IREC Conference

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IREC Conference

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• Financing Opportunities For Renewable Energy in
  Africa
• A new Investment Opportunity for Africa
• Muyi Kazim UBA GM25 October 2007

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Contents

• The reason for alternative energy
• Opportunities We See In this Space
• Current Financing Proposals
• Our Future Direction
• The Argument For Renewable Energy
• How UBA Global Markets Will Raise RE Finance via
  CC Business
• Our Objectives
• How CC Are Derived
• Income Generation and Arguments For
• Our Areas of Interest
• Introducing UBA Global Markets
• Recap
• Contacts

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The Reason

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The Reason

• For Renewable Energy
• Kyoto Protocol
• Emissions Reduction Targets
• Energy Prices and Sovereign Security
• Carbon based sources are depleting

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The Reason

• Kyoto GHG emissions global warming
• Discovered 1896, by Smate Arhenius working with
  Thomas Chamberlain.
• Kyoto signed to reduce GHG in 1997 took effect
  2005.
• Kyoto set Emission Reductions Targets for worlds
  foremost indutrialised nations
• Ex USA, Australia, China and India.

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The Reason

• Energy Prices and Sovereign Security

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The Reason

• Energy Prices and Sovereign Security
• Recent Increases in Prices have seen record
  levels of US90 pb on 19Oct, inflation adjusted
  highest ever is US100pb, 1980 (Iran/Iraq)
• Price increase helped by brewing crises between
  Turkey and Iraq
• Energy Industry Investors/Analysts at Energy and
  Capital and Goldman Sachs have predicted prices
  of US95pb by YE 07
• Industry specialists predict prices over US105pb
  by 2009 and as high as US300pb as crude becomes
  more scarce.

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The Reason

• Largest Indutrialised Nations and crude importers
  US, UK, Europe see this a threat to their future
  sovereignty
• Also effect of China and India competing for the
  same scarce commodity with increasing thirst

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Opportunities We See

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Opportunities We See

• For Alternative Energy Financing
• Near Term
• CDM Projects Carbon Credits
• Biofuels
• Longer Term
• Wind
• Solar

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Current Financing Proposals

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Financing Proposals

• Some Energy deals we are evaluating
• Bio-diesel, 50MT, US10m Debt, first phase plant
  and Machinery acquisition
• 140 MW gas turbine, US150 million, Syndicated
  debt, 9 year term.
• 1000MW Gas Turbine IPP, first phase 350MW at
  approximately US400 million. Syndicated term
  debt.
• 7B p.a. cubic feet, Gas turbine, US15m plant and
  equipment term debt, 4 years / Private Placement.

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Our Future Direction

• Specialist Origination, Structuring and Advisory
  Desk for Alternative Energy being finalised
• Will initially focus on raising finance for CDM
  projects for generation of Carbon credits and
  Bio-fuels
• Other types of renewable energy funding will also
  be looked at later.

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The Argument For

• US45B of Renewable Energy Investments Globally
  in 2006
• Forecast to Grow to US120-240B by 2020
• Growth outlook is in the region of 30 p.a
• As carbon derived energy prices increase RE
  sector investments make more sense
• Trendy Reflects growing awareness of global
  warming and need to reduce GHGs

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How UBAGM Will Raise Finance via Our Carbon
Credits Business

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Objectives

• Establish Africas leading desk for Origination
  and Advising on CCs
• Obtain external sponsorship to enable Plant and
  Machinery purchase for CDM worthy Projects
• Raise financing directly for our Clients where we
  see CDM worthy opportunities.

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How CC Are Derived
Kyoto Protocol
EU Emission Trading Scheme
EUAs
CERs
Clean Development Mechanism
Joint Implementation
ERUs
Kyoto Protocol
EUAs
CER/ERU
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Income Generation

• One Nigerian Bank has completed a CDM deal as
  part of a Gas project
• Total of EUR2.3M p.a. for a relatively small
  start up power project (i.e. only 330K of CC
  p.a.) between 2008-2012
• Total of EUR9.2M for the life of the project.
  Forward deal.
• Set-up costs sponsored by the World Bank and
  IFC. This can be possible for others.

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Arguments For

• Market crying out for African originations
• USD22B 30B of CC deals originated in 2006
  mainly traded via EU
• This is expected to grow in the next phase
  2008-2012 as caps become tighter
• Morgan Stanley recently announced it has set up a
  Carbon Bank to buy and sell CC. It expects to
  invest in buying c.USD3B

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Arguments For

• Of 785 approved CDM projects registered at UN
  only 21, i.e. less than 3 originated from Africa
  as at June 2007
• 61 are from China and 12 from India
• UN/West recognises this is poor as the whole
  purpose is to help least developed nations

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Arguments For

• Estimated size of Mkt is USD500B over next 30
  years
• Scarcity of CCs globally expected to generate
  increasing interest in Africa
• Opportunities should be seized in the next Kyoto
  phase 2008-2012
• Tighter caps are expected after 2012, plus caps
  on US, China and India are likely

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Our Areas of Interest

• Oil and Gas projects
• Iron/Steel
• Cement
• Bio Fuels
• Waste Management

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Introducing UBA Global Markets
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UBA Global Markets

• Profile
• Investment Banking arm of UBA PLC, our parent
  company who controls approximately US3 billion
  in assets (14 of the banking sector) and US360
  million in shareholders equity
• Incorporated as UBA Securities on the 14th of
  March, 2002, the name was changed to UBA Global
  Markets (UBAGM) on the 19th of August 2005
• Core market activities include
• Fixed Income Origination, Sales and Trading
• Equities - Origination, Sales and Trading
• Corporate Finance Advisory
• Project Finance Advisory
• Syndicated Term Loans
• Research Fixed Income / Equities / Economics
• Brokerage
• We have a very strong institutional investor base
  which includes the newly approved Pension Fund
  Administrators

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UBA Global Markets

• Debt Expertise
• Arranged and structured major debt transactions
  for the Federal Government, State Governments and
  Corporates, examples of which are as follows
• First Bond with an embedded options
• First Zero coupon US corporate bond
• First multi-seller future flow securitisation
• First single originator future flow
  securitisation
• First indigenous financial advisor to NNPC
• First Residential Mortgage Backed Securitisation

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Transaction Profile
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Re-Cap
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Re-Cap

• UBA GM is setting up a new Desk for RE
• Will Originate and provide Advisory Services to
  the Industry
• CC
• Biofuels
• In future will Include
• Wind
• Solar

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Re-Cap

• We See Many Opportunities for RE Growth In
  Africa, our CC example tells the story
• Specific Areas of CC Interest include Oil Gas,
  Steel, Cement, Bio-Fuels Waste Management

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Contact
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Contacts

• UBA Global Markets
• 11th floor, UBA House, 57 Marina, Lagos, Nigeria
• Telephone [phone]

Alternative Energy Team
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• Thank You