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Al Batinah Power Company SAOG(under transformation)

P.O. Box 39 Bareeq Al Shatti 103, Suites 501 & 512 Business Centre

Bldg. No. 326, Way No. 3307, Al KhuwairSultanate of Oman

Tel: +968 2439 3300; Fax: +968 2439 3333URL: www.albatinahpower.com

PROSPECTUSInitial Public Offering of 236,210,601 Offer Shares of nominal value Bzs 100 each

OFFER PERIODOffer Opens on: 11 May 2014Offer Closes on: 9 June 2014

FINANCIAL ADVISER & ISSUE MANAGER

Bank Muscat SAOGP.O.Box 134, Postal Code 112, Ruwi, Sultanate of Oman

Tel: +968 2476 8888; Fax: +968 2479 8220URL: www.bankmuscat.com

COLLECTING BANKS

LEGAL ADVISER TO THE ISSUER

Al Busaidy, Mansoor Jamal & Co.

The Capital Market Authority (the “CMA”) assumes no responsibility for the accuracy and adequacy of the statements and information contained in this Prospectus nor will it have any liability for any damage or loss resulting from the reliance upon or use of any part of the same by any person.This Prospectus has been prepared in accordance with the requirements as prescribed by the CMA. This is an unofficial English language translation of the original Prospectus prepared in the Arabic language and approved by the CMA in accordance with Administrative Decision no. KH/23/2014 dated 29/04/14.

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Important Notice to Investors

The aim of this Prospectus is to present material information that may assist investors to make an appropriate decision as to whether or not to invest in the shares of Al Batinah Power Company SAOG (under transformation) (the “Company” or “Al Batinah Power”) offered hereunder (the “Offer Shares”).

This Prospectus includes all material information and data and does not contain any misleading information or omit any material information that would have a positive or negative impact on the decision of whether or not to invest in the Offer Shares.

The Directors of Al Batinah Power are jointly and severally responsible for the integrity and adequacy of the information contained and confirm that to their knowledge appropriate due diligence has been performed in the preparation of this Prospectus and further confirm that no material information has been omitted, the omission of which would render this Prospectus misleading.

All investors should examine and carefully review this Prospectus in order to decide whether it would be appropriate to invest in the Offer Shares by taking into consideration all the information contained in this Prospectus in its proper context. Investors should not consider this Prospectus a recommendation by Al Batinah Power to buy the Offer Shares. Every investor is responsible for obtaining his or her own independent professional advice on the investment in the Offer Shares and for conducting an independent valuation of the information and assumptions contained herein using appropriate analysis or projections.

No person has been authorised to make any statements or provide information in relation to Al Batinah Power or the Offer Shares other than the persons whose names are indicated in this Prospectus. Where any person makes any statement or provides information it should not be taken as authorised by Al Batinah Power or the Financial Adviser & Issue Manager.

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Additional Points to be Noted

References to documents

All summaries of documents or provisions of documents provided in this Prospectus may not provide a complete summary of such documents, and statements in this Prospectus relating to such documents should not be relied upon as being comprehensive statements in respect of such documents.

Scope of information

The information contained in this Prospectus is intended to provide to a prospective Applicant with adequate information relating to the investment opportunity and background information on the IPO. However, this Prospectus does not necessarily contain all the information that a prospective Applicant may consider material. The content of this Prospectus is not to be construed as legal, business or tax advice. Each prospective Applicant should consult his own lawyer, financial adviser or tax adviser for legal, financial or tax advice in relation to any subscription, purchase or proposed subscription or purchase of the Offer Shares.

Investor due diligence

Prior to making any decision as to whether to subscribe for the Offer Shares, prospective Applicants should read this Prospectus in its entirety. In making an investment decision, prospective Applicants must rely upon their own examination of the terms of this Prospectus and the risks involved in making an investment.

Equity risk

All equity investments carry market risks to varying degrees. The value of any security can fall as well as rise depending on the market conditions. Potential investors should read “Chapter XIII – Risk Factors” of this Prospectus.

Restrictions on distribution of this Prospectus

The distribution of this Prospectus and the Offer Shares may, in certain jurisdictions, be restricted by law or may be subject to prior regulatory approvals. This Prospectus does not constitute an offer to sell or an invitation by or on behalf of Al Batinah Power to subscribe to any of the Offer Shares in any jurisdiction outside of Oman where such offer or invitation would be unlawful. This Prospectus may not be distributed in any jurisdiction where such distribution is, or may be, unlawful. Al Batinah Power, the Financial Adviser & Issue Manager and the Collecting Banks require persons into whose possession this Prospectus comes, to inform themselves of and observe, all such restrictions. None of Al Batinah Power, the Financial Adviser & Issue Manager, or the Collecting Banks accept any legal responsibility for any violation of any such restrictions on the sale, offer to sell or solicitation to subscribe for Offer Shares by any person, whether or not a prospective Applicant, in any jurisdiction outside Oman where such sale, offer to sell or solicitation to subscribe would be unlawful.

Restrictions on use of information contained in this Prospectus

The information contained in this Prospectus may not be published, duplicated, copied or disclosed in whole or in part or otherwise used for any purpose other than in connection with the Offer, without the prior written approval of Al Batinah Power and the Financial Adviser & Issue Manager.

Disclaimer of implied warranties

Save and except as required under applicable law and regulations, no representation or warranty, express or implied, is given by Al Batinah Power, the Financial Adviser & Issue Manager, or the Collecting Banks, or any of their respective directors, managers, accountants, advisers, lawyers, employees or any other person as to the completeness of the contents of this Prospectus; or of the projections included within; or of any other document or information supplied at any time in connection with the Offer; or that any such document has remained unchanged after the issue thereof.

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Selling Restrictions outside Oman

Kingdom of Bahrain

In relation to investors in the Kingdom of Bahrain, securities, the subject of this Prospectus and related offering documents may only be offered in registered form to existing account holders and accredited investors as defined by the Central Bank of Bahrain in the Kingdom of Bahrain where such investors make a minimum investment of at least US$100,000, or any equivalent amount in other currency or such other amount as the Central Bank of Bahrain may determine.

This offer does not constitute an offer of securities in the Kingdom of Bahrain in terms of Article 81 of the Central Bank and Financial Institutions Law 2006 (Decree Law No. 64 of 2006). This Prospectus and related offering documents have not been and will not be registered as a prospectus with the Central Bank of Bahrain. Accordingly, no securities may be offered, sold or made the subject of an invitation for subscription or purchase nor will this Prospectus or any other related document or material be used in connection with any offer, sale or invitation to subscribe or purchase securities, whether directly or indirectly, to persons in the Kingdom of Bahrain, other than to accredited investors for an offer outside Bahrain.

The Central Bank of Bahrain has not reviewed, approved or registered this Prospectus or related offering documents and it has not in any way considered the merits of the securities to be offered for investment, whether in or outside the Kingdom of Bahrain. Therefore, the Central Bank of Bahrain assumes no responsibility for the accuracy and completeness of the statements and information contained in this document and expressly disclaims any liability whatsoever for any loss howsoever arising from reliance upon the whole or any part of the content of this document.

State of Kuwait

This Prospectus has not been reviewed by the Capital Markets Authority of Kuwait and is not issued by a person licensed by the Capital Markets Authority. Accordingly, this Prospectus may not be circulated within the State of Kuwait nor may any of the Offer Shares be offered for subscription or sold, directly or indirectly, nor may any invitation or offer to subscribe for any of the Offer Shares be made to persons, including for the avoidance of doubt, any legal entities, in the State of Kuwait. In the event that this Prospectus is forwarded to any person in the State of Kuwait, it should be disregarded and no steps should be taken in reliance upon it. No person in the State of Kuwait may accept or subscribe for, or purport to accept or subscribe for, the Offer Shares.

State of Qatar

The Offer Shares have not been and will not be offered, sold or delivered, at any time, directly or indirectly in the State of Qatar in a manner that would constitute a public offering. No application has been or will be made for the Offer Shares to be listed or traded on the Qatar Exchange or the QE Venture Market. This Prospectus has not been, and will not be, reviewed or approved by or registered or filed with the Qatar Financial Markets Authority or Qatar Central Bank and may not be publicly distributed. This Prospectus is intended for the original recipient only and must not be provided to any other person. It is not for general circulation in the State of Qatar and may not be reproduced or used for any other purpose.

Kingdom of Saudi Arabia

This Prospectus may not be distributed in the Kingdom of Saudi Arabia except to such persons as are permitted under the Offers of Securities Regulations as issued by the Board of the Capital Market Authority of the Kingdom of Saudi Arabia resolution number 2-11-2004 dated October 4, 2004 as amended by resolution number 1-28-2008 dated August 18, 2008 (the “KSA Regulations”).

This Prospectus is directed to “sophisticated investors”, as defined under Article 10 of the KSA Regulations (“Sophisticated Investors”), for information purposes only. This Prospectus is not intended for distribution to, or use

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by anyone who is not a Sophisticated Investor. Any person who is not a Sophisticated Investor should not act on this Prospectus or any of its contents. This Prospectus also is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution would be contrary to law or regulation.

The Capital Market Authority of the Kingdom of Saudi Arabia does not make any representation as to the accuracy or completeness of this Prospectus, and expressly disclaims any liability whatsoever for any loss arising from, or incurred in reliance upon, any part of this Prospectus. Prospective purchasers of the securities offered hereby should conduct their own due diligence on the accuracy of the information relating to the securities. If you do not understand the contents of this Prospectus, you should consult an authorised financial adviser.

United Arab Emirates (excluding the Dubai International Financial Centre)

This Prospectus is strictly private and confidential and is being distributed to a limited number of investors and must not be provided to any person other than the original recipient, and may not be reproduced or used for any other purpose.

By receiving this Prospectus, the person or entity to whom it has been issued understands, acknowledges and agrees that none of the Shares or Prospectus have been approved by the UAE Central Bank, the UAE Ministry of Economy and Planning, the UAE Securities and Commodities Authority or any other authorities in the United Arab Emirates, nor has Financial Adviser & Issue Manager received authorisation or licensing from the UAE Central Bank, the UAE Ministry of Economy and Planning, the UAE Securities and Commodities Authority or any other authorities in the United Arab Emirates to market or sell the Shares within the United Arab Emirates. No marketing or offer of the Shares has been or will be made from within the United Arab Emirates and no subscription to the Shares may or will be consummated within the United Arab Emirates. It should not be assumed that the Financial Adviser & Issue Manager is a licensed broker, dealer or investment adviser under the laws applicable in the United Arab Emirates, or that it advises individuals resident in the United Arab Emirates as to the appropriateness of investing in or purchasing or selling securities or other financial products. The Shares may not be offered or sold directly or indirectly to the public in the United Arab Emirates. This Prospectus does not constitute a public offer of securities in the United Arab Emirates in accordance with the UAE Commercial Companies Law, Federal Law No. 8 of 1984 (as amended) or otherwise.

Nothing contained in this Prospectus is intended to constitute investment, legal, tax, accounting or other professional advice. This Prospectus is for your information only and nothing in this Prospectus is intended to endorse or recommend a particular course of action. You should consult with an appropriate professional for specific advice rendered on the basis of your situation.

Dubai International Financial Centre

This Prospectus is not intended to, and does not, constitute a financial promotion, an offer, sale or delivery of shares or other securities under the Dubai International Financial Centre (the “DIFC”) Markets Law (DIFC Law 12 of 2004, as amended), Regulatory Law (DIFC Law 1 of 2004, as amended), under the Offered Securities Rules of the Dubai Financial Services Authority (the “DFSA”) or otherwise. The Shares are not intended for, are not being offered, distributed, sold or publicly promoted or advertised, directly or indirectly, to, or for the account or benefit of, any person in the DIFC. This Prospectus is not intended for distribution to any person in the DIFC and any such person that receives a copy of this Prospectus should not act or rely on this Prospectus and should ignore the same. The DFSA has not approved the offer of Shares or this Prospectus nor taken steps to verify the information set out in it, and has no responsibility for it.

United States

The Offer Shares have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “US Securities Act”) and may not be offered or sold within the United States or to, or for the account or benefit of, US persons (as such term is defined in Rule 902 under the US Securities Act (a “US Person”)) except in certain transactions exempt from the registration requirements of the US Securities Act.Terms used in this paragraph have the meanings given to them by Regulation S under the US Securities Act.

The Financial Adviser & Issue Manager has agreed that it will not offer or sell the Offer Shares(i) as part of its distribution at any time or (ii) otherwise until 40 days after the later of the commencement of the Offer and the closing date of

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the Offer, within the United States or to, or for the account or benefit of, US Persons, and it will have sent to each dealer to which it sells Shares during the distribution compliance period a confirmation or other notice setting out the restrictions on offers and sales of the Shares within the United States or to, or for the account or benefit of, US Persons.Terms used in this paragraph have the meanings given to them by Regulation S.

The Offer Shares are being offered and sold outside of the United States to non-US Persons in reliance on Regulation S.

United Kingdom

Investment in Al Batinah Power is a controlled investment for the purposes of the financial promotion restriction under section 21 of the Financial Services and Markets Act 2000 (“FSMA”).

This Prospectus has not been approved under FSMA by an authorised person. This communication is exempt from the general restriction under section 21 of FSMA on the communication of invitations or inducements to engage in investment activity on the grounds that it is made only to or directed only at the following persons (“Relevant Persons”):

(a) “investment professionals” within the meaning of Article 19 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“FPO”); or

(b) “high net worth companies, unincorporated associations etc” within the meaning of Article 49 of the FPO,

or any other person to whom this Prospectus may lawfully be communicated.

Persons who are not Relevant Persons must not act or rely on this communication. Al Batinah Power or the Financial Adviser & Issue Manager will deal in the investments described in this Prospectus only with Relevant Persons.

An “investment professional” for the purposes of Article 19 of the FPO is a person who has professional experience in matters relating to “investments”.

A “high net worth company, unincorporated association etc” for the purposes of Article 49 of the FPO is (i) a body corporate which has, or is a member of the same group as an undertaking which has, a called-up share capital or net assets of at least £5million (or where the body corporate has more than 20 members or is a subsidiary undertaking of a parent undertaking which has more than 20 members, at least £500,000); (ii) an unincorporated association or partnership which has net assets of not less than £5 million; (iii) the trustee of a high value trust which has, or has had in the 12 months before the date of this communication, an aggregate value of at least £10million; or (iv) any person (“A”) whilst acting in the capacity of director, officer or employee of a person (“B”) falling within any of the above where A’s responsibilities when acting in that capacity, involve him in B’s engaging in investment activity.

European Economic Area

In relation to each Member State of the European Economic Area that has implemented Directive 2003/71/EC (as amended) (the “Prospectus Directive”) (each, a “Relevant Member State”), an offer to the public of Offer Shares may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of Offer Shares may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

(i) to any legal entity which is a qualified investor as defined in the Prospectus Directive;

(ii) to fewer than 150 natural or legal persons (other than “qualified investors” as defined in the Prospectus Directive); subject to obtaining the prior consent of the Financial Adviser & Issue Manager; or

(iii) in any other circumstances which do not require the publication by Al Batinah Power of a prospectus within the meaning of the Prospectus Directive,

provided that no such offer of Offer Shares shall result in a requirement for the publication by Al Batinah Power or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive or any measure implementing the Prospectus Directive in a Relevant Member State.

For the purposes of this provision, the expression “an offer to the public” in relation to Offer Shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the Offer and any Offer Shares to be offered so as to enable an investor to decide to acquire any Offer Shares, as the same may be varied in that member state by any measure implementing the Prospectus Directive in that member state.

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Forward-Looking Statements

This Prospectus contains certain “forward-looking statements”. These forward-looking statements generally can be identified by the use of forward-looking terminology, including terms such as “aim”, “anticipate”, “believe”, “expect”, “estimate”, “goal”, “intend”, “objective”, “plan”, “project”, “shall”, “will”, “will continue”, “will pursue”, their negative, or other words or phrases of similar import. Similarly, statements that describe Al Batinah Power’s strategies, objectives, plans or goals are also forward-looking statements. All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual outcomes, including among other things, Al Batinah Power’s result of operations, financial condition, cash flows, liquidity, financial projections and growth to differ materially from those contemplated by the relevant forward-looking statement.

Important factors that could cause actual results to differ materially from Al Batinah Power’s expectations include but are not limited to:

inability to estimate future performance;

inability of Al Batinah Power to meet its debt service obligations under its Finance Documents;

inability of Al Batinah Power to meet their payment obligations under the Project Documents;

inability to realise revenue forecasts after the expiration of the off-take obligations contained in the Project Documents;

unavailability of fuel for the Plant after the Project Documents have matured;

certain financing and/or operational and maintenance risks, which are inherent to the Project;

access to adequate insurance to cover all potential losses;

change in monetary and/or interest policies of Oman, local and/or international inflation, local and/or international interest rates;

fluctuations in foreign exchange rates, equity prices or other rates or prices;

the performance of the financial markets in Oman;

general political, economic and business conditions in Oman which may have an impact on Al Batinah Power’s business activities;

changes in laws and/or regulation and/or conditions that may have a bearing on the position of Al Batinah Power’s clients, and/or suppliers after the expiration of the PPA, or the power generation sector in Oman; and

increasing competition and the conditions of Al Batinah Power’s clients, suppliers and the power generation sector after the expiration of the Project Documents.

By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could be materially different from those that have been estimated. None of Al Batinah Power or the Financial Adviser & Issue Manager or any of their respective affiliates has any obligation to update or otherwise revise any statements in this Prospectus to reflect circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition or differ from actuality.

The above list is not exhaustive and for a further discussion of factors that could cause actual results to differ, see “Chapter XIII – Risk Factors” of this Prospectus. After listing on the MSM, Al Batinah Power will adhere to the disclosure rules and regulations issued by the CMA, which includes making timely disclosure regarding Al Batinah Power’s results of operation. Al Batinah Power advises prospective Applicants and Shareholders to track any information or announcements made by it after listing through the MSM website at www.msm.gov.om.

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Presentation of Financial, Industry and Market Data

Financial Data

Unless stated otherwise, the financial data in this Prospectus is derived from Al Batinah Power’s audited financial statements or its unaudited interim financial statements, in each case prepared in accordance with IFRS. Copies of the 2011, 2012 and 2013 annual audited financial statements and the unaudited condensed interim financial statements for the three-month period ended 31 March 2014 are set out in “Chapter XXII – Financial Statements” of this Prospectus. Al Batinah Power’s financial year commences on 1 January and ends on 31 December. In this Prospectus, any discrepancy in any table between the total and the sum of the relevant amounts listed is due to rounding.

Currency of Presentation

In this Prospectus, all references to “OMR” and/or “Omani Rials” are to the legal currency for the time being of Oman, all references to “US$” and/or “US Dollars” are to the lawful currency for the time being of the United States of America. Translations of amounts from Omani Rials to US Dollars in this Prospectus are solely for the convenience of the reader. The Omani Rial has been pegged to the US Dollar since June 1986. Unless specified otherwise, for all periods presented in “Chapter X – Description of Al Batinah Power and Business Overview”, “Chapter XII – Project Cost and Financing”, “Chapter XIV – Projected Financial Information” of this Prospectus, translations of amounts between Omani Rials and US Dollars have been made at an exchange rate of US$1.00 = OMR 0.3845.

The financial model use an exchange rate of US$1.00 = OMR 0.3845 and, accordingly, translations of amounts from Omani Rials to US Dollars have been made at this exchange rate for all periods presented in this Prospectus.

Industry and Market Data

Unless stated otherwise, industry and market data used throughout this Prospectus has been obtained from third-party industry publications and/or websites, including, without limitation OPWP. Although it is believed that industry data used in this Prospectus is reliable, it has not been independently verified and therefore its accuracy and completeness are not guaranteed and its reliability cannot be assured. Similarly, internal company reports, while believed to be reliable, have not been verified by any independent sources. The extent to which the market and industry data used in this Prospectus is meaningful depends on the reader’s -familiarity with and understanding of the methodologies used in compiling such data.

This Prospectus contains references to the electricity capacities of the independent power and water projects communicated by OPWP. Unless stated otherwise, the stated electricity capacities provided refer to the contracted capacity of such projects at the time of their full commercial operation date. Power plants suffer degradation of their capacity to produce electricity overtime, especially during the early years of operation, and as such, the contracted electricity capacity stated for the Project, pursuant to the PPA, will reduce slightly over time.

Presentation of Power Generation Data

This Prospectus contains references to MW capacities of the Plant. For the purposes of this Prospectus, all of the references to “MW” are to megawatts of electrical energy. All references to ‘‘GW’’ are to gigawatts of electrical energy, and all references to ‘‘kW’’are to kilowatts of electrical energy. All references to ‘‘heat rate’’ or ‘‘gas consumption’’ refer to the measure of thermal efficiency of the Plant in the conversion of natural gas into electricity. All references to ‘‘backup fuel’’ refer to diesel.

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Table of Contents

Chapter I Abbreviations and Definitions ................................................................................................................ 2

Chapter II Summary Information Relating to Al Batinah Power ........................................................................... 10

Chapter III General Information on the Offer and the Company ........................................................................... 12

Chapter IV Summary of Expenses in Connection with the Offer .......................................................................... 16

Chapter V Purpose of the Offer and Use of Proceeds ......................................................................................... 17

Chapter VI Objects and Approvals ........................................................................................................................ 18

Chapter VII Shareholding Details............................................................................................................................ 20

Chapter VIII Overview of the Omani Economy ........................................................................................................ 26

Chapter IX Regulatory Framework and Industry Overview ................................................................................... 29

Chapter X Description of Al Batinah Power and Business Overview ................................................................... 36

Chapter XI Contractual Framework ....................................................................................................................... 50

Chapter XII Project Cost and Financing ................................................................................................................. 56

Chapter XIII Risk Factors ......................................................................................................................................... 61

Chapter XIV Projected Financial Information ........................................................................................................... 67

Chapter XV Dividend Policy .................................................................................................................................... 70

Chapter XVI Valuation and Price Justification ......................................................................................................... 72

Chapter XVII Related Party Transactions and Material Contracts ............................................................................ 77

Chapter XVIII Corporate Governance ........................................................................................................................ 79

Chapter XIX Rights and Liabilities of Shareholders ................................................................................................. 90

Chapter XX Market Information .............................................................................................................................. 93

Chapter XXI Subscription Conditions and Procedures ........................................................................................... 96

Chapter XXII Financial Statements ......................................................................................................................... 102

Chapter XXIII Undertakings ..................................................................................................................................... 199

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Chapter 1: Abbreviations and Definitions

AER The Authority for Electricity Regulation of Oman.

Al Batinah Power/Company Al Batinah Power Company SAOG (under transformation).

Al Suwadi Power Al Suwadi Power Company SAOG (under transformation).

Applicant A person or entity who applies for the purchase of Offer Shares pursuant to the terms of this Prospectus.

Application The application form used to apply for the Offer pursuant to the terms of this Prospectus.

Application Money The amount to be paid by each Applicant at the time of submission of his/her Application as specified in “Chapter XXI – Subscription Conditions and Procedures” of this Prospectus.

Articles The articles of association of Al Batinah Power, as registered with the Ministry of Commerce & Industry.

Authorised Share Capital The authorised share capital of the Company.

Baizas/Bzs Omani Baizas (Bzs 1,000 = OMR 1).

Basis of Allotment The basis on which the Offer Shares will be allotted to Applicants under the Offer and which is described in “Chapter XXI – Subscription Conditions and Procedures” of this Prospectus.

BHSP Blue Horizon Sohar Power B.V.

Board/Board of Directors

The board of directors of Al Batinah Power, elected and holding office in accordance with the Articles and the CCL.

BOO Build, own and operate.

BOOT Build, own, operate and transfer.

Capital Market Law The Capital Market Law of Oman issued by Royal Decree 80/98, as amended.

Category I Investors Omani and non-Omani individuals and juristic persons who apply for a minimum of 1,000 Offer Shares and in multiples of 100 Shares thereafter up to a maximum of 600,000 Offer Shares.

Category II Investors Omani and non-Omani individuals and juristic persons who apply for a minimum of 600,100 Offer Shares and in multiples of 100 Shares thereafter up to a maximum of 23,621,000 Offer Shares, or 10 per cent. of the Offer Shares.

CBO The Central Bank of Oman.

CCL The Commercial Companies Law of Oman issued by Royal Decree 4/74 (as amended).

CCGT Combined cycle gas turbine.

Chairman The Chairman of the Board.

CEO The Chief Executive Officer of Al Batinah Power.

CFO The Chief Financial Officer of Al Batinah Power.

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CIRR Commercial Interest Reference Rate.

CMA The Capital Market Authority of Oman.

COD The commercial operation date of the Plant, being 3 April 2013.

Code The CMA Code of Corporate Governance for public joint stock companies issued by circular 11/2002, as amended.

Collecting Banks Bank Muscat SAOG, Bank Dhofar SAOG, National Bank of Oman SAOG, Oman Arab Bank SAOC, Bank Sohar SAOG, Ahli Bank SAOG.

Commercial Facility Agreement

The facility agreement dated 16 September 2010 between Al Batinah Power, KfW IPEX-Bank GMBH, Credit Agricole Corporate & Investment Bank, Standard Chartered Bank, Natixis, BayerischeLandesbank, HSBC Limited, Europe Arab Bank plc, Credit Industriel et Commercial – CIC.

Commercial Register The commercial register maintained by the MOCI pursuant to Royal Decree 3 of 1974.

Completion Date The completion date under the terms of the CTA, being 8 October 2013.

CPI Consumer Price Index.

CTA The Common Terms Agreement dated 16 September 2010 between, Al Batinah Power, KfW IPEX-Bank GMBH, Credit Agricole Corporate & Investment Bank, NATIXIS, Bayerische-Landesbank, The Hong Kong and Shanghai Banking Corporation Limited, Europe Arab Bank PLC, Credit Industriel et Commercial CIC and Standard Chartered Bank (as mandated lead arrangers), the Export-Import Bank of Korea as KEXIM (certain financial institutions), Credit Agricole Corporate & Investment Bank (as Global Facility Agent, Offshore Security Trustee, Offshore Account Bank, KEXIM Facility Agent and Commercial Facility Agent), Bank Muscat SAOG (as Onshore Security Agent, Onshore Account Bank, Performance Bond Issuing Bank and Performance Bond Facility Agent and KfW IPEX-Bank GMBH (as Hermes Facility Agent).

DCF Discounted cash flows valuation methodology.

Deputy Chairman The Deputy Chairman of the Board.

DGC Dhofar Generating Company SAOC.

DPC Dhofar Power Company SAOC.

DSCR Debt Service Coverage Ratio.

DSRA Debt Service Reserve Account.

EBITDA Earnings before interest, taxes, depreciation and amortisation.

EBL The equity bridge loans made in favour of Al Batinah Power by KfW IPEX-Bank GMBH, Mizuho Corporate Bank Ltd. and HSBC Bank Middle East Limited, pursuant to the terms of the ESRA

ECA The Electrical Connection Agreement dated 28 December 2011 between OETC and Al Batinah Power.

Effective Date The effective date under the PPA, being 20 September 2010.

EGM An extraordinary general meeting of the Shareholders.

EHC Electricity Holding Company SAOC.

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EHC Option The option of EHC to acquire up to 35 per cent. of the Shares in accordance with the PFA.

End Date The date on which Al Batinah Power has no further actual or contingent obligation to make any payments to any of the Finance Parties under or pursuant to the terms of any Finance Document and no Finance Party has any actual or contingent obligation or liability under or pursuant to any Finance Document which will give rise to such an actual or contingent obligation of Al Batinah Power.

