly due to lowerdevelopment fees as we were unsuccessful indeveloping new greeneld projects during the2010. While we realized a development fee on theclosing of the acquisition of Barka 1 transaction it

was substantially lower than the higher developmentfee income in 2009 on the closing of the Rabigh IPPtransaction.

Income from Joint Ventures and Associates

The results of the investments in joint ventures and

associates are recorded using the equity methodwhich covers Shuaibah IWPP, Shuaibah ExpansionIWP, Shuqaiq IWPP, and associates Maraq JubailIWPP, Rabigh IWSPP and Rabigh IPP. The incomefrom investments in joint ventures and associates isreected as one of our main activities and recognizedas part of operating income. The share of income from

joint ventures and associates companies includes thenet income generated from initial operations and forMaraq Jubail IWPP it also includes net liquidateddamages (net of receipts from EPC and payments tothe off-taker) received from the contractor on delay inachievement of commercial operations.

Income from consolidated businesses

The results of Barka 1 IWPP, NOMAC and Bowaregeare fully consolidated into ACWA Power. Though theoverall contribution from Bowarege for the year 2010was negative, the business has achieved a signicantturnaround with the stabilization of operations andreturned to protability towards the end of year.

Revenue

Revenue is driven by the availability of the powerand water facilities and dispatch of electricity anddesalinated water by operational facilities, supply ofoperation and maintenance services and realization ofdevelopment fees.

Operating costs

Operating cost comprises development expensesincurred for projects that have achieved nancialclose and xed and variable operation andmaintenance costs incurred at Bowarege, NOMACand Barka 1 IWPP. Costs for the projects generallycomprise chemicals, salaries and wages, routine andannual plant maintenance, consumables and spares,insurance, development fees, plant depreciation andamortisation, replacement costs of membranes andother equipment, environmental health and safety

expenses, outsourced labour and manpower costsincurred in the operation and maintenance of theasset portfolio.

Other costs

Other costs comprise general and administrativeexpenses and provision or write-off of developmentcost of discontinued projects. General andadministrative expenses are made up of staff costs,ofce costs, telecommunication and internet, utilities,general repair and maintenance, general insurance,travel and subsistence, legal and professional charges.

Other income

Other income results from incidental incomegenerated on moving the Barges from one location toanother at Bowarege, prots on deposits, commissionincome on equity bridge loans provided to R abighIPP under a back to back arrangement from severalshareholders and other service income generated fromservices provided to projects.

Financial costs

Financial charges are largely driven by interest onlong term loans at Barka 1 IWPP and Bowarege.The commission on letters of credits and guaranteesissued by the nancial institutions arise fromthe commitments of ACWA Power in it’s variousinvestments and development projects. AdditionallyACWA Power pays commission to its shareholdersthat have funded an equity bridge loan for Rabigh IPP(whose commission is fully recovered from Rabigh IPPand is reected under other income).

Cashows and dividends

ACWA Power received a capital injection from theshareholders in 2010 in relation to the acquisition ofBarka 1 IWPP. It also declared at the end of the year adividend to its shareholders.

Debt and Capital Structure

ACWA Power's capital structure comprises mainly ofequity injections from the shareholders. The loans atthe projects are secured with non-recourse nancingexcept for Bowarege where the loan is againstguarantees provided by the shareholders of Bowarege.In addition to the direct capital injection into theorganization, the shareholders have also funded,

directly and indirectly, loans to fund the equity bridgeloan for the Rabigh IPP Project.



34 35

BecomeSmart

The majority of water and electricity distributions systems push excessive supply to meetpredicted demand. Water and electricity production costs increase during peak demandperiods and system inefciencies increase for the durations of minimum demand.

Smart Grids constantly gather information from consumers and balance the delivery of utilitieswith point of use demand.

Real time dynamic balancing enables pricing to be calculated on actual supply versus demand

rather than on xed predetermined tariffs.

Demand or time based pricing is one method of encouraging consumers to use utilities duringnight time oversupply cycles and conserving throughout day time peaks.

Smart meters and smart appliances communicate with the network and obtain real time pricesenabling consumers to take control of when they use water and electricity and how much theypay.

Off-peak heating and cooling, washing and drying using timers are simple to use and areintegrated into newer appliances and equipment.



36 37

ACWA Power International Annual Report 2010 Strategy for growth

GrowthOur medium and long term business strategy isevolving and was further rened during 2010 withoutany fundemental changes from the foundationsestablished in 2009. Our overall objective remainsto expand our portfolio to 30,000MW o f powerincluding at least 1,500MW of renewable energy and5 Mm3 /day of desalinated water production capacity.We plan to progressively grow internationally andto broaden the portfolio across a wider geographicalplatform. The focus is on countries with a stable sociopolitical foundation, strong economic fundamentals, arobust legal framework coupled with a track record ofhonoring contracts and a healthy respect for the valueprivate sector brings to the eld of power generationand desalinated water production.

The announcement of signicant GCC infrastructureinvestments has lead to over 28,000MW of poweropportunities opening to tender across the MENAand Levant regions. Our short term target markets arethe GCC, Jordan, Egypt, Morocco, Turkey and SouthAfrica. We have identied opportunities in each ofthese target countries and are either preparing offersor have commenced development work.

We will be progressing with the Memorandum ofUnderstanding concluded with a local Turkish partnerto develop a 800MW CCGT plant on a “fast-track”basis. This is will be the rst merchant facility in ourportfolio.

We will maintain our focus on the Saudi Arabianelectricity and water market and particularly itsdependence on oil and gas for power generationand desalinated water production. It is now wellrecognized that the country will benet by diversifyingits fuel source to include an element of renewableenergy which would also reduce the country’s carbonfootprint. Solar power offers the greatest potential asa reliable and clean energy. Solar would benet theregions where there is a power decit especially inthose rural areas which are off grid. Furthermore SaudiArabia plans to export solar generated electricity andthere is little to stop it becoming the largest exporter.We believe there are exciting opportunities for us tofulll our ambitions in this emerging energy sector.

