November 2018 1

Project BarakRound Table14.11.2018

November 2018

November 2018 2

BARAK PROJECT…

'יד', פרק ד, שופטים

The Alon Tavor Site Location

Alon Tavor

Industrial

Park

October 2018 4

The Alon Tavor Site Location (Cont.)

Area not to be sold (Transmission facility)

Area under assets settlement with the State – owned by ILA – ILA is examining the possiblity to give to the Buyer an option to lease it

Site border (see following pages for detailed infrastructure overview)

19,700 Sqm

Transferred to the

State

92,620 Sqm

30,340 Sqm

1

2

3

4

October 2018 5

The Alon Tavor Site Location - Dovrat

In addition, Alon Tavor’s drainage reservoir and water treatment center, a part of the cooling system of the CCGT, will be sold as part of the site.

Dovrat Water

Treatment

Facility

Alon

Tavor Site

99,700 Sqm

22,500 Sqm

November 2018 6

The Alon Tavor Site - Overview

Nominal Capacity (Total 583 MW)*

220

363

2 Gas Turbines E CC Class F

Actual Generation (GWh)

7

10

2 Gas Turbines E

2016 2017

CC Class F

1,713

1,947

* The Nominal Capacity of the CCGT detailed above is using primary fuel (NG), using secondary fuel (Diesel fuel) the Nominal Capacity is 373MW.

November 2018 7

Overview of Related Infrastructure

Zone 1 – Current Combined Cycle

1

Major infrastructure mapping:North-East:• Units 3&4 operation area• A single 20m3 compressor washing tank is contained in a secondary and

covered container• Two underground oil drainage tanks (1m3 each) are in the secondary

containerSouth-West:• Cooling pumps• Oil collection tank from the CCGT units, an underground tank in

secondary container• 1-m3 diesel tank is stored inside the auxiliary boiler • 1-m3 diesel tank used for diesel generator backup of units 3,4• Command and control room for units 3,4

compressor washing tankAuxiliary boiler

The combined cycle production (units 3 & 4) was established in two stages: Unit 3 commenced operation with diesel fuel at the beginning of 2004. In the second stage, the steam unit was operated in 2008. Since the summer of 2011, the combined cycle is operated by natural gas.

November 2018 8

Overview of Related Infrastructure

Zone 2 - Fuel storage area and cooling towers

2

Major infrastructure mapping:• Two diesel oil tanks of 4,000m3 used by units 1,2 and 3(after

undergoing FOTP treatment)• FOTP fuel treatment facility includes an underground tank for

collecting sludge• A 1,000 m3 treated diesel oil tank used by unit 3• 20m3 FOTP drainage tank is stored in a secondary container• 20m3 drainage tank of fuel is stored in a secondary container• Water Demineralizing facility includes water tanks, and a

container of chemicals

Diesel tanks

Established in 1991 with the establishment of units 1,2. Diesel fuel is used as fuel for units 1,2 and as a backup fuel for combined cycle (units 3,4). The fuel supplied from an underground fuel pipeline from the Elroi terminal 1. A Fuel Oil Treatment Plant (“FOTP”) was established in 2004. In the south area of this site there are cooling towers and also water treatment facilities. The water treatment facilities include two water demineralizing facilities that were established in 2004. Each facility includes a reversed osmosis and an Electrodeionization systems.

1.IEC leases a diesel container at Elroi terminal for storage purposes for different power plants including Alon Tavor. It is not yet determined if the Buyer will need to lease a tank at Elroi terminal

November 2018 9

Overview of Related Infrastructure

Zone 3 - Gas Turbines, Units 1,2 and Offices

3

Major infrastructure mapping:North:• A diesel tank in the volume of about 1m3 used for diesel

generator backup of units 1,2, stored inside a diesel generator container

Center:• Units 1,2 operation area• 7m3 compressor-washing pit used by unit 1West:• A sodium hypochlorite container of 20m3 is contained in an

incinerator. The sodium hypochlorite is added to the water in the cooling tower

East:• 7m3 compressor-washing pit used by unit 2

Production Area for unit 2

Units 1,2 were first operated in 1991-1992. Wastewater from this area, which includes cyclical cooling system discharges and compressor washing, is collected in two 7m3 wash tanks and being transported for disposal in the authorized site.

November 2018 10

Overview of Related Infrastructure

Zone 4 - Designated for additional generation units (“Additional Capacity”)

4

Requirement for Additional CapacityIn The southeastern part of the Alon Tavor site, there is an area designated for additional power units (currently includes offices and warehouse). Previously, a plan for the construction of a combined cycle with a capacity of 370MW has been advanced in this area and in the area under assets settlement with the State, but never matured. The site has a power space reserved in the grid to allow establishing installations of up to 230MW.