EPC Contract The turnkey Engineering, Procurement and Construction contract dated 15 September 2010 between Al Batinah Power and the EPC Contractor as supplemented by agreement dated 1 June 2012.

EPCC / EPC Contractor Siemens AG and GSECC.

EPCOD The early power commercial operation date, achieved on 3 June 2012.

Equator Principles The principles set out in the paper entitled “A financial industry benchmark for determining, assessing and managing social and environmental risk in project financing” dated July 2006 developed by the International Finance Corporation.

ESRA The Equity Subscription and Retention Agreement dated 16 September 2010 between Al Batinah Power, GDF SUEZ SA as the Sponsor, the Project Founders, Credit Agricole Corporate & Investment Bank (as Global Facility Agent and Offshore Security Trustee), KFW-IPEX Bank Gmbh as GDF SUEZ Equity Bridge Facility Agent, Mizuho Corporate Bank Ltd as Sojitz and Yonden Equity Bridge Facility Agent.

Finance Documents As defined in the CTA.

Finance Parties As defined in the CTA.

Financial Adviser & Issue Manager

Bank Muscat SAOG.

Financial Close 30 November 2010.

Financial Year/FY The period of twelve months starting on 1 January and ending on 31 December of that particular year.

GCC The Cooperation Council for the Arab States of the Gulf, comprising Oman, United Arab Emirates, Saudi Arabia, Qatar, Bahrain and Kuwait.

GDF SUEZ GDF SUEZ S.A.

GDP Gross domestic product.

GIS Gas insulated switchgear.

Generation License The Electricity Generation License issued by AER to Al Batinah Power on 1 January 2012.

Government The Government of Oman.

Grid Code The grid code issued pursuant to the Sector Law.

GSECC GS Engineering and Construction Corporation.

GT Gas Turbine.

GWh Gigawatt hours.

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Hermes Covered Fixed Term Facility Agreement

The facility agreement dated 16 September 2010 between Al Batinah Power and KfW IPEX-Bank GmbH.

Hermes Covered Variable Term Facility Agreement

The facility agreement dated 16 September 2010 between Al Batinah Power, Credit Agricole Corporate & Investment Bank, Credit Industriel et Commercial – CIC, HSBC Limited, Europe Arab Bank plc, Natixis, BayerischeLandesbank, Standard Chartered Bank

HRSG Heat recovery steam generator.

HSSE Health, safety, security and the environment.

IFRS International Financial Reporting Standards.

Independent Director As defined in the Code.

Investor Number The investor number issued by the MCDC to investors holding investor accounts with the MCDC.

International Power International Power S.A. (current denomination of Suez-Tractebel) acting through its Dubai Branch.

Issued and Paid-Up Share Capital

The issued and paid-up share capital of the Company.

IPA IPA Energy + Water Economics Ltd., the independent market adviser in relation to the Offer.

IPO The initial public offering of the Offer Shares pursuant to the Offer.

IPP Independent power project.

IRR Internal rate of return.

IWPP Independent water and power project.

Kahrabel Kahrabel FZE.

KEXIM The Export-Import Bank of Korea.

KEXIM Covered Facility Agreement

The facility agreement dated 16 September 2010 between Al Batinah Power, KfW IPEX-Bank GmbH, Credit Agricole Corporate & Investment Bank, Credit Industriel et Commercial – CIC, HSBC Limited, Europe Arab Bank plc, Natixis, BayerischeLandesbank.

KEXIM Direct Facility Agreement

The facility agreement dated 16 September 2010 between Al Batinah Power and KEXIM.

kJ Kilojoules.

km Kilometres.

km2 Square kilometres.

kV Kilovolts.

kW Kilowatts.

kWh Kilowatt hours.

LD Liquidated damages.

Legal Adviser Al Busaidy, Mansoor Jamal & Co.

6

Lenders’ Independent Engineer

Mott MacDonald Ltd.

LHV Lower heating value.

License agreement The licence agreement relating to the Temporary Areas dated 10 August 2010 between Al Batinah Power and SIPC.

LIBOR London Interbank Offered Rate.

m3 Cubic metres.

Management The senior management team of Al Batinah Power.

MCDC Muscat Clearing & Depository Company SAOC.

MECA The Ministry of Environment and Climate Affairs of Oman.

Memorandum The memorandum of association of Al Batinah Power, as registered with the MOCI.

Ministry of Housing Electricity and Water/MHEW

The Ministry of Housing, Electricity and Water of Oman.

Ministry of Commerce & Industry/MoCI

The Ministry of Commerce & Industry of Oman.

Ministry of Finance/MoF The Ministry of Finance.

Ministry of Housing/MoH The Ministry of Housing formerly known as the Ministry of Housing, Electricity and Water (MHEW).

Ministry of National Economy/MONE

The Ministry of National Economy of the Sultanate of Oman (abolished pursuant to Royal Decree 38/2011).

Ministry of Manpower/MoM

The Ministry of Manpower.

Ministry of Oil & Gas/MoG

The Ministry of Oil & Gas.

MENA The Middle East and North Africa.

MIGD Million imperial gallons per day.

MIS The Main Interconnected System of Oman.

MMBTU Million British thermal units.

MSF Desalination Multi stage flash desalination.

MSM The Muscat Securities Market.

MSM Index The Muscat Securities Market Index.

Multitech Multitech LLC.

MW Megawatts.

NCSI National Center for Statistics and Information of Oman.

NGSA The Natural Gas Sales Agreement dated 31 August 2010 between Al Batinah Power and the MoG.

7

NGSDA The Natural Gas Sales Direct Agreement dated 19 October 2010 between Al Batinah Power, MoG, Credit Agricole Corporate & Investment Bank, and Bank Muscat.

Non-Executive Director As defined in the Code, a member of the Board who is not a full-time director (employee director) and/or does not draw any fixed monthly or annual salary from Al Batinah Power.

O&M Agreement The Operation and Maintenance Agreement dated 24 September 2010 between Al Batinah Power and STOMO.

O&M Direct Agreement The direct Operation and Maintenance Agreement relating to the O&M agreement dated 24 September 2010 between STOMO, GDF SUEZ CC SCRL, Al Batinah Power and Credit Agricole Corporate & Investment Bank.

OCCI Oman Chamber of Commerce & Industry.

OCGT Open cycle gas turbine.

OETC Oman Electricity Transmission Company SAOC.

Offer The offer for sale of 236,210,601 (Two hundred thirty six million two hundred ten thousand six hundred and one) existing Shares by the Selling Shareholders, each with a nominal value of Bzs 100, as described in this Prospectus.

Offer Closing Date The closing date of the Offer, which is described in “Chapter XXI – Subscription Conditions and Procedures” of this Prospectus.

Offer Expenses The expenses collected from each Applicant in connection with the Offer, as further described in “Chapter IV – Summary of Expenses in Connection with the Offer” of this Prospectus.

Offer Opening Date The opening date with respect to the Offer, which is described in “Chapter XXI – Subscription Conditions and Procedures” of this Prospectus.

Offer Period The period between the Offer Opening Date and the Offer Closing Date inclusive of both days and during which an Applicant can submit an Application.

Offer Price Bzs 128 per Share.

Offer Proceeds The proceeds of the Offer that will be available to the Selling Shareholders.

Offer Shares The Shares subject to the Offer.

OGC Oman Gas Company SAOC.

OGM An ordinary general meeting of the Shareholders.

Oman The Sultanate of Oman.

Omani Rial/OMR Omani Rials, the lawful currency of Oman.

OPWP Oman Power and Water Procurement Company SAOC.

P/E Price to earnings.

PAEW Public Authority for Electricity & Water of Oman.

Paid-Up Share Capital The paid-up share capital of the Company.

PASI Public Authority for Social Insurance.

PDO Petroleum Development Oman LLC.

8

PFA The Project Founder’s Agreement dated 10 August 2010 between each of the Project Founders and EHC, and as further amended from time to time.

Plant The Sohar-2 independent power plant with c.744 MW of contracted power capacity at COD located c.200km northwest of Muscat, Oman and situated within the Sohar Industrial Port area.

PPA Power Purchase Agreement dated 10 August 2010 between Al Batinah Power and OPWP as supplemented by an agreement dated 6 September 2011.

PPI Producer Price Index.

Project The development, ownership, financing, design, construction, maintenance and operation of the Plant.

Project Documents As defined in the CTA (including, but not limited to, the PPA, the NGSA, the ECA, the Sub-Usufruct Agreement, the PFA, the SHA, the EPC Contract and the O&M Agreement).

Project Founders/ Founders/ Founder Members

Suez-Tractebel, Multitech, Sojitz, Yonden, PASI.

Project Sponsors International Power, Suhail Bahwan Group Holding LLC, Sojitz, Yonden, PASI.

RAECO Rural Areas Electricity Company SAOC.

Reporting Accountants and Auditor

KPMG.

Repayment Date As defined in the CTA.

RH Relative humidity.

ROP The Royal Oman Police.

Salalah System The Salalah regional power system of Oman.

SAOC Société-Anonyme-Omanaise-Close, an Omani closed joint stock company.

SAOG Société-Anonyme-Omanaise-Générale, an Omani general joint stock company.

Scheduled COD The scheduled commercial operation date of the Plant under the PPA, being 1 April 2013.

SCRL Société Coopérative à Responsabilité Limitée.

Seawater Extraction Agreement

The Seawater Extraction Agreement dated 10 August 2010 between Majis Industrial Services Company SAOC and Al Batinah Power.

Sector Law Royal Decree 78/2004, issued on 1 August 2004, as amended.

Security Documents As defined in the CTA.

Selling Shareholders Kahrabel, Multitech, BHSP, SEPI and PASI.

SEPI SEP International Netherlands B.V.

Settlement Agreement The Settlement Agreement dated 28 September 2013 entered into between Al Batinah Power and EPCC.

SHA The Shareholders’ Agreement dated 29 November 2010 between Kahrabel, Multitech, Sojitz, Yonden and PASI, as supplemented by accession agreements dated 3 May 2011 and 9 January 2012 and as further amended from time to time.

9

Share An ordinary share of Al Batinah Power.

Share Capital The share capital of the Company.

Shareholder A shareholder of Al Batinah Power.

Shareholder Loans The subordinated advances made in favour of Al Batinah Power by PASI, pursuant to the terms of the ESRA.

Siemens AG Siemens Aktiengesellschaft.

SIPC Sohar Industrial Port Company SAOC.

Site The area comprising 93,136 square metres and identified as “Area for Sohar II IPP”.

SLA Shareholder Loan Agreement.

Sojitz Sojitz Corporation.

ST Steam turbine.

Sub-Usufruct Agreements

The SUAS and the License Agreement.

SUAS The Sub-Usufruct Agreement relating to the Site dated 10 August 2010 between Al Batinah Power and SIPC.

Suez-Tractebel Suez-Tractebel S.A. (previous denomination of International Power).

STOMO / Operator Suez-Tractebel Operation and Maintenance Oman LLC.

Temporary Areas The areas comprising 60,000 square metres and identified as “Lay Down / Temporary Area for Sohar II IPP”.

Transfer Scheme The scheme determined, implemented and modified by the MONE, in accordance with the provisions of the Sector Law, for the purposes of transfer of the relevant assets and liabilities of MHEW to the substitute/successor entities pursuant to the Sector Law.

Transmission System The lines and electrical installations of OETC, with voltage equal to or greater than 132kV used for transporting electricity from production facilities to substations, or from production facilities to other production facilities, or from substations to other substations, or to or from any interconnector, premises or Transmission System and any electric plant used for the purposes of dispatch.

TWh Terawatt-hours.

UAE United Arab Emirates.

US$/USD US Dollars, the lawful currency of the United States of America.

Working Capital Facility Agreement

The facility agreement dated 5 June 2012 between Al Batinah Power and Bank Muscat SAOG and any amendments made thereto.

Yonden Shikoku Electric Power Co. Inc.

10

Chapter II: Summary Information Relating to Al Batinah Power

This summary highlights information contained elsewhere in this Prospectus. It does not contain all the information that all Applicants should consider before investing in the Offer Shares. All Applicants should read the entire Prospectus carefully, including the financial statements of Al Batinah Power set out in “Chapter XXII – Financial Statements” of this Prospectus. In addition, all Applicants should read “Chapter XIII – Risk Factors” of this Prospectus for more information about important factors that should be considered before buying Offer Shares.

Overview of Al Batinah Power

Al Batinah Power’s core business activity is to own and operate the Sohar-2 power plant, a gas-fired combined cycle power generation plant with a contracted power capacity of 744 MW1, located approximately 200km northwest of Muscat in Oman within the Sohar Industrial Port area, between the plot of the existing Sohar-1 IWPP and Sohar Aluminium Power Plant. The Plant has been in full commercial operation since 3 April 2013 and was completed at a cost of OMR 313 million (within budget). Al Batinah Power currently generates its revenues pursuant to a 15-year term PPA with OPWP, which is indirectly wholly-owned by the Government. The capacity of and power produced from the Plant are fully contracted to OPWP and used to meet the growing power demands of the MIS region during the term of the PPA and beyond. As the largest power plant at a single location in Oman (on an equal footing with the Barka-3 power plant owned by Al Suwadi Power), the Plant’s contracted power capacity of 744 MW represents c.13.3% of the MIS total currently contracted capacity of approximately 5589 MW2. According to OPWP’s 7 year statement (2013-2019), the Plant is expected to result in a significant improvement in overall gas utilization efficiency, based on using newer, more fuel-efficient technology than existing plants.

The combined cycle power generation technology employed in the Plant is a proven technology that has been implemented globally on numerous projects. The Plant is mainly comprised of 2 gas turbines and 1 steam turbine supplied by Siemens AG. The Plant uses the state-of-the-art Siemens SGT5-4000F gas turbine technology.

The PPA imposes an obligation on Al Batinah Power to operate and maintain the Plant at an agreed level of availability in respect of the contracted power capacity. From the COD, Al Batinah Power is required to make available electricity generating capacity of 744 MW and sell the electrical energy output exclusively to OPWP. In return, Al Batinah Power receives a tariff covering capacity charges, electrical energy charges and fuel charges from OPWP. The capacity charge is payable for each hour during which the Plant is available and OPWP is obliged to pay capacity charges, regardless of whether or not such capacity is dispatched. The capacity charge is subject to reductions due to forced and scheduled outages. The capacity charges were calibrated so that they cover inter alia the debt service, fixed operating and maintenance costs, taxes, insurance costs and return on capital. In addition to these capacity payments, Al Batinah Power also receives the electrical energy charge for the electrical energy delivered under the PPA to cover the variable costs. The fuel charge is calculated based on the consumption of natural gas calculated by the Plant model for electrical energy delivered and is in effect a virtual pass-through cost factor, subject to achieving the guaranteed heat rate (or guaranteed gas consumption). The Plant’s contracted power capacity is sold exclusively to OPWP in accordance with the terms of the PPA. Natural gas, supplied by the MoG, is the primary fuel with fuel oil (diesel) as back-up. Al Batinah Power has a long-term agreement with the MoG securing supply of fuel over the contracted PPA period. The power is evacuated to OETC’s 220 kV grid.

The Operator of the Plant (pursuant to a 15-year agreement) is STOMO, a company indirectly owned by GDF SUEZ. The Operator is managed locally and is the most experienced operator of power projects in Oman.

1 Applies in Year 1

2 As of 2013

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The Plant has been established under a BOO scheme, which enables it to be operated beyond the PPA term of 15 years, either by extending the PPA (if agreed to by OPWP), or by selling the power into an electricity pool which may exist at that time and/or to eligible customers.

As at the date of this Prospectus, the Issued and Paid-Up Share Capital of Al Batinah Power is OMR 67,488,743. The Selling Shareholders of Al Batinah Power are Kahrabel, which owns 46 per cent., Multitech, which owns 22 per cent., BHSP, which owns 11 per cent., SEPI, which owns 11 per cent. and PASI, which owns 10 per cent. For a profile of each of these Shareholders, please see “Chapter VII – Shareholding Details” of this Prospectus.

Competitive Strengths

Al Batinah Power’s competitive strengths include the following:

Well-established contractual framework with long term power purchase agreement, ensuring cash flow protection against adverse events such as buyer risk events and force majeure;

Stable and predictable cash flows, resilient to potential shocks in gas prices and power demand until 2028;

State-of-the-art fuel-efficient power plant;

Largest power plant at a single location in Oman;

Experienced Selling Shareholders with an established track record globally, in the GCC and in Oman;

Fully operational Project operated by an experienced operator with largest O&M expertise in Oman and having reached COD without material delays;

No outstanding claims or litigations;

Strong and consistent demand for electricity, ensuring opportunities after the expiration of the current off-take contract;

Long term availibility of natural gas; and

Experienced Management.

For further details in relation to Al Batinah Power’s competitive strengths, please see “Chapter X – Description of Al Batinah Power and Business Overview – Competitive Strengths” of this Prospectus.

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Chapter III: General Information on the Offer and the Company

Name Al Batinah Power Company SAOG (under transformation).

Commercial registration number 1092788

Date of registration 02/08/2010

Registered office P.O. Box 39, Bareeq Al ShattiPostal Code 103Sultanate of Oman

Principal place of business P.O. Box 39Bareeq Al Shatti, Postal Code 103, Suites 501 & 512Business Centre, Bldg No. 326, Way No. 3307Al Khuwair, Sultanate of OmanTel: +968 2439 3300; Fax: +968 2439 3333

Duration Unlimited

Financial Year Commences on 1 January and ends on 31 December each year.

Authorised share capital OMR 67,488,743 divided into 674,887,430 Shares with a nominal value of Bzs 100 per Share.

Issued and paid-up share capital OMR 67,488,743 divided into 674,887,430 Shares with a nominal value of Bzs 100 per Share.

Number of Shares offered for subscription (Offer Shares)

236,210,601 Shares, representing 35 per cent. of Al Batinah Power’s total Issued and Paid-Up Share Capital.

Type of Shares offered for subscription All the Shares issued by Al Batinah Power and the entire equity capital of Al Batinah Power consist only of ordinary shares. Each single Share carries the right to one vote at any general meeting of Al Batinah Power, including any OGM or EGM.

Offer Price of the Offer Shares Bzs 128 per Offer Share (comprising a nominal value of Bzs 100, a premium of Bzs 26 and the Offer Expenses of Bzs 2 per Offer Share).

Percentage of the total issued and paid-up share capital on Offer

35 per cent. of the Issued And Paid-Up Share Capital of Al Batinah Power.

Names of Selling Shareholders and number of Shares being sold

Kahrabel: 108,656,877 Shares, representing 46 per cent. of the Offer Shares.

Multitech: 51,966,331 Shares, representing 22 per cent. of the Offer Shares.

BHSP: 25,983,167 Shares, representing 11 per cent. of the Offer Shares.

SEPI: 25,983,167 Shares, representing 11 per cent. of the Offer Shares.

PASI: 23,621,059 Shares, representing 10 per cent. of the Offer Shares

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Purpose of the IPO Al Batinah Power is undertaking the IPO to comply with the obligations stipulated in the PFA.

Persons eligible for the Offer Shares The subscription will be open to Omani and non-Omani individuals and juristic persons.

Persons prohibited from subscribing to the Offer

The following Applicants shall not be permitted to subscribe to the Offer:

Sole proprietorship establishments: The owners of sole proprietorship establishments may only submit Applications in their personal names.

Trust accounts: Customers registered under trust accounts may only submit Applications in their personal names.

Multiple Applications: An Applicant may not submit more than one Application.

Joint Applications: Applicants may not submit applications in the name of more than one individual (including on behalf of legal heirs).

All such Applications will be rejected without contacting the Applicant.

Proposed allocation procedure In case of oversubscription of the Offer, for the purpose of allocating the Offer Shares between the eligible investor groups, the allocation of the Offer Shares will be made as follows:

Category I Investors: 153,536,891 Offer Shares, being 65 per cent. of the Offer, on a pro-rata basis.

Category II Investors: 82,673,710 Offer Shares, being 35 per cent. of the Offer, on a pro-rata basis.

In accordance with Article 65 of the CCL, a minimum number of Offer Shares may be distributed equally among subscribers, taking into consideration small subscribers and the remaining Offer Shares shall be allocated on a pro-rata basis.

Any under-subscription in Category I will be carried to Category II and vice versa, as described in “Chapter XXI – Subscription Conditions and Procedures” of this Prospectus.

Minimum limit for subscription by each Applicant

Category I Investors: 1,000 Offer Shares and in multiples of 100 Shares thereafter.

Category II Investors: 600,100 Offer Shares and in multiples of 100 Shares thereafter.

Maximum limit for subscription by each Applicant

Category I Investors: 600,000 Offer Shares.

Category II Investors: 23,621,000 Offer Shares, representing 10 per cent. of the Offer.

Offer Opening Date 11 May 2014

Offer Closing Date 9 June 2014

Nominal value of the Shares Bzs 100 per Share

Offer Expenses Bzs 2 per Offer Share

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Date of EGM for approval of the IPO 31 March 2014

Financial Adviser & Issue Manager Bank Muscat SAOGP.O. Box 134, Postal Code 112 Ruwi, Sultanate of OmanTel: +968 2476 8888; Fax: +968 2479 8220www.bankmuscat.com

Collecting Banks Bank Muscat SAOG P.O. Box 134, Postal Code 112 Ruwi, Sultanate of OmanTel: +968 2476 8215; Fax: +968 24787764www.bankmuscat.com

Bank Dhofar SAOGP.O. Box 1507,Postal Code 112Sultanate of OmanTel: +968 2479 0466; Fax: +968 2478 4428www.bankdhofar.com

National Bank of Oman SAOGP.O. Box 751, Postal Code 112 Ruwi, Sultanate of OmanTel: +968 2477 8757/8610; Fax: +968 2477 8993www.nbo.co.om

Oman Arab Bank SAOCP.O. Box 2010, Postal Code 112 Ruwi, Sultanate of OmanTel: +968 2482 7304; Fax: +968 2482 7367www.oman-arabbank.com

Bank Sohar SAOGP.O. Box 44, Postal Code 114 Hai Al Mina, Sultanate of OmanTel: +968 2476 1938; Fax: +968 2476 1741www.banksohar.net

Ahli Bank SAOGP.O. Box 545, Postal Code 116 Mina al Fahal, Sultanate of OmanTel: +968 2457 7082; Fax: +968 2456 7841www.ahlibank.om

Reporting accountants and auditors of Al Batinah Power

KPMG 4th Floor, HSBC Bank BuildingCentral Business DistrictP.O. Box 641, Postal Code 112Sultanate of Oman Tel:+968 2470 9181; Fax:+968 2470 0839www.kpmg.com

15

Legal Adviser to Al Batinah Power Al Busaidy, Mansoor Jamal & CoBarristers & Legal ConsultantsP.O. Box 686, Postal Code 112 Ruwi, Sultanate of OmanTel: +968 2481 4466; Fax: +968 2481 2256www.amjoman.com

Communications consultants to Al Batinah Power

OHI Leo BurnettP.O. Box 889, Postal Code 100 Muscat, Sultanate of OmanTel: +968 2463 6673; Fax: +968 2448 2746www.ohileoburnett.com

Independent market adviser to Al Batinah Power

IPA Energy + Water Economics Ltd34 Melville Street Edinburgh, EH3 7HAScotland Tel:+44 20 7659 9888; Fax: +44 20 7962 1321www.ipaeconomics.com

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Chapter IV: Summary of Expenses in Connection with the Offer

The maximum expenses incurred by Al Batinah Power in connection with the Offer are estimated at OMR 781,000, which would equate to 2.58 per cent. of the total proceeds of the Offer if all 236,210,601 Offer Shares are sold. The breakdown of the maximum estimated expenses incurred by Al Batinah Power in relation to the Offer is contained in the table below:

Estimated Expenses OMR

Financial Adviser & Issue Manager fees 357,500

Collecting Bank fees 121,000

CMA and MCDC fees 40,000

Market consultancy adviser fees 20,000

Legal, tax, accounting adviser and translator fees 83,500

Insurance 31,000

Communications, advertising and publicity 90,000

Other contingency expenses 38,000

Total expenses in connection with the Offer 781,000

Offer Expenses of Bzs 2 per Offer Share collected 472,421

Difference between estimated total expenses incurred and Offer Expenses of Bzs 2 per Offer Share collected

308,579

The above figures are indicative estimates only. The Offer Price includes an amount equal to the Offer Expenses of Bzs 2 per Offer Share, which will be used to meet part of the expenses incurred by Al Batinah Power in relation to the Offer and any excess shall be borne by or accrue to Al Batinah Power. If all 236,210,601 Offer Shares are sold, total Offer Expenses of Bzs 2 per Offer Share collected will equate to OMR 472,421. Expenses incurred in excess of the Offer Expenses of Bzs 2 per Offer Share have been considered in the preparation of the projected financial statements.

For the summary projected financial statements, please see “Chapter XIV – Projected Financial Information” of this Prospectus.

17

Chapter V: Purpose of the Offer and Use of Proceeds

Purpose of the Offer

The Selling Shareholders are undertaking the IPO to comply with their obligations under the PFA, which require them, amongst other things, to make 35 per cent. of the Shares available for public subscription and to list such Shares on the MSM.

The Government has embarked upon an extensive program to enable international investors to participate in infrastructure projects in Oman. It has also been the Government’s intention that Omani investors should be able to participate in strategic projects of this nature. As part of the tendering process for the Project, each of the Project Founders entered into the PFA with EHC on 10 August 2010, which required them to provide certain warranties and undertakings to EHC in respect of Al Batinah Power, which was the project company formed by the Project Founders for the purposes of entering into the PPA and undertaking the development, ownership and operation of the Project.

The PFA requires the Project Founders, within four years from the incorporation of Al Batinah Power, to offer 35 per cent. of the shares of Al Batinah Power to the public. Accordingly, the Selling Shareholders are offering 236,210,601 Shares, equivalent to 35 per cent. of the Issued and Paid-Up Share Capital of Al Batinah Power. Al Batinah Power has obtained the requisite approvals to offer 35 per cent. of Issued and Paid-Up Share Capital, including approval from PAEW pursuant to Article 13 of the Sector Law. Al Batinah Power has also obtained the approval of AER to proceed with the sale of 35 per cent. of the Issued and Paid-Up Share Capital through an IPO.

Use of the Proceeds of the Offer

The Offer Shares do not represent an issuance of new Shares. The Offer Shares represent the selling/divestment of a part of the Shares currently held by the Selling Shareholders. The proceeds of the Offer (including the premium) shall therefore accrue to the Selling Shareholders in the ratio of Shares offered. The Bzs 2 per Share collected towards the Issue Expenses will cover a portion of the expenses incurred in relation to the IPO.

18

Chapter VI: Objects and Approvals

Overview

Al Batinah Power was incorporated and registered as an SAOC on the MOCI Commercial Register on 2 August 2010. At an EGM held on 31 March 2014, it was resolved to transform Al Batinah Power into an SAOG.

Al Batinah Power’s core business activity is to own, maintain and operate a power generating facility and associated gas interconnection facilities and other relevant infrastructure. Al Batinah Power is 100 per cent owned by the Selling Shareholders and, following this Offer, should the Offer be fully subscribed, the public will own 35 per cent of Al Batinah Power’s Issued and Paid-Up Share Capital.