Saudi Arabia is the world’s third largest per capitaconsumer of water. It produces one quarter of the

desalinated water in the world, which accounts forapproximately one quarter of the country’s total waterdemand. The government anticipates this demandwill grow on average by 10.7% per annum for thenext six years, with total demand for desalinatedwater projected to be 6 Mm3 /day by 2020. Currentlymost of the desalinated water is supplied by SWCC,which produces approximately 3 Mm3 /day. Subjectto government approval, the private sector is likely tohave an opportunity to acquire strategic equity interesteven in this existing capacity.

Strategy for growth

Stability

Our asset portfolio’s continued exceptionalperformance, both commercial and technical, isthe fundamental basis for our ongoing continuedexistence and expansion. The Asset Managementteam will support the swift resolution of billing andcommercial issues and stabilizing earnings andreturns. Emphasis will be placed on containing costs

within budgets and formalizing standard accountingand reporting practices across the entire eet offacilities.

The Enterprise Risk Management (ERM) projectin progress at ACWA Power will be extended tothe subsidiaries and operational facilities. HSEperformance will be assured by our HSE teamwho undertake periodic inspections and audits.The monthly monitoring and reporting of HSEperformance will continue and performance will beconsolidated for comparison against annual targets.

We pride ourselves on the good relationships we havewith our stakeholders, supply chain and subsidiaries.Keeping in close communication and contact withour partners is an ongoing objective to ensure webuild trust and cooperation. The provision of technical

support, consulting services and training events toour extended team and associates will be carriedon to maintain and improve standards and shareexperience.



38 39

ShowersShorter

Average and longer showers using large and multi-head showers use more water than atypical bath.

Shower TypeLiters perminute

Volume used duringan average 10 minute

showerBath equivalent*

Electric shower 4-6 50 liters ±½

Low ow shower 9 90 liters 1

Mixer shower 9-12 100 liters > 1

Power shower 16 160 liters ± 2

Multi-head shower up to 45 400 liters > 4

* Based on 90 liters which is a full standard bath

Take short showers of 4-5 minutes and use a shower timer as a reminder.

Replace high volume showers with low ow and aerated shower heads.

Bath water can be re-used or shared to conserve water.



40 41

ACWA Power International Annual Report 2010 CR&S

ACWA Power’s main corporate responsibility and sustainability goal for 2010 was to institutionalize and reporton health, safety and environmental (HSE) management across the group. HSE management and performanceis the foundation of corporate responsibility and a signicant indicator of an organization’s governancestandards. We set our benchmarks to sector and international levels using the ISO, OHSAS, World Bank/IFCand GRI standards as guidelines. In April 2010 our Chairman and CEO approved ACWA Power’s Health, Safetyand Environmental Policy Statement. The statement sets out a clear HSE strategy that is applicable to all ouroperations and upon which we have developed our corporate HSE management system.

ACWA Power International (ACWA Power) is a leadingdeveloper, asset owner and operator of independentpower generation and desalination water productionfacilities. We are committed and focused on integratinghealth, safety and environmental (HSE) considerationsinto all our business operations and those we develop

jointly with our partners in order to be a responsibleemployer and business leader.In order to comply with our legal responsibilities and tosupport environmentally sound and sustainabledevelopment ACWA Power will:• Provide and maintain safe, healthy and

environmentally responsible working conditions• Implement a risk-based HSE management system

that conforms to international practices and standards• Provide HSE training to our employees and HSE

leadership to our partners.

• Regularly engage with our employees and partnerson HSE issues.

• Adopt a preventative approach in our businessactivities by undertaking risk assessments,complying with legislation, using resourcesprudently and minimizing pollution.

• Implement arrangements and set standards topromote and assure the best practicable HSEperformance of our subsidiaries, supply chain andproject companies

• Periodically monitor and report on HSEmanagement and performance

• Annually review our HSE policy statement and setperformance and management targets

All ACWA Power employees are responsible for adhering

to and implementing this policy statement which shall befurther developed into our health, safety andenvironmental, policies and standards. Our businessleaders and managers are accountable for monitoringand managing compliance and performance.This policy statement is applicable to all our employees,offices and business activities.

اع د ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ـ ب إ اه ـ ـ ـ ـ ـ ـ ـ ي ـ ـ ـ ـ ـ ـ م ـة ـ ـ ـ ـ ـ ـ ـ ـ ا ـ ـ ـ ـ ـ ـ ـ لية و دل ا

قة ا طلا و

ه ا يمل ا

ال مع أ

كة

Date: April 2010 Revision: 1.0

President & CEO Chairman

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CorporateResponsibility

and Sustainability

ACWA Power International Annual Report 2010 HSE performance

We are pleased to be able to report that there were no fatalities, nes or cases of HSE enforcement actionacross our portfolio of assets during 2010. Unfortunately there were six reportable health & safety incidentswhich lead to an overall Accident Frequency Rate per 200,000 hours of 0.09. This should be compared to UKand European AFR rates of 0.25 for operational facilities, 0.30 for construction and 0.19 for ofces. Elevenenvironmental incidents occurred, none of which resulted in permanent contamination or pollution. A summary

of HSE performance is tabulated below.

