ISRAEL ELECTRIC CORP. LTD.

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The Israel Electric Corporation Ltd.
April 2006
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Installed Generating Capacity Growth ( MW )
14,878
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Generation Expansion Plan for the Period
2005-2010
?
9.2008 Steam Add. CC-HaifaB 139 MW
?
6.2008 Steam Add. CC-HaifaA 139 MW
?
11.200 CCHaifaB Phase 1-GT 238 MW
9.2008 IPP Dorad 400 MW
12.2006 Steam Add. CC-GezerB 136 MW
Repowering 2x360 MW (Net Increase (290
MW
12.2005 CCGezerB Phase 1-GT 236 MW
?
8.2007 CCHaifaA Phase 1-GT 238 MW
7.2008 Steam Add. CC-Zafit 126 MW
9.2006 Steam Add. CC-GezerA 136 MW
9.2005 CCGezerA Phase 1-GT 236 MW
1.2010 CC-IPP 354 MW
10.2007 Wind 50 MW
4.2009 CC-IPP 350 MW
7.2008 IPP Hadera 200 MW
7.2006 CCZafit Phase 1-GT 228 MW
9.2005 Steam Add. CC- Eshkol 141 MW
6.2007 Steam Add. CC- Alon Tavor 135 MW
1.2010 Wind 100 MW
3.2008 IPP Dorad 400 MW
1.2009 Solar Plant 100 MW
4.2006 CC-Hagit 359 MW
2005
2008
2009
2010
2006
2007
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IECS FINANCING

• -Financing is needed for the development plan of
  the electricity system
• -Internal resources
• -Israeli banks
• -Israeli capital market-Notes
• -International capital market-Notes
• -ECAS- EXIMBANK,HERMES,COFAS ETC.
• -OPIC

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ECA

• EXPORT CREDIT AGENCY

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ECAs - General

• All ECAs (like EXIMBANK) targets are to support
  local industry by providing export financing for
  goods and services.
• Such financing serves the exporter and the buyer.
• OPIC supports U.S. exporters,fosters economic
  development in new and emerging markets and
  supports U.S. foreign policy.
• IEC has utilized both EXIMBANK and OPIC
  facilities.

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IECs Experience

• EXIM- hundreds millions have been borrowed and
  fully repaid.
• hundreds millions have been borrowed and are
  still open.
• Main financing is for power plants 12 years
  repayment after a grace period of 4-5 years.
• OPIC- 250 m for natural gas pipeline 15
  years repayment after 5 years grace period.

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ADVANTAGES

• Advantages for IEC
• Long term financing.
• Relative-Cheap financing.
• Money on time no negative carry.
• New market competition with local financing
  market.
• International activity which creates added value
  to the company and the State of Israel.
• Development of the company and the State.
• Creates added value to the business cooperation
  with foreign suppliers.

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EXIMBANK-OPIC

• OPIC
• All financing
• All vessels
• A State guarantee has been required
• On going yearly insurance fee

• EXIMBANK
• US content financing
• US flag vessels are required
• A State guarantee is required/not required
• Up front exposure fee

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OPICISRAEL ELECTRIC CORP. LTD.

• NATURAL GAS PIPELINE

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THE PROJECT

• -Offshore pipeline (mainly)
• -Estimated cost - 250 m
• -Constraction period 2 years
• Local/foreign goods and services

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OPIC

• CITIBANKS General information
• State guarantee - unknown
• Total cost and terms were unknown

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CHOOSED LENDER

• After checks
• CITIBANK has been choosen

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PRELIMINARY INFORMATION TO OPIC

• -General information concerning IEC.
• -General information concerning the project.
• -Government involvement
• -US investor (lender)

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FURTHER INFORMATION

• Investments to be made
• ENVIRONMENTAL IMPACTS STUDY
• Investments to be insured
• Loan duration
• Economic/other contributions of the project
• Employment-workers rights/safety
• Health and safety
• Revenues of the local government
• Any new technology

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INGL

• -IEC is the project manager and the funds
  provider in this specific project.
• -The pipeline is the states property which will
  be operated by INGL.
• -As a consequence INGL participance was
  necessary.

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ACTUAL

• -GOVERNMENT GUARANTEE FEES/WORDING
• -OPIC INSURANCE PREMIUMFEES/WORDING
• -TRUST US CITIZEN
• -LEGAL DOCUMENTS HUGE ! A LOT OF PARTICIPANTS
• -LOAN TERMS INTEREST FIX/FLOATING
  RATE,DURATION,GRACE PERIOD ETC.
• -L/C OR DEPOSIT IN ADVANCE
• -ENVIRONMENTAL STUDY WORLD BANK GUIDELINES !
• -PRECONDITIONS FOR SIGNATURE
• -PRECONDITIONS FOR DISBURSEMENTS-DOZENS
  CERTIFICATES/PAPERS !
• -LEGAL OPINIONS INCLUDE US COUNSEL LEGAL OPINION

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SUMMARY

• OPIC/EXIMBANK an added value to Israel and IEC.
• Additional capital market which provide long term
  financing.
• Push the israeli market to reduce spreads.
• Creates international involvement.

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NEEDS

• Financing skill.
• International financing skill.
• International legal skill.
• Reports.
• ..Consumes time and learning curve in order
  to meet all requirements.

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Last but not least

• A message to those people who wish to start the
  process
• A GOOD DEAL IS NEVER
• EASY
• BUT
  AN EASY DEAL IS NEVER GOOD.

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THANK YOU