Al Batinah Power presently holds the following permits and licences which are material to the ongoing operation of its business:

Ministry of Commerce & Industry: Commercial Registration

Commercial Registration Number: 1092788Date of registration: 2 August 2010Expiry date: 1 August 2015

Oman Chamber of Commerce & Industry: Membership

Registration Number: 2720Granted on: 31 July 2013Expiry date: 2 August 2014

AER: Generation Licence

Effective date: 1 January 2012Expiry date: 25 years from the effective date, i.e. 31 December 2037

MECA: Environmental Licence

Preliminary Environmental Approval – Third RenewalGranted on: 23 March 2014Expiry date: 21 September 2014

Memorandum and Articles

The principal objects for which Al Batinah Power is established are to develop, finance, design, construct, operate, maintain, insure and own a power generating facility and associated gas interconnection facilities and other relevant infrastructure.

A copy of the Memorandum and Articles is available for perusal at the registered office of Al Batinah Power during business hours.

Resolutions Passed

At the EGM held on 31 March 2014, the following resolutions were unanimously passed:

a) conversion of Al Batinah Power from an SAOC to a SAOG, in connection with which the Selling Shareholders will offer to sell the Offer Shares for public subscription as per the details provided for in para (c) hereinbelow;

b) approval of the proposed amendments to the Articles in accordance with the regulations issued by the CMA and the provisions of laws of Oman with respect to the form and content of the articles of association of SAOGs;

c) that the Selling Shareholders will offer 35 per cent. of Al Batinah Power’s Issued and Paid-Up Share Capital to the public, in the manner detailed below:

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Name of ShareholderNumber of Shares held

prior to the Offer Offer SharesNumber of Shares held

following the Offer

Kahrabel 310,448,220 108,656,877 201,791,343

Multitech 148,475,230 51,966,331 96,508,899

BHSP 74,237,620 25,983,167 48,254,453

SEPI 74,237,620 25,983,167 48,254,453

PASI 67,488,740 23,621,059 43,867,681

Total 674,887,430 232,210,601 438,676,829

d) approval of the price at which Offer Shares are to be offered for sale in the IPO;

e) authorise any two (2) members of the Board of Al Batinah Power acting jointly, to carry out the following matters:

to negotiate, finalise and sign on behalf of Al Batinah Power all agreements to be entered into by Al Batinah Power with third party advisers and service providers engaged for the IPO and complete all necessary procedures in relation to the IPO;

to approve and sign on behalf of the Board of Directors and Al Batinah Power the Prospectus and other documents relating to the IPO; and

to do all other acts, sign all documents and file and register any documents with any relevant authority and obtain consents and approvals on behalf of Al Batinah Power and the Selling Shareholders which may be deemed appropriate or necessary in connection with the IPO including listing of Al Batinah Power’s shares on the MSM.

f) to ratify the appointment of Bank Muscat SAOG as the Financial Adviser & Issue Manager for the IPO;

g) to ratify the appointment of Al Busaidy, Mansoor Jamal & Co. as Legal Advisers for the IPO;

h) to ratify the appointment of OHI Leo Burnett as communications consultants for the IPO;

i) to ratify the appointment of IPA Energy + Water Economics Ltd. as independent market adviser for the IPO;

j) to appoint KPMG as the reporting accountants for the IPO;

k) to appoint the Collecting Banks for the IPO;

l) to approve that the expenses incurred by Al Batinah Power in connection with the Offer shall be met from the Offer Expenses of Bzs 2 per Offer Share paid by the Applicants, and any expenses incurred by Al Batinah Power in connection with the Offer in excess of the collected Offer Expenses of Bzs 2 per Offer Share shall be borne by Al Batinah Power; and

m) to ratify all actions taken or delegated by the Board in relation to the IPO prior to the date of the EGM.

Continuing Obligations

In accordance with the CCL, all existing obligations of Al Batinah Power, prior to its transformation to a public joint stock company, shall continue in the transformed company.

20

Chapter VII: Shareholding Details

Equity Structure of Al Batinah Power at Incorporation

Al Batinah Power was incorporated with an initial Authorised Share Capital of OMR 2,000,000, divided into 2,000,000 ordinary Shares, and an Issued and Paid-Up Share Capital of OMR 500,000, and divided into 500,000 ordinary Shares. The following table provides details of the Shares, as at the date of incorporation of Al Batinah Power:

Name of ShareholderNumber of

Shares held % of Total

Aggregate Nominal Value of Shares held

(OMR)

Kahrabel 230,000 46.00 % 230,000.000

Multitech 110,000 22.00 % 110,000.000

Sojitz 55,000 11.00 % 55,000.000

Yonden 55,000 11.00 % 55,000.000

PASI 50,000 10.00 % 50,000.000

Total 500,000 100.00% 500,000.000

Transfer of shareholding held by two of the Founder Members to their respective group entities

Pursuant to an accession deed executed amongst BHSP, Sojitz, Kahrabel, Multitech, Yonden, PASI and Al Batinah Power on 3 May 2011, Sojitz, transferred all its shareholding in Al Batinah Power, amounting to 55,000 shares, to BHSP, in accordance with the terms and conditions of the SHA; and

Pursuant to an accession deed executed amongst SEPI, Yonden, Kahrabel, Multitech, BHSP, PASI and Al Batinah Power on 9 January 2012, Yonden transferred all its shareholding in Al Batinah Power, amounting to 55,000 shares, to SEPI, in accordance with the terms and conditions of the SHA.

Changes in equity structure subsequent to incorporation and details of Al Batinah Power before the Offer

At an EGM held on 27 March 2013, the Shareholders agreed to increase the Authorised Share Capital of Al Batinah Power to OMR 67,488,743 and to increase the Issued and Paid-Up Capital of Al Batinah Power to OMR 67,488,743, divided into 67,488,743 Shares by performing the following conversions (in addition to the initial Paid-Up Capital of OMR 500,000):

a) converting the amount of the EBL amounting to OMR 60,289,869 obtained by each of (a) Kahrabel in the amount of OMR 30,814,822 under the GDF SUEZ equity bridge loan facility, (b) Multitech in the amount of OMR 14,737,524 under the Multitech equity bridge loan facility, (c) BHSP, in the amount of OMR 7,368,762 under the Sojitz equity bridge loan facility and (d) SEPI in the amount of OMR 7,368,762 under the Yonden equity bridge loan facility (collectively, the “EBL Shareholders”) and subordinated by the EBL Shareholders as additional capital contribution to finance the project expenses, as equity contribution of those Shareholders, respectively, to the Issued and Paid-Up Share Capital of Al Batinah Power in order to extinguish and settle the liabilities of Al Batinah Power towards the EBL Shareholders, to the extent of their additional contributions to the equity of Al Batinah Power on repayment of the amount of the EBL by the EBL Shareholders to their respective lenders; and

b) converting the amount of the Shareholder Loan of OMR 6,698,874 subordinated by the PASI, as additional capital contribution to finance the project expenses, as equity contribution of the PASI to the Issued and Paid-Up Share Capital of Al Batinah Power in order to extinguish and settle the liability of Al Batinah Power to the PASI to the extent of its additional contributions to the equity of Al Batinah Power.

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At an EGM held on 18 February 2014, the Shareholders agreed to split the nominal value of the Shares from OMR 1 to Bzs 100, by making the necessary amendment to the Articles.

The current equity structure, after giving effect to the conversion of the EBL and the conversion of shareholder loans into equity and after share split, is as follows:

Name of ShareholderNumber of

Shares held % of Total

Aggregate Nominal Value of Shares held

(OMR)

Kahrabel 310,448,220 46.00 % 31,044,822.000

Multitech 148,475,230 22.00 % 14,847,523.000

BHSP 74,237,620 11.00 % 7,423,762.000

SEPI 74,237,620 11.00 % 7,423,762.000

PASI 67,488,740 10.00 % 6,748,874.000

Total 674,887,430 100.00% 67,488,743.000

The following diagram illustrates the shareholding structure of Al Batinah Power immediately prior to the IPO:

* indirectly owned through subsidiaries^ indirectly owned through wholly owned subsidiaries

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Equity Structure After the Offer

After the completion of the Offer, and assuming that all of the Offer Shares are sold, Al Batinah Power’s Issued and Paid-Up Share Capital will remain OMR 67,488,743 and will be held as follows:

Name of ShareholderNumber of

Shares held % of Total

Aggregate Nominal Value of Shares held

(OMR)

Kahrabel 201,791,343 29.90 % 20,179,134.300

Multitech 96,508,899 14.30 % 9,650,889.900

BHSP 48,254,453 7.15 % 4,825,445.300

SEPI 48,254,453 7.15 % 4,825,445.300

PASI 43,867,681 6.50 % 4,386,768.100

Public 236,210,601 35.00% 23,621,060.100

Total 674,887,430 100.00% 67,488,743.000

The following diagram illustrates the shareholding structure of Al Batinah Power following the IPO:

* indirectly owned through subsidiaries^ indirectly owned through wholly owned subsidiaries

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Brief profile of the Selling Shareholders

Kahrabel

Kahrabel oversees and manages the development, construction and operation of the electricity and water production business of GDF SUEZ Energy International in the MENA region.

Kahrabel is an entity 100% owned directly by International Power, which is itself indirectly wholly owned by International Power Ltd. through other minority stakes held by GDF SUEZ group companies. International Power Ltd. operates under the commercial brand name of GDF SUEZ Energy International. It is responsible for the energy activities of the GDF SUEZ Group in 32 countries across five regions worldwide. Together with power generation and water desalination, GDF SUEZ Energy International is also active in closely linked businesses including downstream liquefied natural gas, gas distribution and retail. It has a strong presence in its markets with 72.9 GW gross (37.4 GW net) capacity in operation and 8.4 GW gross (4.4 GW net) capacity of projects under construction as at 31 December 2013. GDF SUEZ Energy International is a proven international power plant developer and operator, with a strong track record in the Middle East and internationally, and has vast expertise with Siemens AG’s SGT5-4000F turbines, which are used in the Plant.

International Power Ltd. is owned indirectly by GDF SUEZ through other minority stakes held by the GDF SUEZ group, one of the world’s leading energy companies and a benchmark in the fields of gas, electricity, energy services and the environment. The group is active throughout the entire energy value chain, in electricity and natural gas, upstream to downstream. It currently employs close to 150,000 people worldwide and achieved revenues of €81.3 billion in 2013. GDF SUEZ is listed on the Brussels, Luxembourg and Paris stock exchanges and is represented in the main international indices: CAC 40, BEL 20, DJ Euro Stoxx 50, Euronext 100, FTSE Eurotop 100, MSCI Europe, and Euronext Vigeo (World 120, Eurozone 120, Europe 120 and France 120).

In the GCC, Kahrabel acts as an asset developer, selling the electricity and water it produces directly or through specific purpose vehicles to public distribution companies under long-term P(W)PAs. Kahrabel is the GCC’s leading private power developer with a total power generation capacity (including capacity in operation and under construction) of 27,000 MW and almost 5.3 million m³ of water per day of desalination capacity (as of January 2014). Its assets are located in the UAE, Oman, the Kingdom of Saudi Arabia, the Kingdom of Bahrain, Qatar and Kuwait. Kahrabel provides operations & maintenance services to the projects that it has developed and built through O&M companies generally incorporated by Kahrabel in the country where the relevant assets are located. In Oman, Kahrabel has direct and indirect ownership interest in six of the eleven contracted projects by OPWP in the MIS. This experience has allowed Kahrabel to build up a strong relationship with OPWP and acquire in-depth knowledge of the country, including its regulations and customs, which is highly beneficial to the management of these projects.

Further information about the GDF SUEZ group is available at: www.gdfsuez.com.

Multitech

Multitech is part of the Suhail Bahwan Group, a leading business house in Oman.

Multitech is the investment arm of the Suhail Bahwan Group for participation in power and water privatisation projects in Oman. Multitech is the founding shareholder in:

a) ACWA Power Barka SAOG (Barka-1 IWPP);

b) Al Suwadi Power Company SAOG (under transformation) (Barka-3 IPP);

c) Al Batinah Power Company SAOG (under transformation) (Sohar-2 IPP); and

d) Phoenix Power Company SAOC (Sur IPP).

Multitech also engages in the trading of welding products, electrical products, water treatment & oilfield chemicals and cranes. Multitech is under the day to day management of Bahwan Engineering Company LLC, the flagship company of Suhail Bahwan Group.

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BHSP

BHSP is a wholly owned subsidiary of Sojitz for investing in the Sohar-2 IPP. Sojitz (Sojitsu Kabushiki-gaisha, Sojitz) is an investment and trading corporation based in Tokyo, Japan, and listed on the Tokyo Stock Exchange.

Sojitz employs 16,273 people worldwide and achieved revenues of $18.6 billion in the fiscal year ended in March 2013.

Sojitz was created through the merger of Nichimen Corporation (established in 1892) and Nissho Iwai Corporation (established in 1896) in 2004. Sojitz conducts its operations in around 50 countries through over 400 consolidated subsidiaries and affiliated companies in Japan and overseas. Sojitz’ business activities are wide-ranging, covering machinery, energy and metal, chemicals, consumer lifestyle-related business. Sojitz’s strength lies not only in developing financial schemes, but also in conducting accurate analysis of markets through its overseas networks and determining the commercial viability of businesses using accumulated expertise in various fields. Sojitz has used these skills to pursue opportunities in IPP businesses as a developer, investor, finance arranger and/or project coordinator. Sojitz has been involved in IPP projects worldwide including Oman, Saudi Arabia, Vietnam, the USA, Mexico, the Philippines, Pakistan, China, Trinidad & Tobago, the Czech Republic, Sri Lanka and Japan. The IPP business is one of the focused business fields explicitly mentioned in Sojitz’s “Mid-Term Management Plan 2014”, and Sojitz intends to solidify its status as an independent power producer in the Middle East by enlarging its portfolio of high-quality power generation assets.

Sojitz, parent of BHSP, is a global investment and trading company actively involved in project developments for power and energy sector around the world. Sojitz has roughly 6,000 MW gross power capacity in operation and 13.2 MIGD of gross seawater desalination capacity under construction as at end of 2013. Specifically in the Gulf region, Sojitz has long been involved in power and water projects including EPC desalination projects such as Ghubra Phase 1, 2, 3/4 and 5, Muhut and IPP projects such as PP11 IPP (1729 MW) in Saudi Arabia and Barka-3 (744 MW, CCGT) in Oman.

Further information about Sojitz is available at: http://www.sojitz.com/en/

SEPI

SEPI is a wholly owned subsidiary of Yonden for investing and managing IPP/IWPP projects outside Japan, which holds shares in Barka-3 IPP (744MW, CCGT) in Oman, Sohar-2 (744MW, CCGT) in Oman, and Ras Laffan C IWPP (2,730MW, CCGT & 63 MIGD) in Qatar.

Ras Laffan C IWPP, one of the world largest and most complex independent water and power projects, achieved, by close cooperation with the other shareholders, timely COD and has been operating stably since then.

Also, its wholly owning parent company, Yonden, listed on the Tokyo Stock Exchange, is an electric power utility and carries out the integrated process of generating, transmitting, distributing, and selling electricity to 4 million people in the Shikoku region, Japan. Yonden employs more than 4,700 people and has achieved consolidated operating revenues of USD 6 billion from the electricity sales of 28 billion kWh in the fiscal year ended March 31, 2013. Since its establishment in 1951, Yonden has contributed to regional development through the stable supply of low-cost, high-quality electricity by establishing a balanced energy mix that combines nuclear, coal, oil, gas, hydro, solar, and wind power, totaling approximately 7,000MW (net and gross) in generating capacity at 65 power stations.

Especially in the thermal power field, over 400 engineers engage in engineering, construction, operation and maintenance of thermal power plants whose generating capacity is roughly 3,800MW with their comprehensive experiences, skills and know-how obtained for more than 60 years. Yonden owns one CCGT unit (296MW) at its Sakaide Power Station, and is constructing another CCGT unit (289MW) to be operational in 2016.

PASI

PASI is a public authority established in Oman enjoying administrative and financial independence pursuant to Royal Decree 72/91 issued on 2nd July 1991. PASI manages a defined benefit pension scheme for Omani nationals employed in the private sector through prudent, wise and long-term investment strategies. Currently,

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the scheme members exceed 180,000 active participants. PASI invests actively in the local and International capital markets. Locally, PASI has been a pioneer in participating in power, utility companies and major real estate projects. Internationally, PASI’s investments cover both traditional (such as bonds and equities) and alternative assets (such as private equity, infrastructure & real estate).

Further information about PASI is available at: http://www.taminat.com

Restrictions imposed on the Selling Shareholders

The following restrictions apply to the Selling Shareholders under the terms of the PFA:

a) on and from the Effective Date up to but excluding the date on which the Project Founders complete the IPO, the lead founder under the PFA3, is required to, directly or indirectly, hold and maintain at least 35 per cent of the Shares in Al Batinah Power; and

b) on and from the date on which the Project Founders complete the IPO up to and including the third anniversary of the COD, the lead founder under the PFA is required to, directly or indirectly, hold and maintain at least 22.75 per cent of the Shares in Al Batinah Power.

Thereafter, no shareholding restrictions apply to the Project Founders under the PFA. The Project Founders may, subject to applicable law, dispose of Shares in excess of the above thresholds with the consent of EHC.

For further details of the PFA provisions, please see “Chapter XI – Contractual Framework” of this Prospectus.

Under the terms of the ESRA, there is an obligation on Al Batinah Power to procure that International Power S.A. retains a direct or indirect legal and beneficial interest in Al Batinah Power which, in aggregate, represents:

a minimum of 25% of the Shares until the date that is five years after the COD;

a minimum of 20% of the Shares following the date that is five years after the COD and until the date that is ten years after the COD; and

a minimum of 15% of the Shares at any time after the date that is ten years after the COD.

Separately, under the terms of the SHA, following the Offer until the third anniversary of the COD, Kahrabel may not reduce its shareholding below 22.75 per cent. of the total outstanding Shares.

3 The lead founder under the PFA, at the time of its execution was Suez-Tractebel, whose current denomination is International Power.

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Chapter VIII: Overview of the Omani Economy

Location

Strategically positioned at the crossroads of Asia and Europe, Oman has historically been a centre of trade and commerce. With a population of approximately 3.9 million as at November 2013, spread over a land area of 309,500 km2, Oman is a country with stable political, economic and social systems. Oman is administratively divided into eleven governorates (Ad Dakhiliyah, Ad Dhahirah, Al Batinah North, Al Batinah South, Al Buraimi, Al Wusta, Ash Sharqiyah North, Ash Sharqiyah South, Dhofar, Muscat and Musandam). Oman’s capital city is Muscat (in the Muscat Governorate), which is situated on the northeast coast of the country.

International relations

Oman maintains strong relations with its neighbours, as well as a wide range of Western and other countries. Oman has enjoyed political and economic stability over the past 40 years and is a member of various prominent international organisations, including the United Nations, the International Monetary Fund, the International Bank for Reconstruction and Development and the World Trade Organisation.

Regionally, Oman is a founding member of the GCC (alongside five other Arab Gulf states: Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates). Oman is also a member of the GCC’s Permanent Petroleum Cooperation Committee which is charged with preparing the long-term petroleum strategy of the GCC in accordance with its sustainability goals. The Permanent Petroleum Cooperation Committee makes proposals with respect to the supply of oil from the GCC to international markets and provides a forum for GCC member states to coordinate policies and share proposals.

Key Economic and Social Indicators

The following table shows a selection of key economic and social statistics for Oman for the periods indicated:

2010 2011 2012 2013

GDP at market prices (OMR billions) 22.61 26.90 30.03 22.63*

Population (millions) 2.77 3.30 3.62 3.91

Per capita GDP at market prices (OMR) 7,997 9,700 8,231 8,300*

Oil and gas industry as % of GDP 46% 53% 52% 52%

Annual inflation 3.3% 4.0% 2.9% 3.3%

MSM market capitalisation (OMR billions) 10.9 10.3 11.7 13.0

Crude oil Dubai spot price (US$ per barrel) 78.1 106.2 109.1 106

Crude oil production (million barrels per day) 315 323 307 344

Sources: Ministry of National Economy, esrtwhile

NCSI

CBO Annual Report 2012

MSM Annual Statistical Bulletin 2013

World Bank figures

*based on NCSI Q3 2013 figures

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Economy

Oman has a credit rating of “A” by Standard & Poor’s and “A1” by Moody’s Investor Services. The Omani Rial is pegged to the US Dollar at a fixed exchange rate of US$1 = OMR 0.3845. According to information published by the NCSI, the Omani economy is estimated to have grown by 11.6 per cent. in 2012, supported by the relative stability in crude oil prices in the international markets.

Oman is the world’s 26th largest producer of oil and the 27th largest producer of gas, and held the world’s 21st largest proven oil reserves and 29th largest proven gas reserves, according to The World Factbook published by the US Central Intelligence Agency. On the back of an oil-based economy, the increase in oil prices from around US$56 per barrel to US$106 per barrel from 2009 to 2013 enabled significant development in Oman’s domestic infrastructure, including its healthcare, telecommunications and transportation systems and the expansion of its international trade network. The Government continues to focus on diversification of the economy in order to gradually reduce its dependence on oil and hydrocarbon revenues, which now represent 52 per cent. of Oman’s GDP. The Government is committed to further non-oil industry growth into the future.

The graph below displays annual production in Oman and annual average prices of crude oil during the period from 2009 to 2013:

(Source: Statistical Yearbook 2013, NCSI)

Public Finance

The data in this section is based on information gathered from publications of the NCSI, the Central Bank of Oman and other public sources.

For the 11 months ended 30 November 2013, Government revenue was OMR 12.7 billion, of which oil and gas revenue was OMR 11.0 billion, or 86 per cent. of total revenue. The average price of Omani oil was US$109.6 per barrel. For the year 2014, the Government has budgeted public revenue of OMR 11.7 billion based on an estimated oil price of US$85 per barrel, being below current oil prices. Total Government expenditure for 2014 is projected at OMR 13.5 billion, which is 11 per cent. higher than the actual expenditure for 2013.

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The graph below displays trade balance figures in Oman during the period from 2005 to 2012:

(Source: Statistical Yearbook 2013, NCSI)

Development Plans

The Government has drawn up the Eighth Five-Year Development Plan, covering the period from 2011 to 2015, which proposes substantial public investments of more than OMR 12 billion with focus on the infrastructure sector including airports, roads, seaports and water. These investments are expected to improve domestic demand and further increase the diversification of the Omani economy. The Government has projected cumulative revenue of OMR 37.5 billion over the plan period with an overall public expenditure of OMR 42.7 billion over the five year plan period. The plan targets to provide additional employment for 200,000 to 275,000 Omani citizens.

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Chapter IX: Regulatory Framework and Industry Overview

The information in this section has been derived from AER’s website, OPWP’s 7-year statement (2013-2019) issued in April 2013, OPWP’s website and other public sources.

Sector Overview

Until 1999, the power and related water activities were solely run by the Government through MHEW. In December 1999, the Council of Ministers approved the introduction of Government policy designed to facilitate the wholesale restructuring of and private sector participation in the electricity and related water sector in Oman. The Government began the process of preparing a new law to facilitate the restructuring and regulation of the electricity and related water sector in Oman. As a result, a new law for the sector, (“the Sector Law”), came into force on 1 August 2004. The Sector Law provides the framework for the industry structure of electricity and related water in Oman. It provides the outline for the transfer of relevant assets and liabilities of the MHEW (subsequently split into the MoH and the PAEW) to a number of successor companies (“Transfer Scheme”).

The distribution of all the electricity and related water activities as per the “Transfer Scheme” involves the setting up of the OPWP and the EHC as well as the transfer of:

Generation assets to RPC and Wadi Al-Jizzi Power Company SAOC;

Generation and desalination assets to Al Ghubrah Power and Desalination Company SAOC;

Transmission assets to OETC;

Distribution and supply assets transferred to Majan Electricity Company SAOC, Mazoon Electricity Company SAOC and Muscat Electricity Distribution Company SAOC;

Certain generation, distribution and supply assets to Rural Areas Company SAOC; and

Establishing a single procurement company, OPWP as well as a holding company, EHC.

The Oman power system is divided into three regional systems partially connected via interconnectors:

the MIS, which is the largest part of the system and covers the northern area of Oman;

the Salalah System, located in the Dhofar Governornate; and

the Rural Areas Electricity System, operated by RAECO, which serves the rest of Oman.

Oman Power and Water Procurement Company

OPWP is the single buyer of power and water for all IPP/IWPP projects within Oman. OPWP is responsible for ensuring that there is sufficient electricity and water production capacity available at the lowest cost to meet growing demands in Oman. OPWP undertakes long-term generation planning and publishes an annual seven-year statement, which identifies new IPP/IWPP projects to be competitively tendered and developed by private sector entities, in order to meet the future power generation and water desalination requirements of Oman. These projects are critical to the reliable and sustainable development of the power sector and the economic development of Oman.

OPWP was established under the Sector Law, Article 74 which specifies its functions and duties including but not limited to:

To secure production capacity and output to meet demand for electricity in the MIS and the Salalah System, in coordination with RAECO.

To secure production capacity and output to meet demand for desalinated water in Oman.

To meet requirements for new electricity and desalinated water capacity in Oman, with new projects to be designed, constructed, financed, owned and operated by local and foreign investors.

The purchase, procurement, and management of production capacity and output, ancillary services and all goods and other services on the basis of economic purchase.

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Electricity & Water Sector Ownership

The Omani electricity and water sector is partly government-owned and partly privatised. The chart below displays the ownership structure of the electricity and water sector in Oman:

Contracted Capacity

OPWP’s portfolio of contracted capacity in the MIS comprises long-term contracts with eleven plants in operation or under construction. As per OPWP’s 7 year statement (2013-2019), the total currently contracted capacity is 5589 MW and 116.2 MIGD. Summary details of these plants and contractual arrangements are provided in the table below:

ProjectContract Type

Current Contract Capacity Plant Type Plant Owner

Lead Developer

Contract Expiry

Ghubrah PWPA 475 MW OCGT/Steam Al Ghubrah Power and Desalination Co. SAOC

(Owned by EHC)

2018

36.8 MIGD MSF Desalination

Natural gas-fired

Rusail PPA 687 MW OCGT Al Rusail Power Co. SAOC(2)

GDF SUEZ 2022

Natural gas-fired

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ProjectContract Type

Current Contract Capacity Plant Type Plant Owner

Lead Developer

Contract Expiry

Wadi-Jizzi PPA 245 MW OCGT Wadi Al-Jizzi Power Co. SAOC

Oman Mining

2020

Natural gas-fired

Manah PPA 273 MW OCGT United Power Co. SAOG(1)

GDF SUEZ4 2020

Natural gas-fired

Al Kamil PPA 282 MW OCGT Al Kamil Power Co. SAOG(1)

GDF SUEZ 2017

Natural gas-fired

Barka I PWPA 435 MW CCGT/Steam ACWA Power Barka SAOG(1)

AES Corporation

2018

20 MIGD MSF Desalination

Natural gas-fired

Sohar I PWPA 590 MW CCGT/Steam Sohar Power Co. SAOG(1)

GDF SUEZ 2022

33 MIGD MSF Desalination

Natural gas-fired

Barka II PWPA 679 MW CCGT/Steam SMN Barka Power Co. SAOC(2)

GDF SUEZ 2024

26.4 MIGD RO Desalination

Natural gas-fired

Sohar II PPA 744 MW CCGT/Steam Al Batinah Power Co. SAOG (under transformation)

GDF SUEZ 2028

Natural gas-fired

Barka III PPA 744 MW CCGT/Steam Al Suwadi Power Co. SAOG (under transformation)

GDF SUEZ 2028

Natural gas-fired

Sur (Under Construction)

PPA 433 MW CCGT/Steam Phoenix Power Co. SAOC(3)

Marubeni 2029

Natural gas-fired

Note 1: Denotes a company listed on the MSM.