Location HSE Management System

Hoursworked

(employees&

contractors) Fatalities

ReportableHealth

& Safetyincidents

ReportableEnvironmental

incidents

HSE Fines orEnforcement

Notices

ACWA Power(corporate ofces)

Certication to ISO14001 & OHSAS 18001scheduled for December2011

198,000 0 0 0 0

NOMAC(corporate ofces)

Certied to ISO 14001 &OHSAS 18001

75,600 0 0 0 0

Barka IWPPCertied to ISO 14001 &OHSAS 18001

124,128 0 0 0 0

Shuaibah IWPPOperator certied to ISO14001 & OHSAS 18001

874,304 0 2 0 0

Shuaibah IWPOperator certied to ISO14001 & OHSAS 18001

112,122 0 0 1 0

Rabigh IWSPP Under development 1,083,112 0 0 3 0

Maraq IWPP Under development 565,650 0 3 4 0

Shuqaiq IWPPOperator certied to ISO14001 & OHSAS 18001

6,522,544 0 0 0 0

DesalinationBarges

Operator certied to ISO14001 & OHSAS 18001

228,372 0 0 0 0

Rabigh IPPFacility still underconstruction

3,229,200 0 1 3 0

Totals 13,013,032 0 6 11 0

Health ,Safety and Environmental Performance



42 43

ACWA Power International Annual Report 2010 HSE performance

There were several notable HSE projects andachievements during 2010 including:

• NOMAC’s Integrated Management System (IMS)was certied by an external accreditation agencyto the ISO 14001 environmental management,ISO 9001 quality management and OHSAS18001 health & safety management standards.This means that the majority of our portfolio isoperating with externally certied managementsystems.

• ACWA Power Barka completed over 8 years ofoperations without a lost time accident which ismore than 1,035,580 hours of safe working. Thiswas only possible due to the diligence and safework practices of the entire Barka team.

• ACWA Power Barka won the Green FootprintAward at the Oman Green Awards which isthe rst national Environmental Award schemein Oman. The Oman Green Awards honor theoutstanding environmental vision, endeavors andachievements of corporate organizations andindividuals.

• An illustrated “Safe Construction” booklet hasbeen developed for distribution to constructioncontractors across our new and existing facilities.The 24 pages booklet has been translated intoEnglish, Arabic, Urdu and Chinese and is a rst inthe Saudi construction sector.

• As part of managing our supply chain, acomprehensive minimum requirements guidelinefor the Operation and Maintenance of our currentand future assets was developed and approved.The standard includes detailed specications forHSE management that are based on internationalbest practices. The guideline has been adoptedand will be implemented by our largest O&Mservice provider.

Since this is ACWA Power’s rst year of measuringHSE performance and so there is no data availableto calculate year on year changes. Water, Energy andGHG emissions have been measured for the Dubaiofce and a corporate target has also been agreed tomonitor these data across the portfolio in 2011.

Renewable Energy

We have made steady progress on achieving ourvoluntary target of adding 5% power generation fromrenewable sources to our asset portfolio. We haveprequalied for a second CSP project in North Africa.Technical and commercial support has been provideto advancing solar desalination to KAUST for theevaluation and eld testing of PVs (photovoltaics) foruse in Saudi Arabia.

Community Initiatives

The Shuqaiq Water and Electricity Company (SqWEC)equipped the Sabya General Hospital’s OptometricCenter in Jizan in December 2010. SQWEC providedsponsorship for specialist medical equipmentand a visiting doctor program. The Sabya GeneralHospital was opened in 1972 to provide health careservices to the residents of the region which todayhas a population of nearly half a million people andincludes 23 towns.

Staff from our Riyadh ofce established anACWA Power basketball team to play in the localtournaments organized by the Filipino community.The objectives of this league are to promotecamaraderie and sportsmanship of all Filipinoexpatriates working in the Kingdom. The team wassponsored by ACWA Power and claimed the secondplace in the 2010 MKB Mobily Cup. The trophy waspresented at an awards ceremony at the PhilippineEmbassy in Riyadh.

CR&S projects and achievements

Our corporate responsibility and sustainabilityprogram has matured and extended during 2010with projects ranging across our supply chainand stakeholders. We are continuing with theestablishment of a technical training institute toeducate Saudi school leavers and encourage them totake up a long term careers in the power and watersector. This initiative has multiple benets and willaddress high regional unemployment and the needfor improved technical skills of the local workforce.The Institute’s vision is that “Saudi Arabia’s worldclass power generation and water desalinationfacilities and sector is excellently lead and staffedby home grown rst-rate managers, operators andtechnicians” and its mission is “to establish a thrivingand self sustaining Institute that inspires young Saudisto enter the power and water sector and becomesthe polytechnic of choice for trainees and employersbased on reputation and quality of training.”

ACWA Power carried on with the sponsorship ofsector conferences and academia. This includesseveral universities and being an active member of theKing Abdullah University of Science and Technology(KAUST). The KIAB program provides opportunitiesfor R&D and business alliances between industry, theuniversity and its pool of world class academics.

We support various international and regionalbusiness associations and networks that promotesustainable development including:

• International Desalination Association

• Saudi Water & Power Forum

• King Abdullah University for Science andTechnology (KAUST) – KAUST Industrial AdvisoryBoard (KIAB) and Center Industry AfliatesProgram (CIAP)

• Emirates Green Building Council

• Emirates Environmental Group

• Global Water Intelligence

• Arab Forum for Environment and Development(AFED)

ACWA Power was recognized for our corporateresponsibility and sustainability program with twoawards, namely:

• The SWPF Award for Innovation with the citationstating “Demonstrating commitment to anintegrated management approach to sustainabilityand corporate responsibility”.

• The 2010 Saudi Arabian Responsible CompetitiveIndex (SARCI) as a top ten nalists from 120entrants. This is the third year that we have beenacknowledged by the Saudi Arabian GeneralInvestment Authority, the King Khalid Foundationand the global research institute Accountabilityfor our corporate responsibility and sustainabilityactivities and leadership role.

Objectives for 2011

In 2011 we aim to extend our corporate responsibilityand sustainability program to all the regions in whichwe have assets. This will signicantly increase therange and nature of our projects as we maintain ourfocus on the needs of the local communities andstakeholders.

Portfolio wide HSE monitoring and reporting willremain a priority and will aim to comply with theGRI guidelines. The accumulated data will enable us

to report year on year performance and trends in ourthird corporate report against performance targets willalso be set using international benchmarks.

Minimum standards for HSE management andperformance will continue to be rolled out across ourdevelopment, acquired and existing asset portfolio.As these standards are often different to the localrequirements, we will continue to support andeducate our supply chain about our expectations forHSE performance which are based on World Bankrequirements.