The EA believes this area is suitable for the construction of flexible open cycle manufacturing facilities with an aggregate capacity of 180-230MW. Therefore, the EA will allow building flexible installations in an open cycle, setting capacity payments per station. The capacity payments calculation will consider, among other, the estimated anticipated investment costs of those units. The capacity payments, as well as the reserved grid space for the Additional Capacity will be reserved for a period up to a date that will be set by the Authority.In the event that the Additional Capacity will not be built till the set date, the Buyer will compete over building production units by the regulations that would be in place at the time.

Statutory status - Currently, there is no approved plan to build the Additional Capacity. In accordance with the Government resolution, IEC is promoting a preliminary statutory plan.

Source: EA resolution No. 1 (1284) from meeting 547 , 3/09/2018, EA resolution for public hearing from meeting 548, 15/10/2018

November 2018 11

Overview of Related Infrastructure

In January 2005, a tripartite agreement was signed to supply up to 2.5 million m3 of effluents per year by the Emek YizraelRegional Council and the Palgey Maim Company.• The agreement is valid for 23 years from the end of the trial

period (October 1st, 2009). IEC has an option to extend the agreement for an additional period of 7 years. For more details see also page 61.

• The effluents come from the following WWTPs: Tel Adashimand Hasolelim that are connected through pipelines that were financed by IEC

Facility Functions:• Absorption and storage of effluents in a reservoir (east side of

the site)• Bringing water quality to the required level in cooling towers• Storage of treated water in an operational reservoir (west side

of the site)• Provision of additional water to the cooling towers• Treatment of the brine stream and its removal from the site

Dovrat Site

Treatments*:• Biological treatment - nitrification pool + sediment• Chemical treatment – conditioner• Mechanical treatment – filters• Sludge treatment - thickening + pressure filter

* In 2010, the Public Health Regulations (Sewerage Quality Standards and Rules for the Purification of Wastewater) were published, requiring WWTPs to increase the degree of purification of the waste water in a way that will make some of the current treatments implemented by the Dovrat site redundant in the future.

Dovrat Water Treatment Facility

Alon TavorPower Plant

November 2018 12

Bid Structure

Sold assets

Lent Employees

(for 5 years)

OptionalArea under assets settlement

with the State

November 2018 13

Cost Structure – General Overview

Energy Costs

Alon TavorOPEX

DovratOPEX

CC (units 3,4) Maintenance

GT (units 1,2) Maintenance

Ongoing CAPEX and

Investments

Other NQ expenses &

costs

November 2018 14

Major Site Agreements

PEI Agreement• Agreement with Petroleum & Energy Infrastructures Ltd. (“PEI”) for the construction of a

33 km pipeline, financed by IEC, from Elroi Terminal to the Site.

Agreement for the Transmission of Gas INGL

• The Buyer will have to enter into a direct gas transmission agreement with INGL.

ILA Lease Agreement• IEC will assign the lease agreement to the Buyer for the area actually transferred (not

including area under assets settlement with the State and the transmission facility which stays under IEC’s ownership). IEC will act to exclude the transmission facility.

Agreement on Access Road to Dovrat Site• Agreement for maintaining the access road to Dovrat.

Agreement for the Supply of Effluents

• Agreement for the supply of effluents and the establishment of required infrastructures

between Palgey Maim and IEC.

Agreement for the Operation and

Maintenance of the Dovrat facility

• Agreement for the operation and maintenance of a sewage treatment facility for Alon

Tavor (Dovrat site) between Palgey Maim and IEC.

Reservoir Agreement• IEC will sign a lease agreement with ILA and then will request ILA to confirm assignment

of rights to the Buyer. The assignment is subject to ILA approval.

LTSA, Unit 3• LTSA for the gas turbine (“GT 3") with GE. The LTSA is confidential and its assignment is

subject to GE’s approval. IEC has approached GE and will update the potential buyers.

November 2018 15

Site Sale Process – Indicative Timetable *

Publication of PQ documents

Publication of the Pre-Qualification terms

PQ Submission of PQ forms by participants

ClosingExecuting all transaction documents, transferring the responsibility on all operation &maintenance of the Site to the buyer, including finalizing all legal and regulatory issues

/201811

12/2018

Not later than

03/12/2019

PQ - Results The qualified participants will be invited to the second phase of the bidding process 1/2019

Pre-Qualification Phase

Bid Phase

* The above schedule and process are tentative and subject to approvals and other developments

Bid Submission

Signing

2-6/2019

Preferred bidder is to be declared shortly after submission.