Note 2: Denotes a company whose holding company is listed on the MSM.

Note 3: Denotes a company which is required to be listed on the MSM in future.

Main Interconnected SystemThe transmission grid in Oman is partitioned into 3 geographical regions (north, central and south). The MIS covers the majority of Oman, serving approximately 600,000 electricity customers. The MIS comprises:

a number of power generation facilities owned and operated by various companies and connected by a single 220/132 kV transmission grid owned by OETC; and

three distribution networks owned and operated by Muscat Electricity Distribution Company SAOC, Mazoon Electricity Company SAOC and Majan Electricity Company SAOC, respectively.

4 Sold its stake

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The MIS is connected to Abu Dhabi via a 220kV link that can import/export 200 MW. In addition, several of the power generation facilities connected to the MIS produce desalinated water in conjunction with electricity to meet the water requirements of PAEW and Majis Industrial Services Company SAOC, the entities responsible for water services in the MIS.

The price of electricity is subsidized by the Government. Households pay a tiered rate based on consumption. The following is a summary of the rates charged based on type of consumer:

Consumer type Structure Bzs per KW

Residential & Government up to 3000 KWh 10

3001 to 5000 15

5001 to 7000 20

7001 to 10000 25

10001 and above 30

Tourism up to 3000 KWh 10

3001 to 5000 15

5001 to 7000 20

7001 and above 20

Agriculture & fisheries up to 7000 KWh 10

7001 and above 20

Commercial - 20

Ministry of Defence - 20

Industrial (except Dhofar) September – April 12

May – August 24

Salalah System

The Salalah System covers the city of Salalah and surrounding areas in the Governorate of Dhofar. The Salalah System comprises the generation, transmission and distribution of power and the water desalination capabilities of:

Salalah IWPP, contracted for 445 MW electricity generation capacity and 15 MIGD desalinated water capacity;

Power station located in Raysut, operated by DPC and DGC pursuant to a concession agreement with the Government and comprising eight OCGT units with a total net capacity of 276 MW; and

the transmission and distribution system owned and operated by DPC and its subsidiary, DGC, pursuant to a concession agreement signed with the Government in 2001.

OPWP has also announced plans for a new IPP in Raysut with electricity generation capacity of 300-400 MW alongside restructuring of the existing DPC.

The Salalah System also has contingency reserves via the interconnection with the 132 kV link between Thumrait and Harweel, owned by PDO and completed in 2012. Its purpose is to support reserve-sharing between the two systems, providing improved reliability by allowing each system access to unused reserves in contingency scenarios.

Rural Areas Electricity System

The Rural Areas Electricity System covers the majority of the land mass of Oman, serving over 20,000 customers. The Rural Areas Electricity System comprises more than 40 diesel power plants, comprising approximately 400 MW across the Sultunate of Oman for supply of electricity to the Dhofar, Musandam, Al-Wusta, Masirah parts of Dakliyah,

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Dahira and Sharqiya regions.The power generated from the plants in these regions is sold directly to customers.

The Rural Areas Electricity System is connected to the MIS via a 132kV interconnector that can import/export 60 MW. The Rural Areas Electricity System is also connected to the Salalah System via a 132kV interconnector that can import/export 100 MW. In addition, five desalination plants with a total capacity of over 2.2 MIGD are located in Abu Mudhaibi, Sowgrah, Kumzer, Masirah and Al Hallaniyat. The desalinated water produced by these plants is sold to PAEW.

OPWP acts as counter-party to the concession agreement on the Government’s behalf. OPWP procures the required power and desalinated water in bulk from generation and production facilities connected to the MIS System and PDO interconnected system.

MIS Electricity Demand

According to OPWP, peak demand for electricity in the MIS is expected to grow from 5,239 MW in 2014 to 8,106 MW by 2019, at an average growth rate of 9.5 per cent. per annum. The demand drivers in the MIS include population growth, household formation, general economic development and infrastructure expansion. The growth in demand from grid-connected loads (generally large industries and infrastructure projects) comprises expansion at existing industrial plants and new projects.

Projected annual power demand and contracted capacity required for the MIS in the period from 2013 to 2019, as estimated by OPWP, is shown in the table and graph below:

MIS Power Demand

(Source: OPWP)

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2013 2014 2015 2016 2017 2018 2019AnnualisedGrowth (%)

Expected Scenario:

Average Demand (MW) 2716 2956 3317 3576 3898 4348 4722 9.8

Annual Energy (TWh) 23.8 25.9 29.1 31.4 34.1 38.1 41.4 9.7

Peak Demand (MW) 4816 5239 5811 6270 6783 7492 8106 9.5

Contracted Capacity Required 5030 5480 6070 6550 7090 7830 8470

Low Case Scenario:

Average Demand (MW) 2550 2712 2915 3145 3387 3679 3959 7.0

Annual Energy (TWh) 22.3 23.8 25.5 27.6 29.7 32.2 34.7 7.0

Peak Demand (MW) 4635 4934 5306 5756 6179 6678 7190 7.6

Contracted Capacity Required 4840 5160 5540 6020 6460 6980 7510

High Case Scenario:

Average Demand (MW) 2876 3230 3698 4087 4651 5118 5596 12.5

Annual Energy (TWh) 25.2 28.3 32.4 35.9 40.7 44.8 49.0 12.4

Peak Demand (MW) 5037 5585 6302 6925 7720 8414 9133 11.4

Contracted Capacity Required 5260 5840 6590 7240 8070 8790 9540

OPWP Procurement Activities

In the MIS, the major expected developments through 2019 include:

1) Completion of the Sur plant, providing 2,000 MW by 2014;

2) Addition of about 200 MW of solar power, subject to final Government approval, is expected to be tendered in 2014 for 2017 operation;

3) Expiration of P(W)PA contracts at existing plants (Al Kamil (2017), Barka I (2018), Ghubrah (2018) and Wadi- Jizzi (2020)) totaling to 1517 MW. OPWP will evaluate whether to enter into new contracts with these power and water plants or whether to procure the development of new power and water capacity;

4) Requirements for one or more new power plants in 2017/2018 with aggregate capacity in the range of 2250 to 3000 MW; and

5) A new power generation plant at Ad Duqm for commercial operation in 2018. The generation capacity of the power plant, specific timing, and prospect for co-location with the water desalination plant is expected to be specified after the completion of OPWP’s ongoing Ad Duqm study.

In addition to these specific projects, OPWP expects that by around 2017, procurement activities will begin for another major power station for commercial operation in about 2021. These projects will be defined further in time, particularly depending on developments in demand growth and system requirements.

Recent developments

On 30 January 2014, OPWP5 announced that it intends to implement new arrangements for the future procurement of power and water from independent power producers and independent power and water producers in Oman. The new arrangement will focus mainly on the MIS. The principal features of the proposed new arrangements are:

5 http://www.omanpwp.com/Docs/OPWP%20Announces%20New%20Power%20and%20Water%20Procurement%20Arrangements.pdf

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the introduction of a “spot market” for power, to operate alongside and in conjunction with the existing system of power purchase agreements and PWPAs; and

the implementation of a more flexible process for the awarding of new power purchase agreements and PWPAs by OPWP, aimed at increasing competition, including between new-build and existing plants.

The proposed spot market will provide an alternative way for producers to sell power to OPWP. Instead of entering into a P(W)PA, qualified producers will be able to participate in a spot market and receive prices determined on a day-to-day basis in accordance with specified market rules. OPWP will remain the single-buyer in accordance with its existing statutory duties. By providing an additional, open and transparent “route to market” for producers, it is believed that the proposed spot market will increase the potential for competition in the power generation market, by providing opportunities for producers without a P(W)PA, including those whose original P(W)PAs may have expired. It is expected that the proposed spot market will be operational by 2017.

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Chapter X: Description of Al Batinah Power and Business Overview

Overview

Al Batinah Power’s core business activity is to own and operate the Sohar-2 power plant, a gas-fired combined cycle power generation plant with a contracted power capacity of 744 MW6, located approximately 200km northwest of Muscat in Oman, within the Sohar Industrial Port area, between the plot of the existing Sohar-1 IWPP and Sohar Aluminium Power Plant. The Plant has been in full commercial operation since 3 April 2013 and was completed at a cost of OMR 313 million (within budget). Al Batinah Power currently generates its revenues pursuant to a 15-year term PPA with OPWP, which is indirectly wholly-owned by the Government. The capacity of and the power produced from the Plant are fully contracted to OPWP and used to meet the growing power demand of the MIS during the term of the PPA and beyond. As the largest power plant at a single location in Oman (on an equal footing with the Barka-3 power plant owned by Al Suwadi Power), the contracted Plant’s power capacity of 744 MW represents c.13.3% of the MIS total currently contracted capacity of approximately 5589 MW as per OPWP’s 7 year statement (2013-2019). According to OPWP’s 7 year statement, the Plant is expected to result in a significant improvement in overall gas utilization efficiency, based on using newer, more fuel-efficient technology than existing plants.

The Plant’s contracted power capacity is sold exclusively to OPWP in accordance with the terms of the PPA. Natural gas, supplied by the MoG, is the primary fuel with distillate fuel oil as back-up. Al Batinah Power has a long-term agreement with the MoG securing supply of fuel over the contracted PPA period. The power is evacuated to OETC’s 220 kV grid. The Operator of the Plant (pursuant to a 15-year agreement) is STOMO, a company indirectly owned by GDF SUEZ. The Operator is managed locally and is the most experienced operator of power projects in Oman.

The following diagram displays the approximate location of the Plant:

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Al Batinah Power was incorporated with the commercial registration number 1092788 for an unlimited duration and registered as a SAOC on the MOCI CR on 2 August 2010. At an EGM held on 31 March 2014, it was resolved to transform Al Batinah Power into a SAOG. The legal and commercial name is Al Batinah Power Company SAOG (under transformation) and its registered office is located at P.O. Box 39, Bareeq Al Shatti 103, Suites 501 & 512 Business Centre, Bldg. No. 326, Way No. 3307, Al Khuwair, Sultanate of Oman.

As at the date of this Prospectus, the Issued and Paid-Up Share Capital of Al Batinah Power is OMR 67,488,743 divided into 674,887,430 Shares of Bzs 100 each. The Shareholders of Al Batinah Power are Kahrabel, which owns 46 per cent., Multitech, which owns 22 per cent., BHSP, which owns 11 per cent., SEPI, which owns 11 per cent. and PASI, which owns 10 per cent. For a profile of each of these Shareholders and their contribution, please see “Chapter VII – Shareholding Details” and “Chapter XII – Project Cost and Financing” of this Prospectus.

History and Background

The Government invited proposals for the development of an IPP at Sohar (Tender No 241/2009) on the following basis.

The IPP was proposed to be located within the Sohar Industrial Port area, between the plot of the existing Sohar-1 IWPP and Sohar Aluminium Power Plant.

The Project involved the design, financing, construction, commissioning, ownership, operation and maintenance of the Plant, on a BOO basis, and the capacity of the Plant would be dedicated to, and sell the entirety of its output to OPWP under the PPA.

Following a competitive bidding process run by OPWP in 2010, the Project Founders were awarded the contract to build the Plant. The Project Founders incorporated Al Batinah Power for the purpose of building the Plant.

The Plant has been established under a BOO scheme, which enables it to be operated beyond the PPA term of 15 years, either by extending the PPA (if agreed to by OPWP), or by selling the power into an electricity pool which may exist at that time or to eligible customers. The same BOO approach has been adopted in the past for SMN Power Holding SAOG, Sohar Power Company SAOG, Al Kamil Power Company SAOG, ACWA Power Barka Company SAOG and Sembcorp Salalah Power and Water Company SAOG.

The BOO approach is unlike a BOOT project as in the case of United Power Company SAOG, where the project is required to be handed over to the Government after the initial PPA period. It should be noted that the expected useful life of the Plant is 40 years.

The PFA requires that the Project Founders float 35% of the Shares on the MSM through an IPO. In 2014, it was agreed between the Project Founders that the PFA would be modified to allow for the transformation of the SAOC into an SAOG at the time of the IPO. The Plant’s total capital cost as of the COD was OMR 313 million, which included EPC and non-EPC costs as well as net early power period revenues.

The table below summarises the main events of the Project’s implementation:

Date Event

11 July 2009 Request for proposal issued by OPWP

8 December 2009 Bid submission

30 May 2010 Declaration as “preferred bidder”

10 August 2010 Execution of PPA

30 November 2010 Financial Close (wet)

3 June 2012 Early power COD

30 September 2012 End of early power period

3 April 2013 COD achieved

31 March 2028 Expiry date of PPA

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The EPC Contractors for the Project was a consortium of Siemens AG & GSECC. The Plant is based on gas turbine combined cycle technology. It has dual fuel capability with natural gas as the primary fuel and diesel as a back-up fuel. The Plant is the largest power plant at a single site in Oman (on an equal footing with the Barka-3 power plant).

The combined cycle power generation technology employed in the Plant is a proven technology that has been implemented globally on numerous projects. The Plant is mainly comprised of 2 gas turbines and 1 steam turbine supplied by Siemens AG. The Plant uses the state-of-the-art Siemens SGT5-4000F gas turbine technology.

Al Batinah Power currently generates its revenues pursuant to a 15-year term PPA with OPWP. The terms of the PPA provide that the Plant’s contracted power capacity is sold exclusively to OPWP on a long-term basis. The MoG supplies gas to the Plant under a 15-year NGSA.

OPWP pays a charge consisting of a capacity charge covering the Plant’s fixed costs and a return on capital, and a variable charge to cover energy and other variable costs. Hence, as long as the power is available for dispatch, capacity charges will be paid, subject to agreed outages for maintenance.

Select Financial Data

The table below shows select financial data for the periods indicated:

Select Financial Data (OMR):As at, and for the year ended,

31 December

Unaudited as at, and for the three months ended,

31 March

2011 2012 2013 2013 2014

Revenue for the period 0 17,922,161 43,164,525 3,016 6,449,269

Profit (loss) after tax for the period (102,295) 4,746,223 9,250,147 (37,702) (3,713,842)

Total assets at the end of the period 220,149,174 282,601,703 301,004,455 294,581,296 298,907,124

Total liabilities at the end of the period 235,091,290 295,525,619 226,308,396 305,902,151 229,694,190

Cash and cash equivalents at the end of the period 747,942 1,452,188 5,057,149 1,595,221 4,335,586

In relation to the three months ended 31 March financial results, please read the following important note.

Due to the achievement of COD on 3 April 2013, Management believes that no meaningful comparison can be made between income statement data for the three months ended 31 March 2014 and earlier periods. Management also believes that showing the profit/loss for January-March can be misleading as these months are winter months where the PPA tariff is at its lowest while depreciation and interest expenses are sustained, therefore resulting in a loss that is not representative of the full year expected profit.

For the year 2011, the Plant was under construction and generated no revenue; for the year 2012 there was an Early Power Period where the Plant generated limited revenue during the summer months; for the nine months from 3 April 2013 to 31 December 2013 the profit after tax is positively affected by the settlement with the EPC Contractor. For the complete financial statements of Al Batinah Power, please see “Chapter XXII– Financial Statements” of this Prospectus.

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Competitive Strengths

Al Batinah Power’s competitive strengths include:

Well-established contractual framework with long term power purchase agreement, ensuring cash flow protection against adverse events such as buyer risk events and force majeure

The Project represents one of the eleven independent and government owned power/and or water production projects on the MIS. It benefits from a well-established contractual framework.

Oman has an outstanding track record of tendering of IPPs and IWPPs in the private sector dating back more than 20 years. Oman is a pioneer of private power in the GCC and the proven contractual framework, enshrined in the Sector Law, is well established. The first IPP in Oman began generating electricity in 1996 and the track record of execution of a compliance with power (and water) purchase agreements since 1993/1994 makes Oman a preferred destination for IPP/IWPP developers. The procurement, ownership and contractual framework template being adopted for the Project is similar to those adopted with the other IPP/IWPPs in Oman predating the Project.

The entire power output from Al Batinah Power’s installed capacity is contracted with OPWP, through a single long-term PPA which expires on 31 March 2028. Beyond the PPA period, Al Batinah Power shall either extend its PPA with OPWP or sell its output in a liberalized market in a power pool or to eligible customers. Its decision to do so will depend, amongst other factors, on the evolution of the market regulations set by the AER.

The PPA provides for various buyer risk and force majeure events which outline the relief that Al Batinah Power may be entitled to receive should the specified events occur that hinder Al Batinah Power from performing its obligations under the PPA, in accordance with and subject to the terms of the PPA. For a more detailed summary on the conditions required to be fulfilled by Al Batinah Power in order to receive relief from buyer risk and force majeure events, please refer to the “Chapter XI - Contractual Framework” of this Prospectus.

Stable and predictable cash flows, resilient to potential shocks in gas prices and power demand until 2028

Under the PPA, Al Batinah Power receives capacity charges from OPWP for the contracted power capacity of the Plant, which are periodically tested. Such capacity charge comprises approximately 97 per cent. of the total revenues of Al Batinah Power in FY 2013 (excluding fuel revenue, which is virtually a pass-through). These capacity charges are payable by OPWP regardless of whether the actual output of the Plant is dispatched by OPWP, and regardless of whether Al Batinah Power is instructed by OPWP to generate and deliver power. This means that, subject to certain limited exceptions, OPWP is obliged to pay capacity charges to Al Batinah Power for 100 per cent. of the available power capacity of the Plant, irrespective of whether power is actually produced. Al Batinah Power’s capacity charges are calculated so that they cover its debt service and other fixed costs, including fixed operating and maintenance costs, insurance costs, taxes and capital returns. Fuel revenues and charges are calculated based on the consumption of natural gas calculated by the Plant model for electrical energy output delivered and therefore the gas price and volume is in effect a virtual pass-through cost, subject to achieving the guaranteed heat rate (or guaranteed gas consumption). In addition, for the power that is made available, OPWP also pays Al Batinah Power a variable output charge to cover variable operating costs. OPWP, a Government owned entity, as the off-taker and the contractual counterparty responsible to pay, is an entity with a high credit rating and an excellent track record of timely payments.

Accordingly, Al Batinah Power has strong predictability of stable (although seasonal) cash flows that are sheltered from volatility of demand for power, given that Al Batinah Power is paid on an availability basis.

State-of-the-art fuel-efficient power Plant

The CCGT power plant combines a set of gas-fired turbines with a steam turbine to make twice the use of the fuel it consumes. The exhaust heat from the gas turbine is exploited to power the steam turbine, greatly improving overall power plant efficiency. This results in high flexibility and availability and overall low life-cycle costs. It also leads to lower fuel consumption thereby resulting in lower operating costs.

These CCGT plants are considered to be among the world’s safest fossil-fired plants for the environment and climate. Another advantage of these power plants is that the natural gas they run on is less carbon dioxide-intense than other fossil fuels, which helps in the battle against climate change.

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Largest power Plant at a single location in Oman

Al Batinah Power is currently (on an equal footing with the Barka-3 power plant owned by Al Suwadi Power) Oman’s largest power Plant in terms of installed electrical capacity. As the largest power Plant at a single location in Oman, the contracted power capacity of 744 MW represents c.13.3% of Oman’s MIS total currently contracted capacity of approximately 5589 MW based on OPWP’s 7 year statement (2013-2019).

Experienced Selling Shareholders with an established track record globally, in the GCC and in Oman

Al Batinah Power has the backing of Selling Shareholders with a proven track record of implementing large and complex independent power and water plants globally, in the GCC, and in Oman. It should be noted that the Selling Shareholders will all remain Shareholders in the Company immediately after the IPO, with a collective holding of 65%:

– Kahrabel, a member of the GDF SUEZ group, is the GCC’s leading private power developer with a total power generation capacity (including capacity in operation and under construction) of 27,000 MW and almost 5.3 million m³ of water per day of desalination capacity (as of January 2014). Its assets are located in the UAE, Oman, the Kingdom of Saudi Arabia, the Kingdom of Bahrain, Qatar and Kuwait. With equity participation in Sohar IWPP (585 MW and 33 MIGD sea water desalination, operational), Al Rusail (665 MW power plant, operational) and Barka 2 IWPP (678 MW and 26 MIGD sea water desalination, operational), Al Kamil (285 MW power plant, operational), Al Batinah Power (Sohar-2, 744 MW power plant, operational) and Al Suwadi Power (Barka-3, 744 MW power plant, operational), Kahrabel is the largest private power and water producer in Oman.

– Multitech is the investment arm of the Suhail Bahwan Group for participation in power and water privatisation projects in Oman. Apart from being a Founder in Al Batinah Power, Multitech is also the founding shareholder in ACWA Barka (435 MW power plant and 20 MIGD water, operational); Al Batinah (744 MW power plant; operational); and Phoenix Power (Sur IPP – 2000 MW; under construction).

– BHSP is an affiliate of Sojitz, the Japanese trading house listed on the Tokyo Stock Exchange. Sojitz’s power experience is primarily as a developer/co-owner in Japan, the USA, Mexico, the Philippines, Pakistan, the Czech Republic, Sri Lanka and Vietnam.

– SEPI is an affiliate of Yonden. Yonden, listed on the Tokyo Stock Exchange, operates approximately 7,000 MW of nuclear/thermal/hydro/ renewable plants in Japan and is also the co-owner of Ras Laffan IWPP in Qatar.

– PASI is the Omani state owned pension fund with shareholding in a number of listed power companies in Oman.

For further information in relation to the Project Sponsors, please see “Chapter VII – Shareholding Details” of this Prospectus.

Fully operational Project operated by an experienced operator with largest O&M expertise in Oman and having reached COD without material delays

The Plant is completed and has been in full commercial operation for over 12 months, thereby eliminating any construction risk. The existing operational Plant has achieved excellent performance parameters in FY 2013, with a reliability of 99.88% which evidences efficient and top-class plant operation.

Al Batinah Power has entered into an O&M agreement with STOMO, the largest provider of operation and maintenance services in the sector in Oman, responsible for approximately 3,675 MW of electricity and a net capacity of 270,000m3

potable water per day. Since STOMO, which specializes in power plant operations and maintenance is indirectly owned at majority by the GDF SUEZ group, this creates an alignment of interest with Al Batinah Power. Through the O&M agreement with STOMO, Al Batinah Power has largely insulated itself from any risk in regular operating and maintenance costs. The maintenance of the gas turbines, which is a specialized activity, has been subcontracted on a long-term basis by STOMO to Siemens AG, whose capabilities in this area are among the best globally.

Al Batinah Power is also able to draw upon its Shareholders’ experience which includes some of the most well-known names in the power industry. This has resulted in optimizing the operation of the power plant, managing the plant site to high standards of safety and operating performance, standardizing management reporting for all investments and investing in improved plant efficiency. Efficiency has been further enhanced by the integrated operations and engineering team ensuring sharing of information. Further, Al Batinah Power also benefits from wider relationships with

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its vendors and equipment suppliers.

As per the PPA and the EPC Contract, the COD was scheduled for 1 April 2013. Actual COD was achieved on 3 April 2013, within just two days from the Scheduled COD. Al Batinah Power has invoiced LD’s to the EPCC, and this was settled as part of the Settlement Agreement with the EPCC. No LD’s have been accrued as payable by Al Batinah Power since OPWP has granted relief for the 2 days. The achievement by Al Batinah Power of the COD within just two days of the Scheduled COD is a significant achievement and is comparatively better than the milestone achievement accomplished by other power companies in Oman at the time of their respective IPOs, with the exception of Al Suwadi Power, who also achieved COD virtually on time.

As per the EPC Contract, the EPCOD was scheduled for 1 May 2012. Actual EPCOD was achieved on 3 June 2012. Due to the delay in EPCOD, OPWP charged liquidated damages. The OPWP liquidated damages were included fully in the settlement between the EPCC and the Company. The OPWP LDs have been fully settled and there is no outstanding amount. This is another significant achievement by Al Batinah Power by virtue of which it (as well as Al Suwadi Power) is positioned at an advantageous position as compared to the other companies in the power sector in Oman.

No outstanding claims or litigations

The EPC contract was executed between the EPCC and Al Batinah Power on 15 September 2010. As per the EPC Contract, the EPCOD was scheduled for 1 May 2012. Actual EPCOD was achieved on 3 June 2012 for which Al Batinah Power invoiced LD’s to the EPCC. On 28 September 2013, Al Batinah Power entered into a Settlement Agreement with the EPCC which detailed all outstanding matters between the two parties. As part of this Settlement Agreement, the EPCC agreed to compensate Al Batinah Power for claims regarding LD’s and other payments to be made by the EPCC to Al Batinah Power under the EPC Contract.

Unlike some of the other listed power companies in Oman at the time of their IPO, as of date, Al Batinah Power has no outstanding LD claims, which is indicative of efficient and effective project management practices adopted and implemented by Al Batinah Power.

Strong and consistent demand for electricity, ensuring opportunities after the expiration of the current off-take contract

Overall demand for electricity in Oman is expected to increase significantly according to OPWP, driven by economic development, population growth, increasing personal income, capital investment and housing, infrastructure and industrial spending and tourism developments. In 2013, peak and annual demand in MIS for electricity were 4,816 MW and 23.8 TWh respectively. According to IPA’s analysis, this is expected to increase to 11,898 MW and 61.0 TWh, respectively, for peak demand (including minimum reserve margin requirement) and annual demand in MIS at the end of the PPA period. IPA anticipates that the capacity of existing plants and firm new builds in the MIS will not be sufficient to cover demand thereafter. Therefore, based on the results of the IPA’s study, Al Batinah Power is expected to remain economically useful in the post-PPA period.

Long term availability of natural gas

Natural gas is the primary fuel used at the Plant. A long term NGSA entered into by Al Batinah Power secures the supply over the contracted PPA period. Under the NGSA, the MoG is responsible for the procurement and delivery to the Plant of all of its natural gas requirements. All gas delivered to the Plant by the MoG must meet minimum quality standards. Any increase in the price of gas charged by MoG is directly passed through in the PPA entered by Al Batinah Power with OPWP. Also, Al Batinah Power is not responsible for and shielded against failures of MoG to deliver gas in accordance with the provisions set out in the NGSA. Therefore, the Plant’s gas procurement risk is largely mitigated in terms of quality, quantity and price. In the event, among others, of the non-availability of natural gas or a disruption in the natural gas supply system, Al Batinah Power has an obligation under the PPA to maintain a backup fuel supply for five days of full load at the Site, which it complies with at all times. In the event that the PPA is extended, the NGSA will be automatically extended.

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Experienced Management

Al Batinah Power benefits from an experienced Management team in addition to the experienced personnel employed by STOMO. Collectively, the Plant benefits from extensive management expertise and operational knowledge accumulated through decades of collective experience. The presence of such experienced professionals, Management and Shareholders also contributes to the pursuit of good corporate governance and ensures that Al Batinah Power also benefits from the senior management expertise of the Project Founders’ organizations.

The presence of such experienced professionals and Management is important for present and future success and achievement of business strategies.

For further details relating to the Management team of Al Batinah Power, please see “Chapter XVIII – Corporate Governance” of this Prospectus.

Technology and Processes

Description of the Plant

The Plant (Sohar-2 IPP) is located approximately 200km northwest of Muscat in Oman, within the Sohar Industrial Port area, between the plot of the existing Sohar-1 IWPP and Sohar Aluminium Power Plant. The facility entered into full commercial operation on 3 April 2013.