44 45

during Ingenuity design

Insulation of roofs, walls and oors plus using efcient lighting can reduce a smallsupermarket’s annual electricity consumption for heating, cooling and lighting byapproximately half.

The capital cost is overwhelmingly repaid over the life of the supermarket, improvingprotability and using ingenuity to avoid depleting national resources.

Electricity consumption of typicalregional supermarket(1,602,581 kWh per annum)

40%35%

7%18%

Electricity consumption of upgradedsupermarket(1,081,813 kWh per annum)

50%30%

15%5%

Cooling Energy

Heating Energy

Internal Lights

Other Uses

Source:Modeling energy use in the commercial sector in a Saudi Arabian retail store, Mohammed Ali Alzain,Department of Physics, Faculty of Science, King Abdulaziz University.



46 47

Project Companiesand

Subsidiaries



48 49

ACWA Power International Annual Report 2010 Project Companies and Subsidiaries

Barka 1 is the rst IWPP developed as part of theprivatization program of the Sultanate of Oman. Theplant began commercial operations in June 2003

and a majority stake was acquired by ACWA Powerin August 2010. The facility contributes 12% of theelectricity and 17% of the desalinated water in Oman.

ACWA Power Barka delivered phenomenal resultsduring 2010 by meeting operational and nancialgoals while facing several challenges. Availabilitywas maintained at more than 99% for both electricityand water and costs effectively managing by applyingthe team’s extensive operational experience. This is acontinuation of the success in 2009 when the plantwon the “Middle East Desalination Plant Operator ofthe Year” award presented by PowerGen.

The impressive performance is also due to theseamless transition post sale and exceptional safetyand environmental management. The plant completedmore than 1,000,000 man hours without a lost time

incident since the project became operational 8 yearsago. The facility successfully renewed its health &safety OHSAS 18001 and environmental ISO 14001management certication for the third consecutiveyear, and there have been no environmental breachesduring the year. In recognition of the environmentalperformance, the facility won the rst “Oman GreenFoot Print Award” presented by the Oman GreenAwards.

Location 60 km north of Muscat, Oman

Services supplied to Muscat

Fuel Natural Gas

Power 427MW

Conguration Combined Cycle(Gas and Steam)

Desalinated Water 91,000 m3 /day

Desalination process Multi-Stage Flash (MSF)

Project Cost SAR 1,556 M, USD 415 M

CommercialOperational Date Q2 2003

Acquisition Date 18th August 2010

ACWA Power Share 58%

Contract Type and Term PWPA-BOO 15 years

Operator ACWA Power (OwnerOperator)

ACWA Power Barka 1 IWPP

Rabigh IWSPP is owned and operated by the RabighArabian Water and Electricity Company (RAWEC);a Joint Venture between Marubeni Corp, JGC

Corporation, ACWA Power, Itochu Corporation andPetro Rabigh. The project was constructed underan EPC contract by Mitsubishi Heavy Industriesand consists of a conventional thermal powerwith ve 118MW steam turbines, nine 470 t/hrsteam generators, three wet limestone Flue GasDesulphurization (FGD) units and sixteen 504 m3 /hrReverse Osmosis (RO) trains. Reliability and availabilityhas signicantly beaten forecasts from the start ofproduction at PCOD in June 2008 until 2010.

The FGD system uses a limestone forced oxidationsystem which incorporates air injection to produceoxidised gypsum resulting in sulphur emissionsdecreasing from approximately 2,200 to 72 ppm.During full load, the facility consumes 600 ton/day oflocally sourced limestone and produces 1,200 tons ofgypsum that is sold to the adjacent Arabian Cement

Company for cement production.

RAWEC employs 207 employees of which 40%are Saudi nationals at all levels of the organization.Employee health and wellbeing are a companypriority and their well-resourced clinic on site whereemployees are offered routine health screenings. A tenmonth apprenticeship scheme developed for youngschool leavers from the Rabigh region has resultedin 19 graduates becoming full time employees. Theemphasis on employee welfare and develop has paidoff and RAWEC employee turnover was 3% comparedwith a with a sector average of 9% during 2009.

Location Rabigh,Western Saudi Arabia

Services supplied to Petro Rabigh Petrochemicalcomplex

Fuel Heavy Fuel Oil

Power 360MW

Conguration Steam Turbines


Desalination process Reverse Osmosis (RO)

Steam 29,520 ton/day

Project Cost SAR4,315 M, USD 1,151 M


ACWA Power Share 23.9%

Contract Type and Term WECA-BOOT 25 years

Operator RAWEC (Owner Operator)

RabighIWSPP



50 51

This facility is the world’s only fulltime commerciallyoperational self-contained desalination plantsmounted on transportable barges which enables them

to be moved at short notice to locations that have anurgent or seasonal need or water deciency.

Bowarege is a venture between ACWA Power andRaka Saudia Power and Water. The off-taker for the50,000 m3 /day is the Saline Water Conversion Corp.(SWCC). Operation & Maintenance is undertaken byNOMAC with a staff compliment of 88.

The barges are currently moored in Yanbu on the RedSea providing desalinated water to the towns of Yanbuand Medina. The facilities have previously supplyservices to Jizan and Shuaibah in 2009 and 2008respectively.

During May and June 2010, the units were relocated540 nautical miles to the north by means of twoseparate towing operations. The facilities stoppedproduction in Shuqaiq on May 20 th and supplies

were resumed 34 days later when Unit 1 resumedcommercial operation in Yanbu. The entire teamcompleted a tremendous job of decommissioning,making the vessels sea ready, completing the shipping,establishment and recommissioning in under 5 weeks.This enabled the two barges to produce 4.8 Mm3 ofdesalinated water in the nal half of the year.

