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EBRD views with respect to gas sector EBRD views with respect to gas sector restructuringrestructuring

Marko KecmanMarko KecmanAssociate Banker, Power & Energy UtilitiesAssociate Banker, Power & Energy Utilities

VrnjaVrnjačka Banja, Serbiačka Banja, Serbia44thth October 2005 October 2005

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ContentContent

About the EBRD

Power and Energy Utilities

Reform and Restructuring

Why work with the EBRD

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A network of 32 offices in 27 countriesA network of 32 offices in 27 countries

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Transition Impact

AdditionalitySound

Banking

Public and Private Sector

Strong Environmental Mandate

What is the EBRDWhat is the EBRD

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EBRD FacilitiesEBRD Facilities

LoansLoansGuaranteesGuarantees EquityEquity

Partial risk guarantees(e.g. political)

Extension of loan maturities

Non/partial recourse to sponsors

Project specific

Hard/local currency

Medium and long term

Floating/fixed rates

New equity

Privatisation

Quasi-equity

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ContentContent

About the EBRD

Power and Energy Utilities

Reform and Restructuring

Why work with the EBRD

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Power & Energy Utilities - ObjectivesPower & Energy Utilities - Objectives

Support sector reforms Accelerate competition & market

liberalisation Foster privatisation & private

investment Finance reinforcement of grid & inter-

connection Prioritise environmental & energy

efficiency investments

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Evolving regulatory environment and market

Subsidised tariffs: high energy consumption

Market Infrastructure: Critical under-investment

Ageing assets, low efficiency, high losses

Environmental standards

Power & Energy Utilities – Key IssuesPower & Energy Utilities – Key Issues

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ContentContent

About the EBRD

Power and Energy Utilities

Reform and Restructuring

Why work with the EBRD

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Transition economies remain too inefficient in their use of energy

Needed: a combination of

Price reform, accompanied by measures that provide social protection for the vulnerable,

Measures to raise collection rates

Introduction of new institutions designed to provide appropriate regulatory supervision

Tariff reform and clear regulations, free of political interference, will attract long term Strategic Investors

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Sector Reform Needs to Be Properly SequencedSector Reform Needs to Be Properly Sequenced

Monolithic company

Corporatisation of company

Unbundle into separate functions:

extraction, transportation and

distributionPrivatisation Market

liberalisation

Time

Regulatory development

Getting it wrong can thwart the benefits of reform

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Reformed Gas Sector StructureReformed Gas Sector Structure

Competing SupplyCompeting Supply

Regulated Transportation CompanyRegulated Transportation Company

Regulated Distribution CompaniesRegulated Distribution Companies

ConsumersConsumers

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Romania: Investing in Gas DistributionRomania: Investing in Gas Distribution

Distrigaz Sud

EUR 31 million equity investment representing 5.1% beneficial ownership in Distrigaz Sud

Company privatised in 2004 to Gaz de France

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ContentContent

About the EBRD

Power and Energy Utilities

Reform and Restructuring

Why work with the EBRD

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Why work with the EBRD?Why work with the EBRD?

Willing to invest in equity Mitigation of political and regulatory risks Access to policy dialogue

Flexible deal structure Catalyses additional financing

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Why work with the EBRD – Our ClientsWhy work with the EBRD – Our Clients

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EBRD contactEBRD contact

Marko Kecman, Associate Banker

Power & Energy Utilities

Telephone: + 40 21 202 7138

Fax: + 40 21 202 7110

e-mail: kecmanm@buh.ebrd.com

website: www.ebrd.com