The Plant consists of two Siemens AG SGT5-4000F gas turbines (GT), two triple pressure heat recovery steam generators(HRSG) and a Siemens AG SST5-5000 steam turbine (ST). The condenser is cooled via a once through seawater system. Seawater is extracted from the existing common intake (shared facility) and discharged to an existing common outfall channel in accordance with the Seawater Extraction Agreement. The gas turbines are fitted with by-pass stacks to enable the operation in open cycle. Although capable of open cycle operation, the normal operating mode of the Plant is in combined cycle (CCGT) for higher thermal efficiency. At site reference conditions of 50°C ambient temperature and 30% relative humidity, the Plant has a net power capacity of approximately 744 MW at COD.

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With this technology, the energy for electricity generation is obtained from the combustion of natural gas. Hot combustion gases formed by the combustion of natural gas drive a gas turbine, which, in turn, rotates an alternator to produce electricity. After driving the gas turbine, the exhaust gases are still hot enough to produce steam in a heat recovery boiler (HRSG). The steam generated in the heat recovery boiler drives a steam turbine, which rotates another alternator to produce additional electricity. The CCGT technology is well proven and more efficient than conventional power plant technology. The process is explained in more detail below:

The Plant is connected to the gas transmission infrastructure owned by MoG and operated by OGC and to the main interconnected transmission system at 220 kV which is owned and operated by the OETC. The Plant is designed for black start operation by means of black start diesel generators which are capable of starting the plant.

The auxiliary power for the Plant is derived from the Plant’s internal electrical system with back up from the grid. The equipment and facilities required for the operation, testing, maintenance and repair of the equipment (for example control room, laboratory, stores, workshop, etc.) are available on site.

Gas Turbines

Each gas turbine consists of an air compressor, a combustor, a turbine and an exhaust. Air is drawn in from the atmosphere and compressed before it is fed into the combustor. Gas fuel, which is drawn from gas pipelines, burns in the combustor in the presence of the compressed air from the compressor. The gases produced in the combustor, a

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mixture of high temperature and high pressure hot gases, drive the turbine. The rotational energy of the turbine rotates the alternator, which produces electricity. The voltage level is stepped up through a transformer before it is fed to the grid.

The SGT5-4000F gas turbine concept builds on more than 40 years’ experience with heavy-duty gas turbines at Siemens and Siemens-Westinghouse. The model of SGT5-4000F has been adopted from previous gas turbine models, including the following features:

15-stage high-efficiency compressor;

annular combustion chamber with 24 hybrid burners for uniform flow and temperature distribution, including a full ceramic heat shield to minimize cooling air requirements and allow for higher temperatures;

improved turbine blade design to withstand high thermal stresses using a heat resistant alloy and an additional ceramic coating. They are cooled internally through a complex array of air channels and externally by film cooling. These measures combine to ensure a long blade service life;

fail-safe hydraulic turbine blade tip clearance control for optimized radial clearances and hence maximimum performance; and

easy-to-service design thanks to an annular walkin combustion chamber, which enables inspection of hot-gas-path parts without cover lift

This combustion system combines all the advantages of optimal combustion, including:

high thermal efficiency;

low NOx and CO emissions;

low pressure drop; and

high operating flexibility.

Heat Recovery Steam Generators

Hot exhaust gases from the individual gas turbines are directed into naturally circulated HRSGs, which generate steam at three pressure levels. The high pressure steam from each of the heat recovery steam generators is combined in a common header before passing to the steam turbine. The same configuration exists for the intermediate pressure and for the low pressure steam, allowing maximum operational flexibility.

A condensate pre-heater is integrated in the HRSG. This arrangement enables higher efficiencies of the combined cycle power plant, by using the exhaust gas energy to preheat the condensate before it passes to the feedwater pump and into the LP-system.

Steam Turbine

The steam generated in the heat recovery boilers is used to generate additional electricity through a steam turbine (SST5-5000) and a separate alternator. The steam turbine consists of a combined high/intermediate pressure and low pressure turbine. The steam turbine blades provide high efficiency due to an advanced blading technology.

Generators

The gas turbine and steam turbine generators are of two-pole type, with direct radial hydrogen cooling for the rotor winding and indirect hydrogen-cooling for the stator winding.

The hydrogen filled generator casing is a pressure-resistant and gas-tight construction and is equipped with end shields at each end. The hydrogen cooler is subdivided into four sections. Two sections are arranged at each generator end.

Technical Parameters

Capacity: Capacity of a Plant is defined as the total electrical power (MW), which can be delivered by the power plant under specific environmental conditions (site reference conditions). The contractual capacity of Al Batinah Power under the PPA is c. 744 MW7. The original net capacity at reference conditions in the original performance test was

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above 745 MW. This capacity is expected to decline over the period of PPA due to normal degradation of Plant but is expected to remain above c.736.5 MW and meet contractual requirements under the PPA.

Availability: Availability is the amount of time the plant is technically capable of generating power as per specifications. As per the project agreements, Al Batinah Power shall be available for 100% of time in summer and 85% of the time in winter. The projected plan nevertheless assumes conservatively that the power plant is in forced outages 1.25%-2.00% of the time.

Plant Efficiency (Heat Rate): The efficiency of the power plant is measured in terms of the amount of heat required to produce one unit of power. Demonstrated efficiency of 58.0% in the original performance test of Al Batinah Power was better than contractual requirements under the PPA, thus bringing a marginal upside in terms of revenues to the Company.

Operation and Maintenance

The Plant is operated and maintained throughout the term of the PPA by STOMO. STOMO is primarily responsible for Plant availability, efficiency, power output capacities and operational cost control. STOMO operates the Plant in accordance with applicable environmental laws and is responsible for operating the Plant efficiently, whilst ensuring the correct spare parts are available and that the staff is properly qualified and trained. The O&M Agreement contains provisions for incentives and penalties, at ordinary arms’ length commercial terms, linked to achievement of certain availability and heat rate targets.

The payment terms of the O&M agreement are fixed and split into three components (Euro, US Dollars and Omani Rial portions). Pursuant to the terms of the PPA, Al Batinah Power is compensated for indexation in respect of both Omani Rials and US Dollar costs; however, the payments to STOMO designed to cover the long term maintenance contract costs with Siemens AG are in Euro, which means that the Plant is exposed to indexation and foreign exchange risk in respect of the Euro payments. In order to mitigate the foreign exchange exposure in respect to the above mentioned Euro payments, Al Batinah Power has entered into foreign exchange hedging arrangements.

Revenue Overview

During the term of the PPA

The PPA sets out the terms of generation and supply of power to OPWP until 31 March 2028. The PPA imposes an obligation on Al Batinah Power to operate and maintain the Plant at an agreed level of availability with respect to the guaranteed contracted power capacity following the COD. The PPA also imposes an obligation to operate the Plant in a safe manner and within its design parameters.

Since the COD, the Plant has a contracted net electricity generating capacity of 744 MW8 and sells the electrical energy output to OPWP. In return, Al Batinah Power receives a tariff covering power capacity charges, electrical energy charges and fuel charges from OPWP, described as follows:

The power capacity charge is payable for each hour during which the Plant is available, irrespective of how much power is actually dispatched, and is designed to cover fixed costs, including fixed operating and maintenance costs, debt service, insurance costs, taxes and return on capital.

The electrical energy charge is designed to cover variable operating costs of generation, excluding fuel costs, and is payable according to the electrical energy delivered under the PPA.

The fuel charge is calculated based on the consumption of natural gas calculated by the Plant model for electrical energy and water output delivered and is in effect a virtual pass-through cost.

Due to higher electricity demand in the summer period in Oman and the tariff structure under the PPA, where seasonality factors are applied to the capacity charges, higher revenues and operating profits are observed and expected during the summer period (from April to September), corresponding to the second and third quarters of the year, compared to the first and fourth quarters. Planned maintenance of the Plant is also conducted in the winter period due to lower electricity demand, further accentuating the seasonality of Al Batinah Power’s revenues. Under the terms of the PPA,

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there is no allowance for planned outages during the summer, resulting in higher capacity payments during that period. Payments are denominated in Omani Rials. The investment charge element of the capacity charge is linked to the OMR-US$ exchange rate. The fixed and variable operation and maintenance charges are linked to the OMR-US$ exchange rate, the prescribed US inflation rate, and the Omani inflation rate for a portion of the total charge. The PPA defines the OMR-US$ exchange rate as the mid-rate of the OMR-US$ spot rate as published by the CBO in the foreign exchange rates indications of the relevant billing period.

Beyond the term of the PPA

The Management expects that the Plant will operate well beyond the term of the PPA (15 years being significantly shorter than what is applied in other countries for single buyer PPAs), and the Plant will be well-placed to meet the forecast long-term demand for power in the MIS. After the expiry of the term of the PPA, the PPA will either be extended or, if the power market in Oman is liberalised during this period, the power produced by the Plant will be sold into a merchant market (into a power pool and/or to eligible customers). An internationally reputed consultant, IPA, calculated this post PPA asset value, by means of a market based assessment.

An independent study was conducted by IPA, for the Financial Adviser & Issue Manager on behalf of the investors, to assess the evolution of market structure and the value of Al Batinah Power under various scenarios after the expiry of the PPA. IPA is an economic consultancy based in London specialising in electricity, gas, renewables, carbon and water, providing services in pricing and markets, trading and risk, regulation, project economics, financing and private sector participation across these sectors, and is one of the leading specialised energy practices in Europe. In 2013, peak and annual demand for electricity in the MIS were 4,816 MW and 23.8 TWh, respectively. By 2028, when the PPA is due to expire, these are expected to grow to 11,898 MW and 61.0 TWh, respectively.

Whether the Project stays online or closes after the expiry of the PPA, IPA’s analysis anticipates that the capacity of existing plants and firm new builds in the MIS will not be sufficient to cover demand thereafter. Therefore, IPA forecasts that the Plant will have value after the PPA expires.

On 30 January 2014 OPWP announced its intention to introduce new power and water procurement arrangements for the MIS in order to maintain market transparency and increase competition9. The proposals include the introduction of a “spot market” and more flexible processes for awarding new or extending existing P(W)PAs. Nevertheless, the single buyer approach has served Oman well and the risks are well known and all projects have been bankable with regional and international banks alike, and OPWP is expected to retain its role as the single buyer for electricity and desalinated water.

Under the single buyer approach, OPWP can be expected to use an “avoided cost” methodology when assessing the merits of extending offtake agreements, leaving it indifferent between procuring capacity and services from new or existing operators. Plans to introduce a “spot market” suggest the potential evolution towards a liberalised market approach. However, IPA results show that the post-PPA results of the Project are expected to be very similar for both approaches on both technical and commercial grounds.

IPA Power Market Modelling

IPA uses a version of its proprietary ECLIPSE® modelling platform to forecast the dispatch and capacity developments in the markets for electricity in the MIS. This was used to establish market and contract pricing for electricity and the dispatch profile for the Project in Al Batinah Power’s base case.

The key assumptions for the power modelling are shown in the table below. IPA believes the case outlined below provides a reasonable central outcome that can be used to assess the post-PPA value of the Project.

9 http://www.omanpwp.com/Docs/OPWP%20Announces%20New%20Power%20and%20Water%20Procurement%20Arrangements.pdf

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Parameter Assumption

Annual Demand 23.8 TWh in 2013 growing at 9.7% on average from 2013-2019; 4.3% in 2020-2030, and 2.9% thereafter

Peak Demand 4,816MW in 2013 growing at 9.5% on average from 2013-2019; 4.3% in 2020-2030, and 2.9% thereafter

Exchanges with Abu Dhabi and Petroleum Development Oman

Firm imports of 200MW and 60MW from Abu Dhabi and PDO respectively

Cost of New Build and Thermal Efficiency Total Investment Cost @ USD 1,200 per kW and thermal efficiency: 58.9% (net LHV)

Technical Lifetime for all Power Plants 40 years

Fuel costs 1.50USD/MMBTU (LHV) in 2014 rising by 3% per year in real terms thereafter

Long-Term US Inflation 2.50% per year

Source: OPWP, IPA Economic Report

National energy strategy in Oman is being studied and formulated by the PAEW. Until a new strategy is outlined, it is reasonable to assume that current energy procurement policies will continue. The new strategy can be anticipated to promote renewable sources of energy such as solar and wind. Nevertheless, IPA expects that Oman will still rely on gas-fired plants for most of its power generation. Even if this were to lead Oman to import greater quantities of natural gas, this should not be a significant problem since the Middle East holds some of the major natural gas resources in the world. Iran and Qatar alone have the world’s 2nd and 3rd largest proven reserves.

The financial outcomes from both single-buyer and liberalised market approaches (in nominal terms) for the Project are shown in the table below:

Representative Year1

Cost saving to Single Buyer

(in USD 000) (A)

Liberalised Market EBITDA (in USD 000) (B)

Difference to Single Buyer

(C=(A-B)/B)

2029 104,607 104,558 0.05%

2032 112,416 112,209 0.18%

2036 123,921 123,506 0.33%

2040 136,723 136,209 0.38%

2045 155,088 154,323 0.49%

2050 176,510 175,966 0.31%

Total(2) 3,484,238 3,472,940

0.32%Average(2) 139,370 138,918

Source: IPA Economics Report

Note 1: For power market modelling purposes, all calender years are mapped onto Representative Years Note 2: Totals and averages shown are based on results for all calendar years 2028-2052, inclusive.

Health, Safety, Security and the Environment

Al Batinah Power has HSSE policies in place to promote compliance with all legal health and safety requirements, and to provide a safe work place for its employees, visitors, contractors and members of the public. Al Batinah Power has established a HSSE management system, and aims to integrate HSSE considerations into all aspects of its business

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operations. To the extent possible, it aims to prevent accidents, injuries, occupational illnesses and pollution as well as conserve natural resources.

The Plant is designed to comply in all respects with all applicable environmental regulations and World Bank guidelines. Environmental regulations in Oman specify the performance requirements of an industrial plant with reference to air, water, hazardous materials, waste, dredging and noise. Air emission standards in Oman are based on the National Ambient Air Quality Standards of the USA.

Since the COD, the Plant has not suffered any material environmental incidents, nor has Al Batinah Power been required to report any such incidents to the MECA. STOMO sends out monthly environmental monitoring reports to MECA for the Plant.

Insurance

Al Batinah Power maintains comprehensive insurance policies as per the normal market standard for this type of project. The following table sets out the insurance policies currently in effect in relation to the Project:

Policy Cover Level of cover

All Risk Project Insurance

During Construction & warranty periodCovers all risks of loss of or damage to all insured property (or part thereof) forming part of the Plant for a minimum period of 32 months commencing from the 15 September 2010 being the notice to proceed date plus 24 months extended period.

US$621.42 million.

During Operation periodAny real or personal property which are owned or which are in the care of insured not limited to machinery, plant, equipment, property in transit.

US$624.42 million.

Business Interruption Insurance

During Operation periodCovers loss or reduction in Gross Profit and increased cost of working as a result of an interruption or interference with the Insured Business due to damage insured under the All Risk insurance. The indemnity period is 24 months

US$206.97 million.

Political Violence and/or Terrorism Insurance

Covers all risk of direct physical loss of or damage to all property, as a result of an act of terrorism, in connection with the construction, testing and commissioning, start-up, ownership, operation, use or maintenance of the Plant as well as loss of revenue as a result of business interruption. The indemnity period is 24 months.

US$300 million for political violence insurance.

US$250 million for terrorism insurance.

Third Party Liability Insurance

Covers legal liability to third parties for death, bodily injury or loss of or damage to their property arising from activities in connection with the construction, testing and commissioning, start-up, ownership, operation, use or maintenance of the Plant.

US$50 million per claim and in the annual aggregate.

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Property

The Site used for the Plant is owned by SIPC, which has granted Al Batinah Power a sub-usufruct right over the Site. The SUAS has tenure of 15 years for a term commencing on 10 August 2010. The term of the SUAS is subject to a further extension of 15 years at the option of Al Batinah Power. Furthermore, the License Agreement granted a sub-usufruct right over the Temporary Areas for a term commencing on 10 August 2010 and ending on the date of receipt of notice by SIPC from Al Batinah Power.

Contractually, the SIPC is obliged to give the right to possession of the Site and the Temporary Areas, free and clear of any right adverse to the sub-usufruct right and to ensure that Al Batinah Power has undisturbed use of the Site and the Temporary Areas. In turn, Al Batinah Power must use and exploit the Site and the Temporary Areas only for the purposes of the Project. The office premises of Al Batinah Power in Muscat, Oman are on a leasing basis.

Employees

As at 31 December 2013, Al Batinah Power and STOMO together employed 39 personnel, comprising 16 Omani nationals (41 per cent.) and 23 expatriates (59 per cent.). Al Batinah Power has not been set an official Omanisation target by the Ministry of Manpower.

Information Technology

Al Batinah Power has an established IT system in the Head Office. The Management has overall responsibility of the IT systems. An annual network maintenance contract includes core network maintenance and support, server support and desktop support as required.

Litigation and Regulatory Proceedings

As at the date of this Prospectus, Al Batinah Power is not subject to any outstanding litigation or regulatory proceedings.

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Chapter XI: Contractual Framework

Summary of Contractual Framework

The following diagram illustrates the key contracts relating to the Project and the relevant counterparties thereto:

The following table shows details of the key contracts relating to the Project:

Project Document Executing Parties Date of Execution Date of Expiry

PFA EHC, Suez-Tractebel, Multitech, Sojitz, Yonden and PASI

10 August 2010 31 March 2028

PPA OPWP and Al Batinah Power 10 August 2010 31 March 2028

NGSA MoG and Al Batinah Power 31 August 2010 31 March 2028

ECA OETC and Al Batinah Power 28 December 2011 30 years from the date of its execution

SUAS SIPC and Al Batinah Power 10 August 2010 2 April 2028

License Agreement

SIPC and Al Batinah Power 10 August 2010 20 October 2013

O&M Agreement STOMO and Al Batinah Power 24 September 2010 31 March 2028

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Project Document Executing Parties Date of Execution Date of Expiry

O&M Guarantee GDF SUEZ CC SCRL, and Al Batinah Power

24 September 2010

EPC Contract Siemens AG, GSECC and Al Batinah Power

15 September 2010

SHA Kahrabel, Multitech, Sojitz, Yonden, and PASI

29 November 2010 Continue in force for a term equal to the term of Al Batinah Power

Seawater Extraction Agreement

Majis Industrial Services Company SAOC and Al Batinah Power

10 August 2010 31 March 2028

Details of Key Documentation

Project Founders’ Agreement

The PFA was executed between the Project Founders and EHC on 10 August 2010. The PFA sets out various warranties and undertakings given by the Project Founders to EHC in respect of, amongst other things, listing pursuant to a public offering and disposal of the Shares. The PFA contains restrictions on share disposals and provides for the procurement of the conversion of Al Batinah Power to a listed SAOG from an unlisted SAOC, and the public offering of 35 per cent of the Shares of Al Batinah Power on the MSM. The PFA states that the listing of the Offer Shares must occur during a period of four years from the date of the incorporation of Al Batinah Power. That is, on or before 1 August 2014.

If all of the Offer Shares are not fully subscribed in the first Offer Period, the Project Founders are required to continue offering the relevant Offer Shares for sale on an annual basis for the three year period following the initial listing. During this three year period, EHC will have an option to acquire the balance of any Offer Shares that were not subscribed according to the pricing mechanism set out in the PFA.

The PFA contains various undertakings given by the Project Founders, including, but not limited to: (i) compliance with the listing and offer obligations contained in the PFA in relation to the IPO of Al Batinah Power; (ii) adherence with respect to the disposal of Shares in Al Batinah Power; (iii) on and from the Effective Date up to but excluding the date on which the Project Founders complete the IPO, the lead Founder under the PFA10, is required to, directly or indirectly, hold and maintain at least 35 per cent of the Shares in Al Batinah; and (iv) on and from the date on which the Project Founders complete the IPO up to and including the third anniversary of the COD, the lead Founder under the PFA is required to, directly or indirectly, hold and maintain at least 22.75 per cent of the Shares in Al Batinah.

Power Purchase Agreement (PPA)

The PPA was executed between Al Batinah Power and OPWP on 10 August 2010. The PPA details the terms agreed between Al Batinah Power and OPWP pursuant to which Al Batinah Power shall undertake the Project.

The PPA sets out a number of obligations which Al Batinah Power must adhere to during the operation period of the Plant. Amongst other things, Al Batinah Power must, acting as a reasonable and prudent operator, operate and maintain the Plant in such a manner so as to ensure that the Plant is capable of operating and maintaining power production.

Under the PPA, Al Batinah Power is obliged, at its own cost, to procure, install, test, commission, own, operate and maintain the metering system and all components thereof in accordance with all applicable requirements of the Grid Code and, additionally, (to the extent not contrary to the Grid Code) in accordance with the PPA.

Under the PPA, Al Batinah is obliged to exclusively sell electrical energy output to OPWP and in return, receives from OPWP capacity charges, electrical energy charges and fuel charges. Capacity charges are designed to cover fixed costs (including debt service and return on capital); electrical energy charges are designed to cover variable operating costs of generation (excluding fuel costs). The fuel charge is a pass through of the gas price

10 The lead founder under the PFA, at the time of its execution was Suez-Tractebel, whose current denomination is International Power.

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under the NGSA (as defined below) to the extent that the contracted fuel efficiency is met. Payments under the PPA are denominated in OMR and Al Batinah is safeguarded under the PPA against RO/US$ exchange rate adjustments and also against inflation for the component of the tariff that covers fixed operation costs.

In addition to complying with the conditions of the Generation License, Al Batinah Power is under an obligation, acting as a reasonable and prudent operator, to develop, maintain and update at regular intervals (and at least once every year) a quality assurance manual, an occupational and environmental health and safety policy, and an operation and control philosophy.

The PPA sets out standard representations and warranties that Al Batinah Power is required to give and apply. Amongst others, Al Batinah Power has represented and warranted that it will not engage in any business or activity other than that permitted by its Generation Licence.

The PPA contains provisions to allow for refinancing and to share refinancing gains between OPWP and Al Batinah Power. OPWP shall be entitled to receive a fifty (50) per cent share of any refinancing gain arising from a qualifying refinancing as defined under the PPA. At Financial Close of the Project, a financing gain was already shared with OPWP based on assumed refinancing terms through a capacity charge reduction. Therefore, Al Batinah Power will only share additional refinancing gain, to the extent it is able to implement a refinancing at better terms than initially agreed with OPWP.

Al Batinah Power is under an obligation to obtain OPWP’s prior written consent to any qualifying refinancing and both Al Batinah Power and OPWP are obligated to act in good faith with respect to any potential or proposed refinancing. OPWP however, shall not withhold or delay its consent to a qualifying refinancing to obtain a greater share of the refinancing gain than it is entitled to, i.e. 50%. The share of refinancing gains due to OPWP may be paid as a reduction in the capacity charges over the remaining term of the PPA, as a single payment, or a combination of a single payment or a reduction in the capacity charges.

The PPA provides for various buyer risk events which outline the relief that Al Batinah Power will receive should the specified events occur that hinder Al Batinah Power from performing its obligations under the PPA. The burden of establishing the existence of a buyer risk event and its impact is upon Al Batinah Power. If a relevant buyer risk event is established in accordance with the terms set out in the PPA, Al Batinah Power will not be liable for any failure to perform or any delay in its performance and will continue to be entitled to be paid capacity charges during the relevant period. In the event that it is determined that a material adverse change has occurred and such material adverse change was caused by a buyer risk event a buyer risk event or events constitute a material adverse change, OPWP shall propose a mechanism to Al Batinah Power in order to adjust the power capacity charge and/or the electrical energy charge, as appropriate, or reimburse Al Batinah Power by some other agreed reimbursement mechanism.

The PPA also provides for various force majeure events that may hinder Al Batinah Power from performing its obligations under the PPA. The onus of proving the existence and effect of a force majeure event is on Al Batinah Power. If it can be established that a force majeure event has occurred, or will occur, and that it could not have been mitigated by Al Batinah Power, acting as a reasonable and prudent operator, Al Batinah Power will be relieved from liability for any failure to perform its obligations under the PPA and the term of the PPA will be extended by the period for which the force majeure event hindered Al Batinah Power from performing its obligations. Furthermore, Al Batinah Power shall be entitled to continued receipt of power capacity charges to the extent of its availability during the force majeure delay period.

Subject to certain force majeure, OPWP risk events and termination provisions contained therein, the term of the PPA commenced on 10 August 2010 and expires on 31 March 2028, (approximately 15 years after the COD).

As at 31 December 2013, Al Batinah Power had received invoice dispute notices from OPWP aggregating to USD 322 thousands of disputed payments outstanding, which mostly relate to the fuel component of the invoices, pending approval by OPWP of the final Plant model (inclusive of the fuel component). Al Batinah Power has made full provision for the disputed payments outstanding in the 2013 financial statements. Al Batinah Power is proactively working with OPWP on this matter, so as to minimize the delays of the said approval. Once the invoicing dispute is resolved, any unused portion of the provision will be released to Al Batinah Power’s income statement.

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Natural Gas Sales Agreement (NGSA)

The NGSA was entered into between MoG and Al Batinah Power on 31 August 2010. It establishes the terms upon which Al Batinah Power purchases natural gas as feedstock for the Plant from the MoG. The NGSA term is linked to the PPA term and, therefore expires on 31 March 2028. The NGSA term will automatically be extended to reflect any extensions to the term of the PPA.

In accordance with the NGSA, natural gas will be supplied up to the gas delivery point of the Plant. Al Batinah Power has no obligation to pay the MoG for any natural gas delivered and accepted until Al Batinah Power has received the amount of the PPA payment from OPWP (provided that Al Batinah Power has invoiced OPWP properly and on a timely basis, OPWP has not exercised a right of set-off under the PPA, and Al Batinah Power has given notice to OPWP and the MoG). If Al Batinah Power receives part of the PPA payment, it is required to pay the corresponding percentage of the monthly invoice amount for natural gas, with the remainder due upon receipt of the unpaid portion.

The maximum quantity of Natural Gas that Al Batinah Power may nominate and take under the NGSA on any day and which MoG shall be obliged to deliver shall be 129,162 MMBTUs at the LHV of 845 BTU/scf.

According to the NGSA, the price payable by Al Batinah Power for natural gas delivered to and accepted by Al Batinah Power shall be equal to the OMR equivalent of USD 1.50 per MMBTU, inclusive of all transportation costs of natural gas to the gas delivery point, and all taxes, duties and other imposts applicable to the sale of natural gas to or the purchase of natural gas by Al Batinah Power.

The NGSA also states the following:

“notwithstanding the foregoing, from time to time [the gas price shall] be equal to the price for natural gas which is utilised in substantially the majority of the electricity generation sector in Oman”

It should be noted that the price of natural gas may be readjusted by the MoG, a matter on which the NGSA makes no further comment. However, the gas price will be adjusted in the PPA to the same extent.

MoG’s overall aggregate liability for any claims howsoever arising out of or in connection with the NGSA in each PPA contract year (including any claims arising under or in connection with shortfall quantities) shall be limited to OMR 7,500,000 in each PPA contract year.

The NGSA is terminable by Al Batinah Power as a result of the dissolution of the MoG or a material breach of the NGSA by the MoG, although alternative sources of natural gas would need to be secured. For Al Batinah Power, events of default include insolvency, failure to make a payment where the amount due exceeds OMR 200,000 within 30 days of the due date, and material breaches which are not remedied within 30 days of notice.