LocationYanbu, 250 km north of Jeddah,Western Saudi Arabia

Services supplied to Yanbu and Medina

Energy Supply Electricity from dieselgenerators

Desalinated Water 2 x 25,000 m3 /day


Project Cost SAR370 M, USD 110 M


ACWA Power Share 64.85%

Contract Type and Term WPA-BOO 3 years

Operator NOMAC

Bowarege


The Shuaibah Expansion Project was delivered inresponse to the Saudi Government’s need for a fast-track solution. The challenge was to provide an

additional 150,000 m3 /day of desalinated water tomeet the accelerating demand in Jeddah The projectis located on reclaimed land adjacent to the ShuaibahIWPP and the plants use a common water dischargechannel. The facility uses reverse osmosis technologywith 2 passes (sea water and brine) and energyrecovery equipment and systems.

The facility’s deemed availability during 2010 exceedforecasts and averaged 98.6%. Over 43 Mm3 ofdesalinated water was produced without a lost timeaccident or environmental incident.

The facility is operated and maintained by 67qualied and experienced personnel. One of theteam’s priorities was successfully implementing a SAPsystem to computerize the p lant’s overall operationsand maintenance management. The facility has put

the system into service and is reaping the benetsof streamlined planned preventive maintenance,performance monitoring and periodic reporting.

Location 120 km south of Jeddah, Western Saudi Arabia

Services supplied to Jeddah

Energy supply Electricity



Project Cost SAR874 M, USD 233 M



Contract Type and Term WPA-BOO 20 years

Operator NOMAC

ShuaibahExpansion IWP



52 53

The Shuaibah IWPP was the rst IWPP developedfollowing the Saudi government’s decision to openthe market to private investment. The facility delivers

water and electricity to a wide region including thecities of Makkah, Jeddah, Taif and Al-Baha.

The facility's capacity was admirably demonstratedduring 2010 with approximately 7,300 TWh ofelectricity being exported to the Saudi ElectricityCorporation. Peak summer demand targets wereachieved and exceeded plus the additional supply wasprovided at the standard rate.

Desalinated water production totalled more than 264Mm3 which works out to contributing 8,374 liter/ second to the regional demand or lling an Olympicsized swimming pool with drinking water every 5minutes.

Environmental performance was regularly monitoredand audited as per the Environmental and SocialImpact Assessment (ESIA) requirements. Atmospheric

emissions are abated using electrostatic precipitatorsand ue gas desuphurization equipment. The averageparticulate (dust) emissions were approximately7 mg/Nm3 which is much less than the 50 mg/ Nm3 prescribed by the World Bank and IFC HSEGuidelines. Sulphur dioxides, nitrogen oxides andcarbon monoxide emission were also signicantlybelow permissible levels.

Location 120 km south of Jeddah, Western Saudi Arabia

Services supplied to Jeddah

Fuel Arabian Light Crude

Power 900MW



Desalination process Multi-Stage Flash (MSF)

Project Cost SAR 9,188 M, USD2,450 M

Commercial

Operational Date

Q1 2010



Operator NOMAC

ShuaibahIWPP


Maraq IWPP is the world’s largest power anddesalination plant, located in Jubail industrial cityin the Eastern Province. The project comprises four

blocks, with three Gas Turbines and one steam turbinein each block and 27 MED desalination units.

The facility achieved several milestones during 2010including the Commercial Operation for Blocks 2, 3and 4 in February, March and June respectively. Theplant then achieved PCOD on the 28 th October 2010after the successful completion of the reliability testrun.

Looking back, the EPC Contractor received the limitednotice to proceed on the 20th January 2007, startedsite clearing on the 20 th April 2007 and receivedfull notice to proceed on 20 th June 2007. The entireproject was delivered in only 1,377 days or just under46 months which is a signicant accomplishment forits scope and complexity.

The early production and revenues during 2010

before full commercial operation were exceptionalwith the facility exporting over 150 Mm3 ofdesalinated water and approximately 16 TWh ofelectricity.

Location Jubail, North eastern Saudi Arabia

Services supplied to Jubail Industrial City

Fuel Heavy Fuel Oil

Power 2,743MW

Conguration Combined Cycle(Gas + Steam)


Desalination process Multi-Effect Desalination(MED)

Project Cost SAR 12,600 M,USD 3,360 M



Contract Type and Term PWPA-BOOT 20 years

Operator JOML

(Joint venture of IPR-GDFSuez and NOMAC)

MaraqIWPP



54 55

The past year have been a critical but remarkableyear for Shuqaiq as it completed construction andsuccessfully made the transition and handover to

NOMAC's O&M personnel. The facility’s initialcommercial operation started on the 1st May 2010and all three power units and water unit achievedtheir full commercial capacity on the 24th August2010 - eleven weeks ahead of schedule. NOMAC stafftook responsibility in their stride and operated theunits without any major incident. O&M procedureswere implemented which resulted in the exceptionalperformance of the power units. Overall plantavailability and performance is better than design andwarranty forecasts.

NOMAC’s staff has b een involved since theearly stages of the construction through to thecommissioning and have completed a formal on-the-job training program delivered by the MHI (theEPC Contractor). The current O&M contingent of 175personal includes 12 Saudi nationals who are trainees

and are progressing through an On Job Trainingapprenticeship.

Regular preventive maintenance and calibrationof the stack emission monitoring instruments areundertaken to maintain condence in their accuracyand ensure regulatory compliance. Data from thestack monitoring system has conrmed the plant’scompliance with environmental requirements and thatthere have not been any contraventions.

The Shuqaiq Water and Electricity Company, the facility’sproject company, sponsored a new eye clinic at theregional hospital as part of its social engagement program.

Location140 km north of Jizan, Southern Saudi Arabia

Services supplied to Assir Region, Jizan

Fuel Arabian Heavy Crude

Power 850MW

Conguration Gas Turbines

Desa linat ed Wate r 212 ,000 m3 /day


Project Cost SAR 6,866 M, USD1,831 M

Commercial OperationalDate

Q4 2010

ACWA Power Share 3 4%


Operator NOMAC

ShuqaiqIWPP


The Rabigh IPP is under construction on the RedSea coast at Rabigh, 160 km north of Jeddah. Theengineering, procurement and construction contract

is a joint venture between two Chinese companies;SEPCO III Electric Power Construction Corporationand Dongfang Electric Corporation.