Deadline for bid submission. SPA to be signed following final negotiations

Publication of Bid documents Publication of the tender documents including VDR access and site visits and Q&As

November 2018 16

Contact Details

The dedicated mail address for the project:Barak_Project@iec.co.il

As mentioned in the process documents, all questions raised by any bidder should be in writing. Should the Company decide to answer those questions, the answer, together with the question will be published to the attention of all the bidders and will be added to the process documents.

November 2018 17

Disclaimer

For the avoidance of doubt, the Site will be sold by the IEC on an "as is" basis. Therefore, the information contained in this presentation (including information about the Alon Tavor Site itself and the assets included therein) are solely intended to provide potential bidders with general, background information. Under no circumstances will they replace (or be deemed to replace) potential bidder's duty to conduct such due diligence investigations as they see fit. Such general background information provided by IEC is not, and under no circumstances should be considered as, complete or definitive.

Furthermore, while IEC believes that the general background information provided by IEC is generally correct, neither IEC nor anyone acting on its behalf makes any representation or warranty regarding the correctness or completeness of such information (or any other information provided by IEC or anyone on its behalf during the sale process). Each potential bidder is responsible, at its expense, to review all information for itself to determine its accuracy and completeness and to conduct all independent reviews and investigations (including by means of appropriately qualified and experienced advisors) it determines are required in such circumstances, including, where necessary by contacting appropriate third parties and public authorities.

Each potential bidder is also responsible, at its expense, to consider all aspects of its participation in the sale process and the entry into the sale agreement for the Alon Tavor Site, including tax consequences and regulatory.

Furthermore, notice is given that any sale will be subject to the provisions of the Law for the Promotion of Competition and the Reduction of Concentration 2013 and regulations promulgated thereunder, receipt of appropriate licenses under the Electricity Sector Regulations (Conditions and Procedures for Granting of Licenses and Obligations of Licenseholders 1997 and applicable restrictions under Clause 2A of the Land Law 1960 regarding the sale of land to non-Israelis. The purchaser will have the sole and exclusive responsibility to obtain all permits and consents required under any applicable law for the purchase of the Alon Tavor Site and the operation thereof, including electricity generation licenses, environmental permits, business licenses and gas transmission agreements.

Therefore, neither IEC nor anyone acting on its behalf shall assume any risk or responsibility for any damages which any potential bidder or third party may incur as a result of the information contained herein. By participating in the competitive bid, each potential bidder irrevocably waives (for itself and for anyone acting on its behalf) any and all claims and rights of any kind against IEC and anyone acting on its behalf in connection with or arising from the information referred to above (including regarding inaccuracies, errors, flawed or missing information or any other such issues).

Furthermore:

IEC shall be under no obligation to issue a procurement procedure in connection with the sale of Alon Tavor site, or any other site, whether pursuant to this presentation or otherwise.

IEC shall be under no obligation to enter into any transaction with any party whomsoever who responds to or participates in the processes mentioned in this presentation, whether in connection with the sale of Alon Tavor site, or otherwise.

IEC shall be entitled to use the information obtained from the process as well as any data, solution, process, technique or suggestion contained in any of the responses or documents/response material submitted to IEC in relation thereto. IEC shall be permitted to use such information in order to facilitate and progress the sale process and/or in order to secure any permits and approvals which may be required during the process

A response to presentation shall not bestow upon any person or entity responding thereto any advantage in any procurement procedure, if such procedure should be issued at all, and IEC shall not be obliged to include any respondent to this Information Memorandum in any procurement process.

Any exceptions, changes or additions to these above instructions (whether contained in any response to the presentation or otherwise) shall be devoid of validity and legal effect and shall not obligate IEC.

This presentation is preliminary and may be updated from time to time. Any such updates will be disclosed to all interested parties.

The stages of the procedure are subject to change at the discretion of IEC as well as in accordance with the requirements of the competent authorities, should the circumstances dictate.

IEC does not undertake to contact any of the entities which express interest in the procurement process, nor will it be obliged to respond to details addressed to the IEC following this presentation.

PLEASE NOTE: This information may include "Inside Information" in accordance with Israel's Securities Law, 1968, and making use of this information may constitute a criminal offence pursuant to that Law. Therefore please treat this information as "CONFIDENTIAL"