Electrical Connection Agreement (ECA)

The ECA was entered into between OETC, a wholly owned Government company established in 2003, and Al Batinah Power on 28 December 2011. The ECA sets out the terms and conditions upon and subject to which OETC and Al Batinah Power have agreed that Al Batinah Power shall connect to the Transmission System. It establishes a framework between OETC and Al Batinah Power to provide for, amongst other things:

a) the payment by Al Batinah Power to OETC of the connection fee; and

b) enforcement of the Grid Code as between OETC and Al Batinah Power.

The ECA became effective from the date of its execution and shall remain in force for an initial period of 30 years (the “Initial Term”) and shall continue in force beyond the expiry of the Initial Term unless and until either party terminates the ECA on six month’s prior notice to the other, provided that no such notice shall take effect before the expiry of the Initial Term.

Sub-usufruct Agreement and License Agreement

The SUAS and License Agreement were each entered into between SIPC and Al Batinah Power on 10 August 2010. The SUAS and License Agreement constitute the land lease agreements in relation to the Site11 and the Temporary Areas12. The SUAS has a term of 15 years from the COD, provided that written notice of COD is

11 means the plot 19B at Sohar Industrial Port area, as more specifically identified in the plot plan and Exhibit B to the SUAS.

12 means the plot 21 at Sohar Industrial Port area, as more specifically identified in the plot plan and Exhibit A to the License Agreement.

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promptly received by SIPC from Al Batinah, supported by a letter from OPWP, failing which the term of SUAS shall expire on 20 October 2028. The term of the SUAS is subject to a further extension of 15 years at the option of Al Batinah Power. Al Batinah Power however, is under an obligation to use the Site for the purpose of the Project as set out in the plot application form submitted to the SIPC and its industrial license from the MOCI, and for such ancillary and related uses as are reasonably required by Al Batinah Power from time to time and for no other purpose whatsoever.

Pursuant to the SUAS, SIPC has granted to Al Batinah Power the exclusive right to use and benefit from the Site during the term of the SUAS. SIPC shall also ensure that Al Batinah Power has undisturbed enjoyment of the Site and the right of way and easements throughout the term of the SUAS without hindrance or interference, by SIPC or anyone claiming by, through or under SIPC.

The exclusive temporary license to use the Temporary Areas under the License Agreement is granted for the period commencing from the date of the License Agreement and ending on the COD, provided that written notice of COD is promptly received by SIPC from Al Batinah, supported by a letter from OPWP, failing which the term of SUAS shall expire on 20 October 2013.

As per the terms of the License Agreement, SIPC shall ensure that Al Batinah Power has undisturbed enjoyment of the Site throughout the term of the License Agreement, without hindrance by SIPC or anyone claiming by, through or under SIPC.

Operation and Maintenance Agreement (O&M Agreement)

The O&M Agreement was entered into between STOMO and Al Batinah Power on 24 September 2010. It sets out the provision of O&M services by STOMO to the Plant. The O&M Agreement requires STOMO to operate and maintain the Plant until 31 March 2028 (approximately 15 years after the COD), provided that the term of the O&M Agreement may be modified to reflect any extension of the term of the PPA as may be determined between Al Batinah Power and OPWP in accordance with the terms of the PPA.

Under the O&M Agreement, STOMO is responsible for:

the operation, maintenance and repairs of the Plant on behalf of Al Batinah Power;

the generation of electricity for supply to OPWP;

managing spare parts, tools, materials and consumables required for the operation and maintenance of the Plant;

the direction and supervision of staff at the Plant and ensuring safety of the Plant, Al Batinah Power staff and visitors of the Plant; and

mobilisation and training of human resources.

The fees payable under the O&M Agreement consist of (i) a fixed monthly fee; (ii) a variable fee. All fees are subject to indexation, based on Omani, Euro and US$ inflation rates.

The O&M Agreement contains provisions for incentives and penalties, on ordinary arms’ length commercial terms, linked to achievement of certain availability and heat rate targets.

The O&M Guarantee

The O&M Guarantee has been issued by GDF SUEZ CC SCRL, an affiliate of GDF SUEZ, in order to guarantee a portion of the payment obligations of STOMO to Al Batinah Power arising under the O&M Agreement, subject to the terms and conditions set out in the O&M Guarantee.

EPC Contract

The EPC Contract was executed between Siemens AG, GSECC and Al Batinah Power on 15 September 2010. Siemens AG and GSECC were jointly appointed as the EPCC under the EPC Contract to engineer, design, manufacture, supply, procure, transport, erect, construct, install, complete, test, commission, warrant and make good the Plant and associated facilities.

As per the EPC Contract, the EPCOD was scheduled for 1 May 2012. Actual EPCOD was achieved on 3 June 2012. Due to the delay in EPCOD, OPWP charged liquidated damages. The OPWP liquidated damages were included fully in the settlement between the EPCC and the Company as described below. The OPWP LDs have been fully settled and there is no outstanding amount.

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As per the PPA and the EPC Contract, the COD was scheduled for 1 April 2013. Actual COD was achieved on 3 April 2013, within just two days of the Scheduled COD. Al Batinah Power has invoiced LD’s to the EPCC. No LD has been accrued as payable since OPWP has granted relief for the 2 days. The achievement by Al Batinah Power of the COD within just two days of the Scheduled COD is a significant achievement on its part and is comparatively better than the milestone achievement feats accomplished by other power companies in Oman, with the exception of Al Suwadi Power, who also achieved COD virtually on time.

On 28 September 2013, Al Batinah entered into the Settlement Agreement with the EPCC which detailed all outstanding matters between the two parties. As part of this Settlement Agreement, the EPCC agreed to compensate Al Batinah for claims regarding LDs and other payments to be made by the EPC Contractor to the Company.

Furthermore, the OPWP LDs were included fully and settled pursuant to the Settlement Agreement.

Shareholders’ Agreement

The SHA was entered into amongst the Project Founders on 29 November 2010. The SHA sets out the arrangements amongst the Shareholders with respect to the Management and the process relating to the Offer.

The SHA provides that the Shareholders must offer the Offer Shares to investors via a public offering on the MSM within a period of four years from the date of incorporation of Al Batinah Power, or otherwise sell 35 per cent. of Al Batinah Power’s Share Capital to EHC in accordance with the PFA. The SHA also sets out certain provisions relating to appointment, composition, quorum and voting requirements in respect of the Board.

The SHA shall continue to be in force for a term equal to the term of Al Batinah Power.

Seawater Extraction Agreement

The Seawater Extraction Agreement was entered into between Majis Industrial Services Company SAOC and Al Batinah Power on 10 August 2010. Seawater extraction services are required by Al Batinah Power for the purposes of performing some of its obligations under the PPA. The Seawater Extraction Agreement sets out the terms and conditions subject to which Majis Industrial Services Company SAOC shall provide such services to Al Batinah Power.

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Chapter XII: Project Cost and Financing

Project Costs

Al Batinah Power achieved COD on 3 April 2013. The total Project cost was approximately OMR 313 million (US$ 813 million) as summarised below:

OMR (Mn)

Uses:Construction costs (EPCC) 241.22Non-EPCC costs 72.08

Total 313.29Sources:Share Capital 0.50 Equity Bridge Loans 60.29Shareholder Loans 6.70Term Loans 234.74Early operating revenues and EPC settlement amount 11.07

Total 313.29

Equity Contributions

The Shareholders initially provided equity for the Project, as shown below:

OMR

Shareholder:Kahrabel 230,000Multitech 110,000Sojitz 55,000Yonden 55,000PASI 50,000

Total 500,000

Equity Bridge Loans and Shareholder Loans

On 16 September 2010, Al Batinah Power, its shareholders at the time, and the lenders under the CTA, entered into the EBL and SLA, under which the shareholders were required to arrange equity bridge loans or provide shareholder loans, as provided in the table below:

Type OMRShareholder:Kahrabel EBL 30,814,822Multitech SLA 14,737,524Sojitz EBL 7,368,762Yonden EBL 7,368,762PASI SLA 6,698,874

Total 66,988,744

Note: On 26 April 2012, Multitech converted its SLA to EBL on receipt of the consents of the other Shareholders.

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As further described in “Chapter VII – Shareholding Details” of this Prospectus, at an EGM held on 27 March 2013, the Shareholders of Al Batinah Power approved the conversion of the EBL and Shareholder Loans into Share Capital of Al Batinah Power, increasing the Authorised and Issued and Paid-Up Share Capital to OMR 67,488,743.

Debt Financing

Al Batinah Power has entered into financing agreements with a consortium of international banks and export credit agencies, for an aggregate amount of approximately OMR 243.19 million (US$632.50 million). Each of these financing agreements are summarised below, all of which are subject to the terms of the CTA.

The following table shows the currently outstanding financing arrangements of Al Batinah Power, with the amount outstanding as at 31 March 2014:

Type of Loan Lender(s) CurrencyInterest rate

Total Base Facility

Available

Total Amount

Drawn as at 31 March

2014

Total Outstanding

as at 31 March 2014

Commercial Facility Agreement

KfW IPEX-Bank GmbH, Credit Agricole Corporate & Investment Bank, Standard Chartered, Natixis, Bayerische Landesbank, HSBC Limited, Europe Arab Bank plc, Credit Industriel et Commercial - CIC

US$ LIBOR + margin

130,968,000 130,968,000 128,820,125

KEXIM Direct Facility Agreement

KEXIM US$ LIBOR + margin

116,835,000 116,835,000 110,502,543

KEXIM Covered Facility Agreement

KfW IPEX-Bank GmbH , Credit Agricole Corporate & Investment Bank, Credit Industriel et Commercial – CIC, HSBC Limited, Europe Arab Bank plc , Natixis, BayerischeLandesbank

US$ LIBOR + margin

54,692,000 54,692,000 51,727,694

Hermes Covered Fixed Term Facility Agreement

KfW IPEX-Bank GmbH US$ CIRR 120,000,000 120,000,000 113,496,000

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Hermes Covered Variable Term Facility Agreement

Credit Agricole Corporate & Investment Bank, Credit Industriel et Commercial – CIC, HSBC Limited, Europe Arab Bank plc, Natixis, Bayerische Landesbank, Standard Chartered Bank

US$ LIBOR + margin

188,000,000 188,000,000 177,810,400

Working Capital Facility Agreement

Bank Muscat SAOG OMR Variable (currently subject to a 2% cap)

8,459,000 2,774,973 2,774,973

As of the date of this Prospectus, Al Batinah senior debt is hedged in compliance with the CTA requirements. This further improves the predictability of cash-flows available to shareholders.

Cash Sweep Mechanism

The Finance Documents includes mandatory cash sweep mechanism as seen in most of the listed power companies in Oman (in relation to the commercial tranche only). This cash sweep mechanism, set out in the CTA directs the operating revenues generated by the Project into a waterfall of project accounts.

The presence of a mandatory cash sweep mechanism in Al Batinah Power’s financing arrangements means that Al Batinah Power’s ability to pay dividends may be impacted in the period of cash sweep as operating revenues may only be paid into the dividend distribution account when the project accounts set out in the CTA have been fully funded. For further details of Al Batinah Power’s dividend policy, please see “Chapter XV – Dividend Policy” of this Prospectus.

Debt Service Reserve

Under the terms of the Finance Documents, Al Batinah Power is required to maintain a cash balance (or Shareholders’ credit support) equivalent to six months’ of future debt service payments in a separate bank account pledged in favour of its lenders. The lenders are entitled to withdraw amounts from this account if Al Batinah Power does not meet its obligations as defined under the Finance Documents or in other events resulting in a situation of default on its obligations. As at the date of this Prospectus, Al Batinah Power provides the entire debt service reserve amount through Shareholders’ credit support.

Debt Service Provision Account

Under the terms of the Finance Documents, Al Batinah Power is required to maintain a debt service provisioning account until October 2024. Al Batinah Power shall procure that the debt service provisioning account is funded by cash from the completion date. Such account was established to be credited by the repayment date which comes after the end of each summer period, where higher revenues are observed due to the seasonality factors applied to the capacity charges under the PPA, and such credited amount to be drawn on the next repayment date which comes after the relevant winter period to meet the debt service payments. The required provisioning amounts were determined at financial close of the Project.

Maintenance Reserve

Under the terms of the Finance Documents, Al Batinah Power is required to maintain a maintenance reserve account which is to be funded (whether by cash, credit support or any combination thereof) with US$ 3,750,000 on each Repayment Date as defined under the CTA, from the 16th Repayment Date until the 19th Repayment Date up to an aggregate amount of US$15,000,000 to cover potential costs related to a life time extension programme.

At any time between the 15th Repayment Date until the 18th Repayment Date, the Lenders’ Independent Engineer shall assess the cost of carrying out the lifetime extension programme. If the estimated cost is less than US$15,000,000,

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then the amount to be deposited shall be reduced accordingly.

Al Batinah Power may only withdraw amounts from the reserve account to pay the costs of implementing the lifetime extension programme, if recommended by the Operator. In the event the Operator has recommended that no lifetime extension programme is required prior to End Date and the Lenders’ Independent Engineer is satisfied with the same, then all amounts shall be transferred to the distribution account. As of the date of the Prospectus, Al Batinah Power expects the entire maintenance reserve amount to be covered through Shareholders’ credit support. In addition, based on the operating history of Al Batinah Power, Management believes, as of the date of this Prospectus, that the lifetime extension will be carried out after the End Date.

Repayment Schedule

The aggregate amount of drawdowns under the facilities (other than the Commercial Facility) is repayable in full in 28 half-yearly instalments commencing from 31 October 2013 with the final instalment being due on 31 March 2027. The Commercial Facility is repayable in full in 30 half-yearly instalments commencing from 31 October 2013 with the final instalment being due on 31 March 2028.

The projected repayment schedule of the principal amounts of the Term Facilities can be summarised as follows:

Outstanding as at 31

March 2014

Payable in 9M 2014

Payable during FY

2015

Payable during FY

2016

Payable during FY

2017

Payable during FY

2018

Payable after FY

2018

In USD 582,356,761 30,885,880 33,813,362 35,549,561 35,852,949 36,873,259 409,381,751

In OMR 223,916,175 11,875,621 13,001,238 13,668,806 13,785,459 14,177,768 157,407,283

As at the date of this Prospectus, Al Batinah Power has paid both principal (comprising 4.6% of the total term loans) and interest in accordance with the terms and conditions of the Finance Documents.

Sources of financing

Statement

Value as on 31 March 2014Value in case of cover of all shares

as on 31 March 2014

(Before the Offer) (After the Offer)

Amount (OMR)

Amount (OMR) Ratio

Amount (OMR)

Amount (OMR) Ratio

Working capital facility 2,025,000 2,025,000

Total short term debt (1) 2,025,000 0.7% 2,025,000 0.7%

Commercial facility @ LIBOR + margin 49,531,338 49,531,338 KEXIM direct Facility @ LIBOR + margin 42,488,228 42,488,228 KEXIM covered Facility @ LIBOR + margin 19,889,298 19,889,298 Hermes covered fixed term facility @ CIRR 43,639,212 43,639,212 Hermes covered variable term facility @ LIBOR + margin

68,368,099 68,368,099

Total long term debt (2) 223,916,175 74.7% 223,916,175 74.7%

Total debt (1+2) 225,941,175 75.3% 225,941,175 75.3%

Share capital 67,488,743 67,488,743 Legal reserve 1,091,682 1,091,682 Retained earnings 5,400,800 5,400,800

Total equity (3) 73,981,225 24.7% 73,981,225 24.7%

Total financing sources (1+2+3) 299,922,400 100.0% 299,922,400 100.0%

Debt/equity ratio 3.1 3.1

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Key Financing Covenants

The key covenants under the CTA are summarised below:

Positive Covenants: The CTA contains frequently adopted positive covenants in relation to financing arrangements of this type, including, but not limited to: construction and operation of the Plant; corporate existence; consents; project documents; further assurances; reserved discretions; taxes; pari-passu ranking; application of revenue and proceeds; working capital facility agreement; maintenance and inspection of records; maintenance of accounts; intellectual property; “know your customer” checks; interest and title; notices; approved costs; and insurance.

Negative Covenants: The CTA contains frequently adopted negative covenants in relation to financing arrangements of this type, including, but not limited to: amendments to the Project Documents; terminate the PFA, liquidation or merger; entry into new agreements in relation to the Project; disposals (other than as permitted under the Finance Documents or required by any provision of the project documents or the PFA); further indebtedness (other than as permitted under the Finance Documents); negative pledge; change of business; capital assets; loans and guarantees; amendment to constitutional documents; compromise, adjustments or settlements; incur operating costs (other than approved costs); hedging agreements; transaction with affiliates; performance testing; winding up; suspension or abandonment; immunity; and environment management plan.

Events of Default: The CTA contains frequently adopted events of default in relation to financing arrangements of this type, including, but not limited to, non-payment, non-compliance with the Finance Documents and the Project Documents; misrepresentation; insolvency events; judgments; delay; Government intervention, cross-default; revocation of consents; illegality; ownership; DSCR ratio (see below); material adverse effect; failure of security interests; Shareholder obligations; loss or damage to the Project; forecast funding shortfall and O&M contractor and long term maintenance arrangements.

Debt Service Coverage Ratio: Any fall in the DSCR, at any calculation date, below the ratio of 1.05:1 will constitute an event of default under the CTA. The DSCR threshold for distribution of dividends has been set at 1.10:1.

In certain specified cases, where a default is capable of remedy, the CTA permits a cure period. As at the date of this Prospectus, Al Batinah Power is not in default under any of the Finance Documents or any other material financing arrangements.The PFA requires that the listing of the Offer Shares takes place within four years of the date of the incorporation of Al Batinah Power, i.e., on or before 1 August 2014.

Security PackageEach term loan has been secured in favour of the lenders by a package of share and asset security granted by Al Batinah Power and the Shareholders. It includes the following agreements, which have each been duly registered where necessary:

a commercial mortgage secured on Al Batinah Power’s assets, governed by Omani law;

a legal mortgage secured on Al Batinah Power’s rights, title and interest in the Sub-Usufruct Agreement and the related movable and immovable property, governed by Omani law;

a share charge over all of the Shares, governed by Omani law;

a charge and assignment and security deed over Al Batinah Power’s accounts, relevant agreements, land and other assets, governed by English law; and

a charge and assignment over the Company’s accounts and relevant agreements, governed by English law.

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Chapter XIII: Risk Factors

Prior to investing in Offer Shares, prospective Applicants should carefully consider the risk factors relating to Al Batinah Power’s business and industry described below together with all other information contained in this Prospectus, including the financial statements set out in “Chapter XXII – Financial Statements” of this Prospectus, before making any investment decision relating to the Offer Shares.These risks and uncertainties are not the only issues that Al Batinah Power faces; additional risks and uncertainties not presently known to Al Batinah Power or that Al Batinah Power currently believes to be immaterial may also have a material adverse or beneficial effect on its financial condition or business success. The occurrence of any or a combination of the following events could have a material adverse or beneficial effect on Al Batinah Power’s business, results of operations, financial condition and prospects and cause the market price of the Shares to fall significantly and investors to lose all or part of their investment. Unless otherwise stated in the relevant risk factors set out below, Al Batinah Power is not in a position to specify or quantify the financial or other risks mentioned herein.

Risks Relating to the Project

Limited operating history.

The Plant commenced full commercial operation on 3 April 2013 and, consequently, the Plant has only operated for approximately 12 months. Accordingly, prospective investors have limited information with which to evaluate the operating performance of the Plant and its current or future prospects or financial results and performance.

The business prospects and financial performance of Al Batinah Power must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by projects with a limited operating history, including challenges in planning and forecasting accurately due to limited historical data, which means the past results of Al Batinah Power cannot be relied on as an indication of future performance. Accordingly, the inability to successfully identify and address risks and difficulties could have a material adverse effect on the business, results of operations and financial condition of Al Batinah Power, including the market price of the Shares.

Operational and technological risks.

The operational risks may prevent Al Batinah Power from performing its obligations under the PPA, which is its source of revenue and, in certain extreme situations such failure to perform could result in OPWP terminating the PPA. Additionally, Al Batinah Power’s current financial covenants prohibit it from diversifying its operations in the future and it is unlikely that Al Batinah Power will be able to generate revenue or cash flow, except through the PPA during the PPA period. However, the business plan of Al Batinah Power accounts for reasonable average outage rates to cover the risk of forced outages for power production. In certain years depending on the number of forced outages, there could be positive or negative variances. The business plan and projections also account for degradation of the technical performance. The plant outage risk is minimized by the utilization of multiple units to produce power.

The technological risk is considered low as the Plant uses proven technology from renowned international suppliers like Siemens. STOMO (a GDF SUEZ majority owned company and the biggest operator for operation and maintenance of power and desalination Plants in Oman) is the operator for the Plant. All operational risks are generally mitigated by STOMO’s vast experience in respect of similar power plants in Oman. A substantive portion of the O&M risk is transferred to STOMO under the O&M agreement by Al Batinah Power. Further operational risks are mitigated by the following risk mitigation factors:

i) The operator is incentivized to maintain the highest possible plant performance through a capped bonus/penalty mechanism.

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ii) A sufficient number of spare parts are available to guarantee swift repairs.

iii) A strategic stock of back-up fuel oil is available on site to cover five days of operations; till date there has been no interruption of gas supply and the Plant has never been asked to run on fuel oil except for proving annual performance testing on fuel oil.

iv) Major overhauls are contractually permitted and the allowed planned outage rates are higher than what is actually used (during the winter period).

Post PPA risk.

The 15-year term of the PPA matures before the Plant reaches its expected lifetime. Consequently, a substantial part of the value is expected to be realized beyond the PPA. However, at that moment, the Plant, as any other plant with an expiring off-take agreement, will face new risks such as:

Gas supply and price risk

Market risk (price and capacity)

Competition from recent, more efficient technologies

Regulatory risk

Operational risk

Customer credit risk

Macro-economic risk

IPA, as the independent professional adviser, has evaluated the value of Al Batinah Power for the period post PPA, taking the risks of different market environment into account. Kindly refer to section titled Revenue Overview in “Chapter X – Description of the Company and Business Overview” for summary of the IPA report. Kahrabel, Al Batinah Power’s majority Shareholder, belongs to GDF SUEZ group that has a vast experience in managing such risks in similar environments such as Europe, the United States or Australia, where it operates many power plants.

Increased operating and maintenance costs or capital expenditure may not be recovered under the PPA.

Operating the Plant involves, among other things, general technical, legal, regulatory and other factors that may be beyond Al Batinah Power’s control. Although there are provisions within the PPA to protect the Company from changes in law, changes in some factors could make it more expensive for Al Batinah Power to operate the Plant than projected, and could require additional capital expenditures or could reduce revenues. Additionally, similarly to any industrial installation, complications with engineering design and implementation or technology or equipment failure could result in reduced plant availability or production and/or higher-than-anticipated capital expenditures and/or operating and maintenance costs.

The rates at which the capacity charges under the PPA were calculated and fixed for its 15-year term, subject to specified escalations, and cost increases higher than those projected at the outset may not be recovered. The Project could be subject to changes in the operating cost structure over the 15-year term of the PPA, including on account of reasons relating to (i) operations; (ii) maintenance, repair and overhaul of plant and equipment; (iii) procurement of backup fuel; (iv) backup fuel transportation; (v) environmental compliance; (vi) ground rent; (vii) utility services; and (viii) insurance.

However, since the majority of the operating and maintenance costs are contracted for 15 years with STOMO, the risk of increased O&M costs for the Plant remains limited.

Dependence on OPWP as the sole customer.

OPWP is the sole purchaser of all electricity output from the Plant and also from the other licensed generation and production operators in Oman. As such, OPWP does not currently face any competition. If OPWP were to cease fulfilling its obligations under the PPA, Al Batinah Power would not be able to sell the Plant’s capacity and output to another purchaser. However, there can be no assurance that the Government will not open the electricity markets to competitors or allow bypass sales of power by providers of generation or production capacity to persons other than OPWP in the future. In addition, no assurance can be made that OPWP’s role in the sector will not change in the

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future. The introduction of competition in Oman or the change of OPWP’s role in the sector could have a material effect (adverse or beneficial) on the business, results of operations and financial condition of Al Batinah Power, including the market price of the Shares.

Al Batinah Power earns its revenues under the long term PPA. Impairment of revenues is mitigated by the following risk mitigation factors:

a) Capacity charge earned in relation to the Project’s availability are designed to cover all: (i) investment costs, (ii) fixed operation and maintenance costs and (iii) financing costs and taxes.

b) OPWP (as the off-taker and the contractual counterparty responsible to pay, inter alia capacity charge), is an entity with a high credit rating with and a good track record of timely payments. Al Batinah Power is dependent on OPWP’s creditworthiness and the on-going financial support it receives from EHC and the Government from time to time. If OPWP’s creditworthiness materially deteriorates and/or if EHC or the Government ceases to provide the requisite financial support to OPWP, OPWP may no longer be able to fulfil its obligations under the PPA and its ability to make payments under the PPA may be impaired and accordingly, Al Batinah Power’s revenue may be adversely affected. This is considered as unlikely.

c) The obligation of Al Batinah Power to make payments to MoG for gas delivered under the NGSA is subject to fuel payments being received from OPWP under the PPA. Hence, there is no payment risk related to gas.

d) Capacity revenues are based on availability and are not dependent on actual dispatch.

OPWP is entitled to terminate the PPA for default by Al Batinah Power which, if not cured within agreed cure periods by Al Batinah Power, will give rise to such termination right. In such a case, Al Batinah Power will lose its sole source of revenue. The extension of the PPA at the expiry of its term is also dependent on the agreement of OPWP. The longer-term view (post-PPA) of the Project depends greatly on the demand for electricity in the MIS. Any termination of the PPA, failure to extend the PPA at the expiry of its term, or failure to realise the forecasted revenues following termination or expiry of the PPA could have a material adverse effect on the business, results of operations and financial condition of Al Batinah Power, including the market price of the Shares.

No ownership of the land on which the Plant is situated.

The Site used for the Plant is owned by SIPC which, under the terms of the SUAS, has granted a sub-usufruct right over the Site to Al Batinah Power with a term of 15 years from the effective date. The term of the SUAS is subject to a further extension of 15 years at the option of Al Batinah Power. If Al Batinah Power is in material breach of the terms of the SUAS, the SIPC may, at its option, elect to terminate the SUAS earlier, evict Al Batinah Power from, and repossess the Site. A termination of the SUAS would have a material adverse effect on the business, results of operations and financial condition of Al Batinah Power, including the market price of the Shares.

Availability of skilled personnel.

Al Batinah Power depends to a significant degree on the continued services of key personnel, both employed by it and those employed by STOMO, which is responsible for operating the Plant. Their knowledge of the power generation industry and their skills and experience are crucial elements to the success of Al Batinah Power’s business. There are a limited number of employees on the payroll of Al Batinah Power, as the labor-intensive operation and maintenance is outsourced under the O&M agreement to STOMO.

The loss of any member of the Board or Management or the loss of any other key employees may result in a loss of organisational focus, poor execution of operations, or an inability to identify and execute potential strategic initiatives such as expansion of capacity. The occurrence of any of these events may have a material adverse effect on the business, results of operations and financial condition of Al Batinah Power, including the market price of the Shares. If Al Batinah Power is eventually exposed to a discontinuity of senior executive and employees, it shall be able to resort to the human resource department support from each of its experienced Shareholders.

Transactions with certain related parties.