The works are on target to meet the ICOD milestonesand the nal PCOD of 1st April 2013. As of December2010, the power house foundations for both units,turbine pedestals, chimney, seawater facilities and

jetty have been completed.

The site has worked over 3 M man hours with just onereportable health & safety incident. The labour forceis continually increasing and reached 2,000 people atyear end and will continue to grow in 2011.

Location Rabigh,Western Saudi Arabia

Services supplied to Petro Rabigh PetrochemicalComplex

Fuel Heavy Fuel Oil

Power 1,204MW


Project Cost SAR 9,397 M, USD 2,506 M

CommercialOperational Date Forecast Q2 2013


Contract Type and Term PPA-BOO 20 years

Operator ROMCO

(Joint venture of KWEPCOand NOMAC)

RabighIPP



56 57

Location Jeddah Head Ofce, Western Saudi Arabia

Services supplied to Power and Desalinationfacilities across GCC

Established 2005


Operation andMaintenance Contracts

• Bowarege DesalinationBarges

• Shuaibah IWPP

• Shuaibah IWP

• Shuqaiq IWPP

• Rabigh IPP(mobilization phase)

• Maraq IWPP

Personnel 537

NOMAC


NOMAC delivered operational and maintenance(O&M) services at four commercially operationalwater and power generating facilities in Saudi Arabia.

Altogether, NOMAC operated a portfolio with acapacity of approximately 2,954MW of power and1.3 Mm3 /day of desalinated water production. Inaddition, an O&M team was mobilized at the RabighIPP which is still under construction.

NOMAC’s philosophy is to operate & maintain allfacilities in the way they are designed and accordingto the highest standards and practices. NOMAC wasable to meet these commitments across the groupby actively participating in the commissioning andacceptance of new plant, preparing tailored on the

job training programs for newly-recruited nationalsand designing refresher courses for all staff andsupporting the entire workforce with specialistservices from the Head Ofce in Jeddah.

The management and technical teams maintain

continual contact with original equipmentmanufacturers in order to keep up-to-date withtechnical information, innovation and transfer ofknowledge. Preference is given to local suppliers tosupport and develop regional supply chains.

One of the key business objectives was theimplementation of a computerized maintenancemanagement system and computerized spare partsmanagement program which is the foundation ofprofessional plant operations and cost containment.The initial SAP system was implemented across theorganization with additional packages going live in2011.

Throughout 2010 the company’s integrated health &safety, quality and environmental management system(IMS) was progressively developed and implemented

at the corporate ofce and the facilities. In Decemberthe system was audited by an external accreditedcertication agency and successfully achievedcertication to three international standards (OHSAS18001, ISO 9001 and ISO 14 001). The certiedIMS covers the operation and maintenance of allthe current and future facilities’ under NOMAC’sstewardship.



58 59

ACWA Power International Annual Report 2010 Our Desalination Barges

Our Desalination

Barges

Barge 1 Barge 2 Total

Locat ion Durat ion Product ion m3 Duration Production m3 Production m3

Shuaiba June. 2008Feb. 2009 5,542,019

Oct. 2008 Jan. 2009 2,370,742 7,912,761

ShuqaiqApril. 2009May. 2010

3,294,060Feb. 2009May. 2010

6,793,871 10,087,931

Yanbu June. 2010March. 2011 6,021,149

July. 2010-March. 2011 3,487,010 9,508,159

Grand Total 27,508,941

The Barges IWP is one of the world’s most unique,innovative and challenging water desalinationprojects. Conceived as a response to the chronic

drinking water shortage in Saudi Arabia in 2008, it hastranslated an entrepreneur’s dream into a daily andprecious reality for the people of the Western Region.The solution was to build a pair of mobile barges,each complete with a 25,000 m3 /day fully mountedand operable RO desalination plant. The unitsmeet the exacting needs of membrane technology,compact design for a limited footprint, environmentalconstraints, international marine certication andindustrial safety standards. The barges can be dockedat a selected site and commissioned in approximately30 days. This is in sharp contrast to land-basedturnkey desalination plants, which typically needs3-5 years from contract signing to commissioning andactual delivery of product water.

The privatized barge-mounted desalination solutionproved to be the most practical and feasible, ifnot the only solution to the acute water shortagesexperienced in many parts of the country, especially

during peak-demand periods, such as the Muslimfasting month of Ramadan and the Hajj (pilgrimage)season. It has successfully contributed to easing the

severe water shortage problems in Makkah, Jeddahand Abha (Asir Region) in 2008-2009, and currentlythe cities of Medina and Yanbu, where the bargeshave been stationed since June 2010. Barge-mounteddesalination has been proven to be a reliable and fast-response for emergency water supply in the event ofunforeseen disasters.

The completed project utilizes a diesel powersupply system, a self-contained intake system, andan integrated membrane process consisting of UFpretreatment for the SWRO/BRO desalination systems.

ACWA Power’s goal to prove the viability, reliability andcost-effectiveness of the project is illustrated in the tablebelow. The barges have produced over 27.5 Mm 3 meters(7.3 billion US gallons) of drinking water from surfaceRed Sea waters in the rst 33 months of operation, andis on track to provide up to 20 Mm3 (5.3 billion USgallons) in annual production capacity.

Featurestudy case

During 2010, after the successful commissioningof the Shuqaiq IWP, both barges were relocated toa deep and open-sea intake site inside the Madina-Yanbu Desalination Plants complex. The relocationand engineering upgrades translated into averageplant availability of 93% at Yanbu with averagedaily production rates of over 45,000 m3 /day. Plansare now underway to add some 10,000 m 3 /day of

capacity to both barges in the next 1-2 years. HE TheMinister of Water & Electricity, HE The Governor ofSWCC and other senior managers have expressedtheir full satisfaction and complete condence of theBarges project’s current performance, capability andreliability. SWCC has already extended its Water SaleAgreement for 3 years at Yanbu.



60 61

Indoor comfort

withIntegrity

In hot arid climates 70-80% of electricity is consumed for air conditioning. 70% of the energyused by households in the EU is spent on heating homes and another 14% on heating water.United Kingdom’s space heating contributed 40% of all non-transport energy consumption in2000.

People adapt clothing and acclimatize to winter and summer temperature variations and sodo not need a constant indoor temperature of 22°C. Seasonally adjusting indoor temperaturesyields signicant energy savings of up to 8% per °C for each degree the thermostat is movedfrom 22°C.

Reconsidering indoor temperatures

Winter Summer

Daytime occupied areas 19-20°C 24-25°C

Nighttime occupied areas 17-18°C 26-27°C

Unoccupied areasUnconditioned or heated

to 14-16°CUnconditioned orcooled to 29-30°C

Time and zone controlled thermostats enable temperatures to be modulated to match demand as compared to permanent operation at constant temperatures.

Traditional ceiling or room fans enables occupants to be comfortable in moderately warmertemperatures because the air movement provides additional sensible cooling.

Awnings, shutters, seasonal trees and vines and decorative screens inhibit heat gain byproviding shade without reducing light leading to energy savings of approximately 5%.

Solar control window lms applied to windows and doors reduces peak demand and airconditioning consumption.

Seasonal and regular maintenance of leaking and blocked ducts, lters and pipe work typicallyleads to a 20-25% saving of cooling and heating costs in an average home.

Sources:http://ec.europa.eu/clima/sites/campaign/control/turndown_en.htm http://www.energy.eu/publications/KH7807164ENC_002.pdf http:// webarchive.nationalarchives.gov.uk/+/http://www.berr.gov.uk/les/le11250.pdf

American Society of Heating, Refrigerating, and Air-Conditioning Engineers, Inc.

http://ec.europa.eu/clima/sites/campaign/control/turndown_en.htm

http://www.energy.eu/publications/KH7807164ENC_002.pdf

http://webarchive.nationalarchives.gov.uk/+/http://www.berr.gov.uk/files/file11250.pdf



http://www.energy.eu/publications/KH7807164ENC_002.pdf

http://ec.europa.eu/clima/sites/campaign/control/turndown_en.htm



62 63

ACWA Power International Annual Report 2010 Corporate Governance Report

Director AppointmentBoard Meetings 2010 AGM

ExtraGAM

5th May 17th Aug. 2nd Dec. 15th May 14th Jul.

Mr. Mohammed AbdullahAbunayyan

Executive Chairman Present Present Present Present Present

Mr. Sul aiman A . A l-Muha id ib Non Execu tive D ir ec to r P re sent P re sent P re sent P re sent P re sent

Mr. Ahmed Al-Rajhi Non Executive Director Present PresentApologiesreceived

Present Present

Mr. R asheed Al-Rasheed Non E xecutive D irector Present Present Present Present Present

Mr. Ta ri q M. A l-Mu tl aq Non Execu tive D ir ec to r P re sentApologiesreceived

Present Present Present

Mr. Yousef Al-Motlaq (resigned on15th August, 2010) Non Executive Director Present - - - -

Mr. Saleh C. Brahimi Independent Director Present Present Present Present Present

Mr. Mohd. Izzaddin Bin Idris(appointed on 16th August, 2010)

Independent Director - - Present Present Present

CORPORATE GOVERNANCE

REPORT The greater part of the corporate management effortduring 2010 went into developing and starting theimplementation of formal corporate governance andrisk management policies and procedures. The AuditCommittee and the Board approved in principle

the corporate governance regulations and codeduring August 2010. The code is based on severalinternational standards including the Capital MarketAuthority regulations issued in the Kingdom of SaudiArabia. The scope of the regulations covers the rulesand standards governing the company’s performancein particular relating to disclosure and reporting,roles and responsibilities of Directors, levels ofauthority, shareholder rights and powers, functionsand responsibilities of the Bo ard committees. Thecode led to the formalization of the Board InvestmentCommittee. The phased introduction of the corporategovernance code and practices will continue into2011, inter alia, with the formation of the Nominationand Remuneration Committee.

ACWA Power is committed to the highest standards ofcorporate governance and these values are reectedin leadership, management and day-to-day operationsof the Board of Directors, management and itsemployees. The overall guiding philosophy is to

assist the management team in their efcient conductof business and fullling obligations towards ourstakeholders. The governance code is applicable to allDirectors, management, employees and professionalassociates.

Board of Directors and BoardCommittees

The Directors bring to ACWA Power a rich experienceof corporate governance, operations and maintenance,nance and accounting, business development andinstitution building. Their experience is complimentedby their academic qualications in the eld ofadministration, management, nance, accounting andengineering. The Board comprises seven members ofwhich ve are non-executive and two are independent.Details of the Board and their attendance at meetings

are tabulated below.

The meetings of the Board of Directors wereconvened by issuing proper notices along with theagenda and relevant work papers. The meetings werepresided over by the Chairman of the Board and theminutes of the meetings were appropriately recordedand circulated. Mr. Abdulrahman Al-Khamis resigned

his Board position of Non Executive Director on 7 th March 2010.

The AGM of the year ending 31/12/2009 was heldon 15th May 2010 and an Extra General AssemblyMeeting (GAM) was convened on the 14 th July 2010.

Member AppointmentAudit Committee Meetings 2010

15th May 12th Jul. 16th Aug. 1st Dec.