Al Batinah Power is involved in and is dependent on certain related party transactions with its shareholders and with other companies controlled by some of its Shareholders, including, but not limited to, the O&M operator, STOMO. Any

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inability or failure by STOMO to provide these services could have a material adverse effect on the business, results of operations and financial condition of Al Batinah Power, including the market price of the Shares.

Al Batinah Power has also engaged in transactions with certain related parties, and it may continue to do so in the future. See “Chapter XVII – Related Party Transactions and Material Contracts” of this Prospectus. Conflicts of interests may arise between Al Batinah Power and such related parties, potentially resulting in the conclusion of transactions on terms not determined by market forces. Al Batinah Power has certain policies in place dealing with conflicts of interest and intends to abide by applicable laws and regulations relating to transactions with related parties.

Risk associated with fuel supply and fuel price risks within the PPA period.

The term of the gas supply contract with MoG goes hand in hand with the PPA mitigating fuel supply risk. Al Batinah Power is not exposed to a fuel price risk as the fuel cost is passed through to OPWP under the PPA.

Government risk.

The PPA provides for full protection against the following political risks:

War, hostilities, belligerence, insurrection or revolution in Oman

Expropriation, requisition, confiscation, nationalization, import restriction or closure of harbors by the Government or any Ministry or Governmental authority

Electrical connection failure

Change of Law

Operations are subject to government regulation and licences.

Regulations that apply to Al Batinah Powers’s business generally cover four areas: (i) corporate existence, and power and authority to conduct its business; (ii) the conduct of power generation; (iii) environmental regulation; and (iv) regulation of health and safety. Al Batinah Power is subject to a varied and complex body of laws and regulations that both public officials and private parties may seek to enforce. Al Batinah Power conducts its power generation operation under several licences, leases and permits and the Sub-Usufruct Agreements. Such licences, permits and sub-usufruct may be suspended, terminated or revoked if Al Batinah Power does not comply with the licence, permit or sub-usufruct requirements, does not comply with any applicable emissions and other environmental requirements, fails to provide required information, becomes insolvent, fails to fulfil any capital expenditure or production obligations or does not comply with any other applicable licence, permit or sub-usufruct conditions. In addition, the laws and regulations to which Al Batinah Power is subject to, impose requirements on the modification, ownership and operation of the Plant. If Al Batinah Power fails to comply with these requirements, this may prevent it from modifying or operating the Plant, and Al Batinah Power could be subject to civil or criminal liability, fines and the imposition of clean-up obligations, including liens, to secure those obligations. Al Batinah Power’s business could also be materially adversely or beneficially affected by changes in existing law, the interpretation of existing laws or the adoption of new laws applicable to Al Batinah Power. The imposition of fines or penalties, or the revocation or suspension of licences, permits or sub-usufruct arrangements could have a material adverse or beneficial effect on the business, results of operations and financial condition of Al Batinah Power, including the market price of the Shares.

Adequate insurance may not be available to cover all potential losses.

Al Batinah Power is obligated under the Project Documents and the Finance Documents to maintain a certain minimum level of insurance against certain risks. However, as a result of certain operating risks and other potential hazards associated with the power generation industry, Al Batinah Power may from time to time become exposed to significant liabilities for which it may not have adequate insurance coverage.

Al Batinah Power maintains insurance for the Project, including all risks property and machinery insurance, general third-party liability insurance, and business interruption insurance, in amounts and with deductibles that Al Batinah Power considers appropriate. There can be no assurance that such insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which Al Batinah Power may be subject.

Further, if there are changes in the insurance markets or increases in insurance costs, Al Batinah Power cannot

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provide assurance that it will be able to pass through to OPWP for reimbursement under the PPA any insurance costs in excess of those projected when Al Batinah Power entered into the PPA. Moreover, the occurrence of a significant event that is uninsured, such as a substantial business interruption could have a material adverse effect on Al Batinah Power’s financial position, results of operations and cash flows. In the event there is a total or partial loss of Al Batinah Power’s assets, there can be no assurances that the insurance proceeds received by Al Batinah Power would not have an adverse effect on the financial condition of Al Batinah Power, including the market price of the Shares.

Depegging or adjustment in Omani Rial/US Dollar peg.

Al Batinah Power maintains its accounts, and reports its results, in Omani Rial and US Dollars. As at the date of this Prospectus, the Omani Rial remains pegged to the US Dollar. However, there can be no assurance that the Omani Rial will not be de-pegged in the future or that the existing peg will not be adjusted in a manner that adversely or beneficially affects Al Batinah Power. Any such de-pegging could have an adverse or beneficial effect on the financial condition of Al Batinah Power, including the market price of the Shares.

Inflation could increase Al Batinah Power’s costs and adversely affect its results of operations.

Pursuant to the terms of the PPA, Al Batinah Power revenues are compensated for indexation in respect of both USD and OMR cost inflation. Hence, the risks of variation of USD/OMR cost inflation are largely mitigated by the revenues being partially tied to an escalation formula based on a mix of US Dollar PPI and Omani Rial CPI indices. However, a portion of the payments in respect of the O&M Agreement are in euro, which means that Al Batinah Power is to a certain extent exposed to indexation risk in respect of such euro payments.

Adverse changes in foreign exchange and custom duty rates will adversely affect Al Batinah Power’s business.

Al Batinah Power has hedging arrangements in place that protect against changes in the euro exchange rate to whichit has exposure due to euro denominated obligations under the O&M Agreement. As of the date of this Prospectus, a portion of the euro denominated payments is not covered by the hedging arrangements.

Al Batinah Power’s ability to obtain new hedging arrangements depends on numerous factors, including general economic and market conditions, international interest rates, from banks or other financiers. There can be no assurance that such hedging arrangements will be available or, if available, that such hedging arrangements will be obtainable on terms or at a cost that are not onerous. If Al Batinah Power is unable to hedge the foreign exchanges euro exposure, this could have a material adverse effect on Al Batinah Power business and financial condition, including the market price of the Shares.

Limited experience complying with listed company obligations.

Al Batinah Power has operated historically as a SAOC and, accordingly, some of its Management have limited experience managing a publicly traded company and complying with laws pertaining to public companies. In particular, the significant regulatory oversight and reporting obligations imposed on public companies will require substantial attention from the Management and may divert its attention away from the day-to-day management of the business, which could have an adverse effect on Al Batinah Power’s business, financial condition and results of operations, including the market price of the Shares.

No existing market for the Shares.

Prior to the Offer, there has not been a public market for the Shares.The Selling Shareholders cannot predict whether investor interest in Al Batinah Power will lead to the development of an active trading market on the MSM, or otherwise, or how liquid any market that does develop might be.The Offer Price for the Offer Shares may not be indicative of prices that will prevail in the open market following the Offer.

The market price of the Shares may fluctuate widely in response to different factors.

Following the Offer, the market price of the Shares could be subject to significant fluctuations due to a change in sentiment in the stock market regarding the Shares or securities similar to them or in response to various facts and events, including any regulatory changes affecting Al Batinah Power’s operations, variations in its half yearly or yearly operating results and its business developments or those of its competitors.

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In addition, stock markets have from time to time experienced price and volume volatility, which, in addition to general economic and political conditions, could adversely or beneficially affect the market price for the Shares. The value of the Shares may go down as well as up, and the market price of the Shares may not reflect the underlying value of Al Batinah Power’s business.

Dividend policy may not be fulfilled.

Any payment of future dividends will be made taking into account the sufficiency of distributable reserves and liquidity in order to ensure Al Batinah Power’s operational needs and/or business growth are not limited by the unavailability of funds, as well as Al Batinah Power’s known contingencies and compliance with any funding facility covenants.

Dividend payments are not guaranteed and the Shareholders may decide, in their absolute discretion, at any time and for any reason, not to pay dividends. Further, any dividend policy, to the extent implemented, will significantly restrict Al Batinah Power’s cash reserves and may adversely affect its ability to fund unexpected capital expenditures, as well as the ability to make interest and principal repayments on its outstanding term loan facilities. As a result, Al Batinah Power may be required to borrow additional money or raise capital by issuing equity securities, which may not be possible on attractive terms or at all. The dividends might also be impacted in case refinancing terms are different from the assumptions used in the projections.

Dilution risk and Founders exit risk.

In addition to the lock-in of pre-issue Share Capital as prescribed under the CCL, this is mitigated by contractual provision, as follows,

From the Effective Date up to but excluding the date on which the Project Founders complete the IPO, the lead Founder under the PFA, is committed through the PFA13 to retain directly or indirectly, hold and maintain at least 35 per cent of the Shares in Al Batinah Power;

From the date on which the Project Founders complete the IPO up to and including the third anniversary of the COD, the lead Founder under the PFA is required to, directly or indirectly, hold and maintain at least 22.75 per cent of the Shares in Al Batinah Power;

Pursuant to the ESRA, International Power is obliged to retain a direct or indirect legal and beneficial interest in Al Batinah Power which, in aggregate, represents:

a) a minimum of 25% of the Shares until the date that is five years after the COD;

b) a minimum of 20% of the Shares following the date that is five years after the COD and until the date that is ten years after the COD; and

c) a minimum of 15% of the Shares at any time after the date that is ten years after the COD.

Separately, under the terms of the SHA, following the Offer until the third anniversary of the COD, Kahrabel may not reduce its shareholding below 22.75 per cent.of the total outstanding Shares.

The Shares are also pledged to the lenders making them less liquid.

13 The lead founder under the PFA, at the time of its execution was Suez-Tractebel, whose current denomination is International Power.

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Chapter XIV: Projected Financial Information

The projections in this section of the Prospectus have been prepared on the basis of the financial model prepared by Al Batinah Power. This Chapter should be read together with the information contained in “Forward-Looking Statements”, “Chapter XIII – Risk Factors” and “Chapter XXII – Financial Statements” and related notes of this Prospectus.

The results of the financial model are not projections or predictions. A financial model simply illustrates hypothetical results that are mathematically derived from specified assumptions. The financial model was designed as a financial forecasting and evaluation tool and not as an operational model. Thus, it will not readily allow comparisons of actual results against forecasts and does not include an ongoing budget comparison facility.

The inclusion of information derived from the financial model should not be regarded as a representation or warranty by Al Batinah Power, the Selling Shareholders, the Financial Adviser & Issue Manager or any other person that the results of the financial model will be achieved. Actual capacity, availability, dispatch and production levels, heat-rate, operating, maintenance and capital costs, and interest and inflation rates will almost certainly differ from those assumed for purposes of this section. Accordingly, Al Batinah Power’s actual performance and cash flows for any future period will almost certainly differ from those shown in this section. Prospective Applicants are cautioned not to place undue reliance on the performance or cash flows in the information derived from the following projected financial information and should make their own independent assessment of the future results of operations, cash flows and financial condition of Al Batinah Power. KPMG has not examined the financial model and therefore does not express an opinion on it.

Assumptions used for drawing projections for the five years ending 31 December 2018:

Significant Agreements.

Al Batinah Power has entered into the following significant agreements, which were used to arrive at the projected financial statements:

The PPA, which establishes the terms upon which Al Batinah Power generates and supplies electrical energy and the basis upon which Al Batinah Power receives revenues.

The NGSA, in respect of the purchase of natural gas as feedstock from MoG.

The O&M Agreement, in respect of the provision of operation and maintenance services by STOMO in relation to the Plant.

The Finance Documents, which set out the terms and conditions of the funds made available to Al Batinah Power.

Macroeconomic Assumptions

Principal macroeconomic assumptions used by Al Batinah Power:

The foreign exchange rate is assumed to be OMR 0.3845 = US$1.00.

The inflation rate for Oman, the United States and Euro is assumed to be 3.0 per cent. 2.5 per cent. and 2.0 per cent. respectively.

Financing Assumptions

The covenants under the Finance Documents are maintained throughout the term of the financing.

The principal repayment profile and interest cost are set out in the Finance Documents and are summarised in “Chapter XII – Project Cost and Financing” of this Prospectus.

The USD Commercial Tranche (representing c.21% of the total financing for Al Batinah Power) is assumed to be refinanced by contract year 4 (May 2016) under the following terms:

– Removal of the cash sweep and extension of the maturity to 3 years beyond the PPA period i.e. until 2031.

– Lower pricing of the facility.

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The refinancing assumptions factor the successful completion of the plant which removes the construction risk. The expected refinancing is assumed to achieve a reduction in the financing margins. The financing structure post completion of refinancing has been assumed to become similar to the other IPPs operational projects in Oman, wherein lenders have accepted to take post-PPA risks.

Accounting and Tax Assumptions

The tax rate is assumed to be 12 per cent. of taxable profits. OMR 30,000 per annum is assumed to be tax-exempt from the calculation of taxable profits.

Legal reserves are built up to a maximum of one-third of share capital by allocating 10 per cent. of net annual profit (after tax) to that account.

The following tables show the projected balance sheet, income statement and cash flow statement of Al Batinah Power for the period 2014-2018. Projected income statements and cash-flow statements are for calendar years, while projected balance sheet is as of the end of each calendar year.

Balance Sheet (OMR millions):As at 31 December

2014 2015 2016 2017 2018

Liabilities

Share capital 67.5 67.5 67.5 67.5 67.5

Legal reserves 2.1 2.8 3.6 4.6 5.7

Retained earning 9.4 8.9 10.2 12.3 14.7

Hedging reserve -5.9 -5.9 -5.9 -5.9 -5.9

Total debt* 215.2 202.7 189.5 176.3 162.6

Unamortized transaction costs -9.8 -8.4 -7.1 -5.9 -4.7

Hedging instruments 5.9 5.9 5.9 5.9 5.9

Payables** 3.2 3.3 3.3 3.5 3.6

Provision for asset retirement and end of service benefits 0.5 0.5 0.6 0.6 0.7

Deferred tax liability 7.1 9.2 10.5 11.6 13.0

Total liabilities 295.0 286.5 278.1 270.5 263.0

* Including current portion of debt and working capital facility** including interest accruals

Assets

Net fixed assets 284.2 276.7 269.2 261.7 254.3

Inventory 1.9 1.9 1.9 1.9 1.9

Trade and other receivables 2.8 3.0 3.2 3.4 3.6

Cash and cash equivalents 6.1 4.9 3.8 3.5 3.3

Total Assets 295.0 286.5 278.1 270.5 263.0

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Income Statement (OMR millions):As at 31 December

2014 2015 2016 2017 2018

Revenues 47.3 49.4 51.9 54.4 57.3

Operating costs -19.7 -21.0 -23.4 -25.9 -28.5

EBITDA 27.5 28.4 28.5 28.6 28.8

Depreciation and Amortization* -7.5 -7.5 -7.5 -7.5 -7.5

Net financing costs ** -12.3 -11.7 -10.8 -10.1 -9.4

Profit Before Tax 7.7 9.2 10.1 10.9 11.8

Income Tax *** -3.1 -2.1 -1.3 -1.1 -1.5

Net Profit 4.6 7.0 8.8 9.8 10.3

*Including provisions for dismantlement and end of service benefits**Including LC costs and deferred financing costs*** Including Deferred Taxes

Cash flow Statement (OMR millions):As at 31 December

2014 2015 2016 2017 2018

EBITDA 27.5 28.4 28.5 28.6 28.8

Working capital movements 0.0 0.0 0.0 0.0 0.0

Tax paid 0.0 0.0 0.0 0.0 0.0

Cash generated from Operations 27.5 28.4 28.5 28.6 28.8

Net financing costs -10.9 -10.3 -9.6 -9.0 -8.4

Movement in financial debt -11.9 -12.5 -13.2 -13.3 -13.7

Capex -3.4 0.0 0.0 0.0 0.0

Dividends paid -3.9 -6.8 -6.7 -6.7 -6.9

Net Increase (Decrease) in Cash and cash equivalents -2.6 -1.2 -1.1 -0.3 -0.2

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Chapter XV: Dividend Policy

Right to Receive Dividends

The Offer Shares rank equally with all other Shares for any rights to dividends that may be declared and paid in respect of the financial year of Al Batinah Power ending 31 December 2013 on a pari-passu basis, and any subsequent years. Following the Offer, the Shareholders’ register of Al Batinah Power maintained by the MCDC will be amended to enable new Shareholders to receive dividends declared.

Dividend Policy

The Management proposes to follow a reasonable dividend payout policy, subject to debt repayments, working capital and operational expenditure obligations. The amount of annual dividends and the determination of whether to pay dividends in any year may be affected by a number of other factors, including but not limited to the business prospects, financial performance, free cash availability, covenants under the Finance Documents and the outlook for the sector.

Al Batinah Power’s dividend policy is subject to restrictions contained in the CCL, its Articles and the covenants of the facilities agreements. These are summarised as follows:

In accordance with the CCL, in each financial year, 10 per cent. of the net profits after tax of every company organised under Omani law must be transferred to a legal reserve until the reserve amounts to at least one-third of the corporation’s share capital. The legal reserve may not be distributed to shareholders by way of dividend. The CCL also requires a proposed dividend payment to be approved by the passing of a shareholder resolution at an annual OGM, and that a dividend must be paid out of net profits or out of optional reserves subject to the provisions of Article 106 of the CCL.

In accordance with the Articles, any profit remaining after the transfer to the legal reserve may be distributed to shareholders or carried forward on the Board’s recommendation.

Dividend distribution will also be limited in time to respect prepayment clauses in the facility agreements. As per the facility agreement, cash sweep prepayment of the loan (commercial tranche only) will apply on 100% of the available cash-flow for cash sweep starting from the twentieth repayment date until the thirtieth repayment date ending on 31 March 2028. The Finance Documents require a mandatory cash sweep. In case Al Batinah Power is able to refinance the loan before the commencement of the cash sweep, dividend distribution may be available to the investors subject to free cash availability.

The constraints on any payment of a dividend are given by way of a payment waterfall under the CTA, where Al Batinah Power has given an undertaking that it will only apply revenues to the distribution account, subsequent to the funding of all other project accounts in accordance with the terms of the CTA.

Al Batinah Power has paid its first dividend amounting to OMR 3,652,750 (Bzs 5.4 per Share based on the current Issued and Paid-Up Shares) on 12 December 2013. After the IPO, it is intended that the shareholders of the Company will receive a stream of cash flows (dividend stream) during the term of the Project and for the post PPA period. The interim dividend is intended to be paid by June 2014 for the benefit of all Shareholders (including the new shareholders) representing a dividend per share of Baiza 1. The dividends are expected to be declared twice in a Financial Year, following each Repayment Date as defined under the Finance Documents. Under the CTA, transfers to Al Batinah Power’s distribution account are permitted 90 days following each Repayment Date.

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The following table shows the forecast of estimated dividends to be declared by Al Batinah Power to its Shareholders, based on the forecast set out in “Chapter XIV – Projected Financial Information” of this Prospectus.

Expected Dividend Announcement DateAmount (OMR

millions)Dividend (Bzs

per Share)

June 2014 0.7 1.0

November 2014 3.3 4.8

May 2015 3.1 4.6

November 2015 3.7 5.4

May 2016 2.8 4.2

November 2016 3.9 5.8

May 2017 2.5 3.7

November 2017 4.2 6.2

May 2018 2.5 3.8

November 2018 4.3 6.4

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Chapter XVI: Valuation and Price Justification

Overview

The key strengths of Al Batinah Power forming the basis of valuation can be categorized as follows:

Strengths arising from the well-established contractual framework of Oman’s power sector

Stable and predictable cash flows, resilient to shocks in power demand until 2028

Al Batinah Power has entered into a long term 15-year PPA with OPWP. Under this agreement, Al Batinah Power receives capacity charges from OPWP (comprising ~97% of the total revenues of Al Batinah Power in FY 2013, excluding fuel charges) which are payable by OPWP based on Plant availability and regardless of whether Al Batinah Power is instructed by OPWP to actually generate and deliver power. In effect, this makes Al Batinah Power immune to power demand fluctuations during the PPA period. This contractual scheme is well proven and has attracted reputable domestic and international investors as well as lenders into power projects in the country. OPWP is owned by the Government of Oman with a credit rating of A1 (Moody’s) and A (S&P) and has a proven track record of timely payments.

Long term availability of natural gas, no exposure to gas price movements, and hence mitigation of fuel risks

Natural gas is the primary fuel used by Al Batinah Power. Under the long-term 15-year NGSA entered into by Al Batinah Power, the MoG is responsible for the procurement and delivery to the Plant of all of its natural gas requirements. Fuel revenues and charges are calculated based on the consumption of natural gas calculated by the Plant model for electrical energy output delivered and therefore the gas price and volume is in effect a virtual pass-through cost, subject to achieving the guaranteed heat rate. In the event that the PPA is extended, the NGSA will automatically be extended. For additional information on the NGSA, please refer to Chapter XI– Contractual Framework of this Prospectus.

Strengths deriving from Al Batinah Power’s shareholding and technical proficiency

Experienced Project Founders and Management with an established track record globally, in the GCC and in Oman

Al Batinah Power has the backing of Project Founders with a demonstrated track record of implementing large and complex independent power and water plants globally, in the GCC, and in Oman. It should be noted that the Founders will all remain Shareholders in the Company immediately after the IPO, with a cumulative holding of 65%. The Project Founders are members of reputable international and domestic groups, namely International Power, Suhail Bahwan, Sojitz, Yonden, and PASI.

International Power, which operates under the commercial brand name of GDF SUEZ Energy International, is a global leader in independent power generation. It has a strong presence in its markets with 72.9 GW gross (37.4 GW net) capacity in operation and 8.4 GW gross (4.4 GW net) capacity of projects under construction as at 31 December 2013. GDF Suez Energy International is a proven international power plant developer and operator, with a strong track record in the Middle East and internationally, and has vast expertise with Siemens AG’s SGT5-4000F turbines, which are used in the Plant. With equity participation in Sohar IWPP (585 MW), Al Rusayl (665 MW) and Barka 2 IWPP (678 MW), Al Kamil (285 MW), Al Suwadi Power (744 MW) and Al Batinah Power (744 MW), International Power is the largest private power producer in Oman. For further information on the Project Sponsors, please refer to Chapter VII – Shareholding Details of this Prospectus.

Fuel-efficient power plant

Al Batinah Power’s CCGT power plant has a thermal efficiency of above 57% (together with Al Suwadi Power’s CCGT, the most fuel-efficient plants in Oman), which is higher than the GCC average of ~50%. The higher efficiency results in lesser fuel being burnt leading to lower greenhouse gas emissions and to lower life-cycle

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costs, which positions the Plant as a competitive asset in the post-PPA period.

O&M contracted with STOMO, the leading O&M operator in Oman

Al Batinah Power has entered into an O&M agreement with STOMO, the largest provider of operation and maintenance services in the Sultanate of Oman. Since STOMO is indirectly majority-owned by GDF SUEZ Energy International, it represents a firm alignment of interest with Al Batinah Power. The O&M Agreement contains provisions for incentives and penalties, on ordinary arms’ length commercial terms, linked to achievement of certain availability and heat rate targets. The maintenance of the gas turbines, which is a specialized activity, has been subcontracted on a long-term basis by STOMO to Siemens AG, whose capabilities in this area are among the best globally. With such long-term O&M contracting, operating costs are well under control and form an integral part of the predictable cash flows of Al Batinah Power.

Largest power plant in operation at a single location in Oman

Al Batinah Power’s Sohar-2 Plant is Oman’s largest power Plant (on an equal footing with the Barka-3 power plant owned by Al Suwadi Power) in terms of installed electrical capacity. The contracted power capacity of 744 MW represents c.13.3% of Oman’s MIS total currently contracted capacity (5589 MW) – which is significant and of strategic importance to the country.

On-time commissioning of the Plant with an industry-leading reliability of 99.9%

The Plant was completed with a delay in COD of merely 2 days, although no delay penalties were payable to OPWP. Also, the plant has been in full commercial operation for over 12 months, and achieved a reliability of c.99.9% in 2013 - which indicates a forced outage rate of ~0.1% - much lesser than the IPA assumed long-term average of 2%. There are no outstanding liquidated damages either with OPWP or with the EPC contractor.

Strengths stemming from Al Batinah Power’s Financials

Key financials (OMR millions):As at 31 December

2013 2014e 2015e 2016e 2017e 2018e

Operating revenue 43.2 47.3 49.4 51.9 54.4 57.3

Net Profit* 9.3 4.6 7.0 8.8 9.8 10.3

Non-recurring items# - 0.7 - - - -

Adjusted Net Profit 9.3 5.3 7.0 8.8 9.8 10.3

EPS (Baizas)* 13.7 7.8 10.4 13.1 14.6 15.3

Total assets 301.0 295.0 286.5 278.1 270.5 263.0

Total equity** 77.7 78.9 79.2 81.3 84.4 87.9

Total debt 226.6 215.2 202.7 189.5 176.3 162.6

Debt equity (times) 2.9x 2.7x 2.6x 2.3x 2.1x 1.9x

* 2013: exceptional profit due to settlement agreement with EPCC(~RO 1.3m pre-tax); future years include provisions for deferred

taxes# IPO related and other costs of OMR 0.70 million

** Excludes hedging reserve

Future estimates provided by Al Batinah Power

Good competitive position and hence considerable value in the post PPA period

In 2013, annual demand in the MIS for electricity was 23.8 TWh. According to IPA’s analysis, this is expected to almost triple by the end of the PPA period. In IPA’s view, the capacity of existing plants and firm new builds in the MIS will not be sufficient to cover demand thereafter. Also, due to its high thermal efficiency, any possible technological obsolescence of the Plant is not expected to cause a significant disadvantage versus future new builds, while it will continue to be better placed than other plants currently in existence. Hence there will be significant value from keeping the plant online post PPA period either by extending the off-take agreement under

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the single buyer approach or by allowing the plant to operate in a liberalized market for power. The base case average annual EBITDA projected by IPA for Al Batinah Power from the expiry of the PPA period to 2053 is OMR 53 million.

Offer Price

The Offer Price of Bzs 126 (excluding Bzs 2 as issue expenses) per Share for Al Batinah Power is based on two broad valuation methodologies that have been used in the past for power sector IPOs in Oman and take into consideration the current market conditions.

Valuation Methodologies

The methods used are as follows:

– Discounted cash flow (DCF) valuation; and

– Relative valuation

These methods along with their advantages and disadvantages have been explained here:

Discounted Cash Flow (DCF) Valuation Method

The DCF method of valuation captures the value of a company based on estimated future cash flows, discounted to a present value. This present value is then generally used to evaluate the attractiveness of an investment opportunity at a given price.

Advantages of DCF method Disadvantages of DCF method

– DCF is one of the most theoretically sound valuation methods.

– Forward-looking analysis, based on cash flow (and, therefore, less influenced by accounting rules), and takes account of all contractual arrangements as well as expected operating strategy.

– Less influenced by volatile market conditions.

– Allows a valuation of the entire business or of each of its components separately.

– Valuation is sensitive to underlying assumptions for future cash flows (mitigated by the presence of long term contracts in place in the case of Al Batinah Power) and discount rate;

– In absence of long term contracts, the valuation depends on long-term projections, which may be affected by technological, macroeconomic and regulatory changes.

Relative Valuation Method

Under the Relative Valuation approach, the valuation is benchmarked against other listed comparables which represent a similar risk return profile i.e. operations, cash flows, capital structure, growth plans etc. The relative valuation is generally based on current financial results or projections for the next 1 to 2 years. The benchmarks which are frequently used for relative valuation include the price to earnings multiple, the EV/EBITDA multiple, the dividend yield and the price to book multiple.

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Advantages of Relative Valuation method Disadvantages of Relative Valuation method

– Based on publicly available information.