Mr. Rasheed Al-Rasheed

Chairman (1/1/10-16/8/10) Non Executive Member

Apologiesreceived

Present Present Present

Mr. Khalid Al-SolaiIndependent Member andChairman (from 17/8/10)

Present Present Present Present

Dr. Ahmed Al-Meghamas

Independent M ember PresentApologiesreceived

PresentApologiesreceived

Audit Committee

An Audit Committee has been established as per ourcorporate governance code and the CMA standards.Mr. Khalid Al-Solai was appointed as the Chairmanof the Audit Committee on 16th August 2010. Allthe members are competent and have relevantaccounting experience in compliance with theSaudi Organization for Certied Public Accountants(SOCPA) standards and commercial laws. Internal

audit was outsourced during 2010 to a leadingmultinational audit rm with a large infrastructure,resource pool, and audit and research tools.

Details of meetings held during the year andattendance by the members is provided below. Inaddition, the Chairman of the Audit Committeeattended the AGM held on the 15 th May 2010 toaddress any queries of the shareholders in relation tothe audited nancial statements.

The Audit Committee and the Internal Audit functionsupports the Board in fullling its nancial oversightresponsible and review function by ensuringadherence to policies, procedures, practices and

compliance with laws and regulations. The Committeeensures that the nancial statements are preparedin accordance with the SOCPA standards. TheCommittee reviewed internal audits of the followingareas:

• Human Resources & Payroll function (audited ona quarterly basis)

• Information Technology

• Corporate Services including the administrationfunction

The Audit Committee and management assert thatthe internal control regulations have been appliedand that sound accounting records were kept withappropriate supporting documents. The policies and

measures of corporate performance were preparedand documented according to international standards.It is conrmed that there were no signicant ndingsnoted in the internal audit reports which could

materially affect the management or the affairs of thecompany and the internal audit based on its randomsample testing procedures did not detect fraud inthe areas audited during 2010. Furthermore, themanagement team was not informed of any fraudwhich it might have known about during the yearand which should have been informed to the internalauditors or the external auditors. The managementteam is progressing with implementing action plans toaddress the internal audit report ndings.

The Audit Committee heard the views of the externalauditors before forwarding the annual accounts for theyear 2010 for approval to the Board of Directors.



64 65

Member Category 11th Jul. 16th Aug. 23rd Oct. 2nd Dec.

Mr. Mohammed Abdullah

Abunayyan

Executive Chairman Present Present Present Present

Mr. Tariq M. Al-Mutlaq Non Executive Director Present Present Present Present

Mr. Ahmad S. Al-Rajhi Non Execut ive Director PresentApologiesreceived

Present Present

Mr. Saleh C. Brahimi Independent Director Present Present Present Present

ACWA Power International Annual Report 2010 Corporate Governance Report

Investment CommitteeThe primary purpose of the Investment Committeeis to consider matters relating to approving theinvestments in projects, investment guidelines,strategic business plans and related decisions onbehalf of the Board of Directors. The InvestmentCommittee is a standing Committee of the Board

deriving its powers under a full delegation ofresponsibility from the Board of Directors. Themembers of the Committee and their attendanceat the Committee meetings are tabulated in thefollowing:

Nomination and RemunerationCommittee

The Governance Code stipulates the composition,main tasks and requirements for a Nomination andRemuneration Committee of the Board to addressNominations and Remuneration of the Directors andManagement. It will be chaired by an IndependentMember of the B oard. This Committee will beconstituted during 2011 with its main duties including

recommending appointment of members to the Board,review of Board structure, ensuring independenceof the Board, proposing remuneration and review ofsuccession planning of executive management.

Related Party Transactions Committee

The Governance code includes provisions for theestablishment of a Board sub-committee to reviewand approve matters and transactions that involveRelated Party transactions and conict of interestwithin the company. The committee’s policies areunder development and will be implemented during2011. The committee will consist of three membersof which two will be independent directors from theBoard of Directors.

Regulatory penalties

No penalties were imposed during the year by Saudiauthorities or any Statutory Authority of the countrywhere any ofce of ACWA Power is located.

Communication to Shareholders

ACWA Power communicated effectively with theshareholders during the year using available means

of communication. Quarterly nancial statementsreviewed by the Audit Committee and approved bythe Board were distributed to the shareholders.

Professional Prole of External Auditor

Ernst & Young is an established accounting rmhaving a permanent ofce in Saudi Arabia (the rstone at Jeddah in 1967 and is in Riyadh since 1974).Ernst & Young, Riyadh, is the principal ofce thatmanages ACWA Power’s audits as well as most of oursubsidiaries, joint ventures and associate Companies.

General

ACWA Power carries out the business of developing,acquiring and operating electricity and waterdesalination facilities and acts as a holding company

for subsidiaries, joint ventures and associatedcompanies.

Business performance

The various sections of this Annual Report, containa review and details of the business, nancialperformance and nancial position of the Companyfor the year ended 31 st December 2010. The AnnualReport also covers risks faced by the Company in itsoperations, the strategy of the Company, a report onthe corporate governance and operating performanceof the assets of the Company.

For its second nancial year ending 31 st December2010, the Company recorded a noteworthyoperational performance. In addition to the Barka 1transaction that achieved completion, several projects

have also commenced operation during the year.

The Directors are satised that the Company hasadequate resources to continue to operate forthe foreseeable future. Accordingly, the Directorscontinue to adopt the ‘going concern’ basis for thepreparation of this nancial statements.

The auditors’ report and the company’s nancialstatements are included in the next sections of thisAnnual Report.

Acknowledgement

The Board of Directors would like to express theirgratitude to The Custodian of the Two Holy Mosques,His Royal Highness the Crown Prince, His Royal

Highness the Second Deputy Premier and to HisExcellency the Minister of Water and Electricity, fortheir continued support of the power and water sectorand offer their thanks to all government ofcials andrelevant authorities for their continued cooperationwith the Company. We also take this opportunity tothank the management and our employees for theirdedication and commitment to position and maintainACWA Power as a leader in this sector in Saudi Arabiaand abroad.

REPORT

Board of Directors'

ACWA Power International Annual Report 2010 Board of Directors' Report

acwa power annual report 2010 ( english )

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