– Market efficiency theoretically implies that trading valuation should reflect all publicly available information

– Can indicate the value of a company without reflecting a control premium

– Takes into consideration current market conditions.

– It may be difficult to find a sample of truly comparable companies considering operational history, technology and configuration differences, remaining contracted period, debt financing terms, etc.

– Valuation may be affected by thin trading, small capitalization, ownership restrictions, limited coverage etc.

– External variables such as M&A activity and regulatory scrutiny may affect stock prices.

Applicability of DCF for valuing Al Batinah Power

Cash flows for discounting

Al Batinah Power has a stable business model (based on the well-established contractual framework as discussed earlier in this Chapter) with reliable projected dividend distributions to investors, which are relevant for discounting purpose. The approach is consistent with the IPO valuation of all power companies in Oman in the past where projected dividends were discounted for DCF valuation.

Cash flow projections for the PPA and post PPA periods

Al Batinah Power’s operating cash flows can be estimated with relative certainty for the PPA period (i.e. until March 2028), while the projections for post PPA period cash flows till March 2053 have been provided by IPA, an independent consultant, appointed on behalf of investors. IPA’s estimates involve a number of assumptions including demand for power, available capacities, alternative sources, tariffs, availability of gas, pricing of gas, off-take arrangements etc. IPA, based on its experience in more than 80 countries, has developed projected cash flows of Al Batinah Power under 27 different scenarios. For the purpose of DCF valuation of Al Batinah Power, projected cash flows under three cases have been considered assuming the Plants operate beyond the PPA period. The highest cash flows as optimistic case, the lowest cash flows as the pessimistic case and the base case as provided by IPA. The projections for capital expenditures have been based on estimates provided by Al Batinah Power.

DCF Valuation

Valuation per share

The price per Share based on projected dividend flows under various scenarios is as follows:

Discount rateValuation

(OMR million)Valuation

(Bzs/share)Resulting IPO

Discount vs. DCF

8% 207.3 307 59%

9% 174.6 259 51%

10% 148.6 220 43%

Includes post PPA cash flows forecasted by IPA

Internal rate of return (IRR)

Based on projected dividend flows (including the post-PPA cash flows forecasted by IPA) under the base case scenario, the projected IRR for the IPO investors is c.14%. Numerous valuation sensitivity cases were run using key post-PPA period inputs. This analysis reflected movement in the valuation of Al Batinah Power of +/- 0.7% around the base case investor IRR.

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Relative valuation: Dividend yield

Dividend yield is the primary relative valuation benchmark for Al Batinah Power in view of a stable business model with no identified expansion plans.

5 year dividends 2014 2015 2016 2017 2018 Average

Dividends (OMR million) 3.9 6.8 6.7 6.7 6.9 6.9*

Dividend (as a %age of per share Face Value) 5.8% 10.0% 10.0% 9.9% 10.2% 10.2%*

Dividend Yield 8.5%* 8.0% 7.9% 7.9% 8.1% 8.1%

*2014 annualized based on 6.5 months of post-IPO holding

Comparables

Listed utilities in Oman comprise companies with single or multiple location independent power projects (IPP), independent water projects (IWPs) and independent water and power projects (IWPP) were considered as potential comparables for Al Batinah Power. These companies share a similar business model which is dependent on concession agreements and contracts. The strength of the cash flows of these companies is primarily measured by the strength of the terms and conditions of these contracts which are signed with similarly rated counterparties. The following MSM-listed power companies were considered as comparables for Al Batinah Power.

Al Kamil Power - owns and operates an electricity generating plant at Al Kamil in the Sharqiya Region in Oman.

ACWA Power Barka - owns and operates an electricity generating plant and water desalination plant, and associated gas interconnection facilities.

Sohar Power – owns and operates an electricity generating and water desalination plant in Oman.

SMN Power Holding - owns and operates an electricity generating plant at Rusayl and an electricity generation and a water desalination plant at Barka in Oman.

Sembcorp Salalah – owns and operates an electricity generating and water desalination plant in Salalah, Oman.

We have excluded the following company for comparison purposes:

United Power - It is a 20 year BOOT project whereas all the other companies are BOO projects.

Company TTM Dividend Yield** P(W)PA Expiry

Al Kamil 6.3% 2020#

ACWA Power Barka 5.6% 2020

Sohar Power 5.7% 2022

SMN Power Holding 7.8% 2022 / 2024

Sembcorp Salalah* 7.1% 2027

Average 6.5%

# PPA term expected to be extended to 2020 as per public reports

* Since Sembcorp Salalah does not have a 12 month trading history on the MSM, we have considered October 2013 and April

2014 dividends as mentioned in its IPO prospectus

** TTM dividend yields based on company filings on the MSM website. Closing prices taken as of 24 March 2014

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Chapter XVII: Related Party Transactions and Material Contracts

Related Party Transactions

Related parties comprise the Shareholders and its affiliates, directors, key management personnel, business entities that have the ability to control or exercise significant influence in financial and operating decisions of the Company and entities over which certain shareholders are able to exercise significant influence.

Prices and terms of these transactions, which are entered into in the normal course of business, are on mutually agreed terms and conditions.

The Company had the following significant transactions with related parties during the year:

2013 2013 2012 2012

RO USD RO USD

Multitech 46,067 119,810 178,474 464,172

Kahrabel 82,610 214,851 149,974 390,051

Kahrabel Operations and Maintenance Oman ("KOMO")

128,817 335,024 221,207 575,310

Suez Tractebel SA 64,388 167,459 59,323 154,285

Tractebel Engineering SA ("TB") 249,574 649,087 395,021 1,027,363

Sojitz 131,899 343,040 141,573 368,199

Yonden 24,609 64,002 63,005 163,861

PASI 43,410 112,901 130,076 338,299

Al Suwadi Power 43,442 112,983 37,060 96,384

Tractebel Engineering S.A Engineering Consultancy (Oman Branch)

47,644 123,912 - -

Electrabel S.A 19,209 49,958 - -

STOMO 5,515,125 14,343,627 3,572,439 9,291,129

6,396,794 16,636,654 4,948,152 12,869,053

The nature of the above transactions is as follows :

Interest on SLA 22,497 58,509 204,169 530,999

Performance bond charges 167,460 435,527 326,027 847,924

Secondment fees 235,507 612,502 326,946 850,314

Professional services fees 112,032 291,371 36,695 95,436

Owner's engineer fees 249,574 649,087 395,021 1,027,363

Mobilisation fee 275,363 716,158 505,709 1,315,237

O&M fixed fee 3,945,792 10,262,139 2,538,524 6,602,142

O&M variable fee 1,003,218 2,609,151 528,207 1,373,749

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2013 2013 2012 2012

RO USD RO USD

O&M capacity incentive fee 230,700 600,000 - -

Minor inspection fees 58,940 153,287 - -

DSRA LC cost 41,759 108,606 - -

Others 53,952 140,317 86,854 225,889

6,396,794 16,636,654 4,948,152 12,869,053

Balances due from related parties at period end comprised:

KOMO 1,178 3,064 941 2,448

Al Suwadi Power 9,946 25,868 7,806 20,300

Yonden - - 15 39

11,124 28,932 8,762 22,787

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Chapter XVIII: Corporate Governance

Certain sections of this chapter summarise the issues relating to corporate governance based on the Articles, the CCL and the rules and regulations issued by the CMA, in particular, the Code. The description provided in this chapter is only a summary and does not purport to give a complete overview of the Articles, nor of the relevant provisions of the CCL, the Code or the CMA rules and regulations.

Overview

This section details the composition of the Board, various Board committees and Management. It also highlights the corporate governance practices that Al Batinah Power has or will have in place.

Board

Current Board Composition

The current Board of Directors was elected on 27 March 2013, and its members’ term of office shall expire on the third anniversary of this date, pursuant to Article 95 of the CCL. The current composition of the Board of Directors is as follows:

Name RepresentingExecutive/ Non-Executive

Independent/ Non-Independent(1)

Mr. Mario Savastano Personal capacity Non-Executive Independent

Mr. Guillaume Louis Leon Baudet Personal capacity Non-Executive Independent

Mr. Johan Van Kerrebroeck Kahrabel Non-Executive Non-Independent

Mr. Jan Sterck Personal capacity Non-Executive Non-Independent

Mr. P. Ananthan Multitech Non-Executive Independent

Mr. Ajeet Walavalkar Personal capacity Non-Executive Independent

Mr. Takahito Iima SEPI Non-Executive Independent

Mr. Hachiman Yokoi BHSP Non-Executive Independent

Mr. Hadi Said Hamaid Al Harthy PASI Non-Executive Independent

Note 1: A director is deemed independent pursuant to CMA rules and regulations.

Biographical Information of the Members of the Board

Name: Mr. Mario Savastano

Position: Chairman

Education: Mr.Savastano holds a master’s degree in Mechanical Engineering from the Catholic University of Louvain (Belgium), and Executive Education at the INSEAD Business School (France and Singapore)

Experience: Mr.Savastano is Executive Vice President - Asset Management for Construction of GDF SUEZ, South Asia, Middle East and Africa (SAMEA). He is in charge of asset management of all projects under construction for the whole of GDF SUEZ SAMEA region.

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Experience: (continued)

Since he joined GDF SUEZ in 1999, Mr.Savastano served as Senior Business Developer in Thailand. In 2003, he became Senior Vice President Business Development for development of energy projects in Middle East and North Africa, based in Dubai. Mr.Savastano amongst others led the consortium that won the Barka 2 greenfield and the Al-Rusail acquisition projects in Oman, which he then managed as CEO of both companies from 2006. Mr.Savastano moved back to Dubai in August 2010 to be responsible of the engineering and construction department of GDF SUEZ META.

Prior to joining GDF SUEZ, Mr.Savastano served for 8 years in proposal and commercial positions in the energy division of Cockerill Mechanical Industries in Belgium, supplying boilers for power plants worldwide.

Mr.Savastano has more than 20 years of technical, commercial and managerial experience in the international power business.

List of Other Directorships:

In addition to Al Batinah Power, Mr.Savastano is also a director of Al Suwadi Power.

Name: Mr. Guillaume Louis Leon Baudet

Position: Non-Executive Director

Education: Mr.Baudet holds a degree in business and administration and a Masters degree in business and finance.

Experience: Mr.Baudet has 17 years of experience in controlling and finance. After 11 years in the automotive industry, he joined GDF SUEZ Energy International in 2007 as Head of Business Control for the MENA region, before being appointed in 2011 as CFO of Hidd Power Company in Bahrain. Mr.Baudet is now the CEO of Sohar Power Company SAOG.

List of Other Directorships:

In addition to Al Batinah Power, Mr.Baudet is also a director of United Power Company SAOG and Al Suwadi Power.

Name: Mr. Johan Van Kerrebroeck

Position: Non-Executive Director

Education: Mr.Van Kerrebroeck holds a master’s degree in Industrial Engineering and attended the Vlerick Management School Belgium and CEDEP/INSEAD in France.

Experience: Mr.Van Kerrebroeck joined the GDF SUEZ Group in 1989 and developed over this period his experience in energy business in Belgium as technical manager for utility distribution (1989-1996) and head of the Study Department (1996-2001) in various regions in Belgium. Mr.Van Kerrebroeck was also Board member of IMEWO. Mr.Van Kerrebroeck joined Tractebel EGI in 2002 as VP Transport and Distribution focusing on Mexico, Peru and Turkey. In 2004 he assumed the position as Senior Vice President Transport and Distribution in the MENA region, in combination with the position of Deputy CEO of PTT NGD and AMATA NGD. In 2010 he moved to Oman to take up the position of CEO of SMN Power Holding Company SAOG.

Since November 2013 Mr.Van Kerrebroeck has moved to Dubai in the capacity of Asset Manager for Qatar, Oman and the Kingdom of Saudi Arabia.

List of Other Directorships:

In addition to Al Batinah Power, Mr.Van Kerrebroeck is also a director of Al Suwadi Power, Barka Seawater Facilities Company SAOC and Al Kamil Power Company SAOG.

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Name: Mr. Jan Sterck

Position: Non-Executive Director

Education: Mr. Sterck holds a degree in electronics engineering.

Experience: Mr. Sterck has 31 years of experience in the power generation industry.

In 1982, after his military service, he joined the Belgian utility Electrabel, where he worked for 11 years in operations and maintenance departments of the Doel 3 and 4 nuclear units. In 1993, Mr. Sterck joined the Tractebel Electricity & Gas International business unit of Tractebel S.A. when it started its international development activities. Since then he has served in different IPP power generation projects worldwide, taking key positions in operations and project management. Among those projects, in 1996, was the United Power Company SAOG - Manah power project in Oman, the first IPP in the Middle East. In 2006 Mr.Sterck returned to the Brussels head office to take up the position of SVP Generation in Suez Energy International (SEI), covering plant operations, support to business development and construction activities.

He maintained this position during the merger with GDF and the reorganization of the power generation activities in GDF SUEZ Branch Energy Europe and International (BEEI). On occasion of the integration of International Power, he took up the position of head of New Build in the present GDF SUEZ Branch Energy International.

List of Other Directorships:

In addition to Al Batinah Power, Mr.Sterck is also on the board of directors of Laborelec, a GDF SUEZ group company and Al Suwadi Power.

Name: Mr. P. Ananthan

Position: Deputy Chairman

Education: Chartered Accountant from the Institute of Chartered Accountants of India.

Experience: Mr. Ananthan has more than 28 years of professional experience in manufacturing and construction industries. He is presently the Chief Financial Officer of Bahwan Engineering Group, part of the Suhail Bahwan Group. During his 19 years with Bahwan Engineering Group, he has worked closely on investment decisions in new ventures, particularly in the Omani power and water sector. His areas of specialisation are finance, taxation, budgeting and management reporting and investment analysis. He did a short stint as the Chief Financial Officer, as Multitech nominee, of Al Suwadi Power during its start-up phase.

List of Other Directorships:

In addition to Al Batinah Power, Mr. Ananthan is also on the Board of Directors of Sharqiyah Desalination Company SAOG.

Name: Mr. Ajeet Walavalkar

Position: Non-Executive Director

Education: Mr. Walavalkar holds a Bachelor’s degree in Electrical Engineering.

Experience: Mr. Walavalkar has more than 35 years’ experience in the electrical energy industry in the capacity of handling products and projects. He has been involved in the marketing of medium to large and special electrical products. During this period, he has also been involved and responsible for the business development, EPC contracting and general management of large electrical infrastructure and industrial projects in the power generation, transmission and distribution sector. Mr. Walavalkar has previously worked with Siemens, India Ltd on overseas projects and is currently the Chief Operating Officer of the Bahwan Engineering Group, Oman.

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List of Other Directorships:

In addition to Al Batinah Power, Mr. Walavalkar is also on the Board of Directors ofAl Kamil Power Company SAOG.

Name: Mr. Takahito Iima

Position: Non-Executive Director

Education: Mr. Iima holds a Bachelor’s degree in Electrical Power Engineering from Waseda University, Tokyo.

Experience: Mr. Iima is the general manager of overseas business of Yonden. In this position, he assumes the management responsibility of its overseas business such as IPP/IWPPs development and management, and technical consulting for power industry under the Japanese Government’s programs.

Mr. Iima started his career at Yonden in 1980 as a power system engineer and was involved in planning, maintenance and operation of its power system (3,396km 187-500kV transmission line and 20,827MVA substations) for 23 years. Subsequently, he has been engaged in its overseas business for the last 11 years.

List of Other Directorships:

In addition to Al Batinah Power, Mr. Iima is also on the board of directors of SEP International Netherlands B.V. and RLC Power Holding Company Limited.

Name: Mr. Hachiman Yokoi

Position: Non-Executive Director

Education: Mr.Yokoi holds a Bachelor’s degree in linguistics, spanish language from the Osaka University for Foreign Studies.

Experience: Mr.Yokoi has more than 20-year experience in the infrastructure project developments. Since joining Sojitz in 1992, he has been involved in various infrastructure projects over the world under the Japanese Government’s programs as well as the Public Private Partnership (PPP) scheme. Mr.Yokoi worked for power and infrastructure project department of Sojitz from 2001 to 2011 during which he was responsible as a project manager for various IPP/IWPP developments (including Barka-3, Sohar-2, Riyadh PP-11 and Fujailah-2 bidding. Currently, Mr. Yokoi is General Manager, infrastructure project department at Sojitz Middle East-Africa office based in Dubai.

List of Other Directorships:

Mr. Yokoi does not have any directorship other than Al Batinah Power.

Name: Mr. Hadi Said Hamaid Al Harthy

Position: Non-Executive Director

Education: Mr. Al Harthy holds a Master’s degree in Business Administration from the University of Strathclyde Business School Glasgow, Scotland UK and a Bachelor’s degree in Business Administration/Finance from the University Of Toledo, Ohio USA.

Experience: Mr. Al Harthy has a total of 32 years of experience in the investment and finance industry out of which he has spent more than 24 years with the CBO. He has been involved in managing traditional and alternative asset investment portfolios both on shore and offshore investments with CBO and in his current role with PASI.

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List of Other Directorships:

In addition to Al Batinah Power, Mr. Al Harthy is also a director of Oman National Investment Development Company previously known as National Investment Fund Company (NIFCO) and Iskan Oman Investment Company.

Post-IPO Board Composition

As per the SHA, after the IPO transaction period, Al Batinah Power shall be managed by a Board comprising eleven (11) members, provided that the majority of the members of the Board shall be non-executive directors. Since the Board of Al Batinah Power currently comprises 9 directors, two additional directors shall be elected to the Board, at an ordinary general meeting of the Shareholders of Al Batinah Power, to be convened as soon as reasonably practicable after the conclusion of the IPO in accordance with the provisions of the CCL and the Articles.

Al Batinah Power intends to have a Board that complies with applicable CMA and CCL requirements, including the requirement for Independent Directors and Non-Executive Directors, which represents the interests of all Shareholders, including those who purchase Offer Shares and also intends to have a Board after the IPO that complies with the provisions of Article 2 of the Ministerial Decision No. 137/2002.

Appointment of the Board

The Board will be elected by the general meeting of the Shareholders by direct secret ballot. Each Shareholder shall have a number of votes equal to that of the Shares held by him. A Shareholder shall have the right to use the entirety of his votes in support of one nominee or divide his Shares among other nominees of his choice through the voting card. It follows from that that the total number of votes given to the nominees by one Shareholder must not exceed the total number of shares owned by him. The proposed Directors who receive the most votes in the ballot shall be declared elected.

Subject to Article 95 of the CCL, and without prejudice to the Articles, nominees to the membership of the Board must:

be of good conduct and sound reputation;

be at least 25 years old;

not be unable to settle indebtedness to Al Batinah Power;

not be declared insolvent or bankrupt unless the state of insolvency or bankruptcy has ceased pursuant to the law;

not be convicted of a felony or dishonourable crime unless he has been discharged;

not be a member or a representative of a juristic person in more than four public joint stock companies based in Oman once appointed to the Board in question;

be authorised to nominate himself for Board membership by the juristic person if he is nominated with such capacity;

present an acknowledgement which contains a statement of the number of his Shares if he is a Shareholder and that he will not dispose of them to the extent that he will be deprived of his status as a Shareholder, throughout the term of his office.

Without any prejudice to the regulations of the CCL mentioned above, the following conditions will be fulfilled while forming the Board:

the Board will be comprised of a majority of Non-Executive Directors;

a minimum of one-third of the total Board (subject to a minimum of three) will be composed of Independent Directors in accordance with the rules and conditions issued by the CMA, from time to time;

a juristic Shareholder will not be represented by more than one representative on the Board; and

the roles of CEO and Chairman will not be combined.

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If a member of the Board ceases to meet any of the conditions necessary for membership of the Board, he/she must inform the Board and his/her place will be considered vacant from the date of receipt of that information; otherwise, his/her membership will terminate from the date Al Batinah Power finds out this information, without prejudice to his/her liability in accordance with law, and his/her place will be filled in accordance with the provisions of Article 98 of the CCL.

The Board of Directors will elect a Chairman and a Deputy Chairman from its members. The Deputy Chairman will officiate as Chairman when the latter is absent. The Chairman of the Board of Directors must implement the resolutions of the Board of Directors and must conduct the regular business of Al Batinah Power under the supervision and control of the Board of Directors in accordance with the authority specified in the Articles and Al Batinah Power’s internal regulations.

Role of the Board

The primary role of the Board of Directors is to provide entrepreneurial leadership to Al Batinah Power within a framework of prudent and effective controls that enable risk to be properly assessed and managed.

Powers of the Board

The Board has full authority to perform all acts required to manage Al Batinah Power in accordance with its objectives and with the primary objective of creating value for the Shareholders. This authority is not limited or restricted except as provided by applicable law, by the Articles or by a resolution of the Shareholders. The day-to-day management of Al Batinah Power is performed by Al Batinah Power’s Management, as described in subsequent paragraphs contained in this Chapter.

Some of the principal functions of the Board include:

to approve the Company’s commercial and financial policies, together with its estimated budget, with a view to achieving the objects of the Company and to maintain and promote the rights of its Shareholders;

to develop, review and update necessary plans from time to time in order to put into operation the Company’s objectives and carry out its activities in light of the purpose underlying its establishment;

to supervise the performance of the executive management and to ensure that the work proceeds in a manner which achieves the Company’s objectives in light of the purpose underlying its establishment;

to appoint the chief executive officer and chief financial officer;

to approve the financial statements related to the Company’s business and work results as submitted by the executive management to the Board quarterly, in a way which reflects the true financial position of the Company;

to include in the annual report presented to the annual OGM of the Shareholders the reasons which justify the ability of the Company to pursue its specified activities and the achievement of its objectives;

to appoint a secretary to the Board in its first meeting and to hold four meetings per annum provided that a maximum period of four months should lapse between each two consecutive meetings; and

to include in the financial statements a full statement of all amounts which a Director may have received during the course of each year, including money paid to Directors in their capacity as employees of the Company.

The Board must not perform the following acts unless expressly authorised to do so by the Articles or by a resolution of the general meeting:

make donations, except donations required by the business wherever they are small and customary amounts;

sell all or a substantial part of Al Batinah Power’s assets;

pledge or mortgage the assets of Al Batinah Power, except to secure debts of Al Batinah Power incurred in the ordinary course of Al Batinah Power’s business; or

guarantee debts of third parties, except guarantees made in the ordinary course of business for the sake of achieving Al Batinah Power’s objectives.

Al Batinah Power will be bound by all acts performed by its Board, its Chairman, its CEO and all other senior

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management (if any), as long as they act in the name of Al Batinah Power and within the scope of their powers.

The Board, in cases other than the distribution of dividends and approving the balance sheet, profit and loss account, and reports of the audit committee and auditors, may pass resolutions without the need to convene a meeting of the Board of Directors if all members of the Board approve the same in writing.

Pursuant to Article 107 of the CCL, Article 64 of the CML and Article 301 of the Executive Regulations, it is not permitted for any member of the Board or senior management to utilise the information that reaches them in the capacity of their positions or jobs to gain any benefit for themselves or their minor children or for any of their relatives to the fourth degree as a result of transactions in the Shares. It is also not permitted for any member of the Board or senior management who has a direct or indirect interest in any authority that is involved in activities which are aimed at influencing the price of Shares issued by Al Batinah Power.

This restriction is explained in the chapter relating to “Insider Trading” regulations contained in the Executive Regulations, which:

define who an insider is (as any person who is in a position to have access to undisclosed material information and includes directors, executive management and any person who may have obtained such information as a consequence of his employment or family relationships or otherwise); and

impose reporting obligations on issuers with respect to the list of directors, executive management and their spouses and relatives of the first degree and any amendments in such list.

Insider trading is punishable by fines and imprisonment under the CCL, the CML and the Executive Regulations.

A member of the Board or senior management or other related party of Al Batinah Power must not have any direct or indirect interest in the transactions or contracts concluded by Al Batinah Power for its account, except those concluded in accordance with the rules and regulations of the CMA.

The members of the Board will be liable to Al Batinah Power, the Shareholders and third parties for damages caused by their acts in violation of applicable law and their acts which fall beyond the scope of their powers, or by any fraud or negligence in the performance of their duties or by their failure to act prudently under certain circumstances.

It is not permitted to file a lawsuit against the members of the Board or their heirs regarding the works they have done while discharging their duties, unless the case is filed within five years from the earlier of (i) the date of the act or omission forming the basis of the complaint; or (ii) the date of the general meeting at which the Board submitted the accounts of Al Batinah Power for the period including the act or the shortcoming which is the reason for the complaint. This period will not apply to suits filed by the CMA.

Remuneration of the Board

The OGM will determine the annual remuneration and sitting fees of the Chairman and the members of the Board at not more than 5 per cent of the net annual profits of Al Batinah Power after providing for taxation and deducting the legal and optional reserves in accordance with Article 106 of the CCL and setting aside or distributing the dividends to Shareholders at not less than 5 per cent of the net profits. The maximum total over-all limit on the entire remuneration and sitting fees paid by Al Batinah Power will be OMR 200,000, with a sub-ceiling of OMR 10,000 as a sitting fee for each Director per annum. Where Al Batinah Power makes losses or less profit to the extent that setting aside or distributing dividends to the Shareholders is not possible, remuneration and sitting fees will be determined in accordance with the rules issued by the CMA. The remuneration will be distributed amongst the members of the Board in such proportions and manner as they, by agreement, may determine, failing which the remuneration will be divided equally among the Board. A member of the Board will be eligible for compensation for his services if he is assigned a job or travels or does something related to Al Batinah Power’s work.

Board Committees

In order to assist the Board in performing its obligations, the Board may form committees to advise it and make recommendations on certain matters. The Board has constituted an audit committee comprising 3 directors. The Board may establish other committees from time to time.

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Audit committee

The members of the audit committee are:

Mr. P. Ananthan

Mr. Guillaume Louis Leon Baudet

Mr. Hachiman Yokoi

The role of the audit committee involves:

Considering the name of the auditor in the context of their independence (particularly with reference to any other non-audit services), fee and terms of engagement, and recommending the auditors to the board for appointment.

Reviewing the audit plan and results of the audit.

Implementing appropriate systems to check financial fraud and ensure the fairness of financial statements.

Oversight of the internal audit function.

Oversight of the adequacy of the internal control systems.

Oversight of financial statements in general including the review of annual and quarterly financial statements before issue, qualifications contained in draft financial statements, and discussions of accounting principles therein and changes in accounting standards adopted by the Company.

Serving as a channel of communication for the Board with the external and internal auditors.

Reviewing risk management policies.

Reviewing proposed related party transactions and making suitable recommendations to the Board.

The audit committee shall comprise at least three non-executive directors, the majority of whom must be independent directors. At least one of the members should have financial and accounting expertise. The audit committee will also be responsible for recommending the appointment and remuneration of a suitably qualified and experienced person for the position of internal audit manager of the Company. Such person will be charged with responsibility for the following:

Developing the internal audit strategy for the Company.

Auditing operations and financial statements of the Company.

Ensuring the Company’s compliance with laws and regulations applicable to the Company.

Preparing periodic reports to the Board with respect to the adequacy and effectiveness of the Company’s system of internal administrative, accounting and financing controls and on other issues on which the internal audit manager is requested to report by the audit committee of the Board.

Senior Management Team

The current composition of the senior management team of Al Batinah Power is as follows:

Name Position

Mr. Jurgen De Vyt Chief Executive Officer

Mr. Mitsuo Nakamoto Chief Financial Officer

Mr. Naveen Kumar Technical Manager

Mr. Daraius Basu Finance Manager

Biographical Information of the Senior Management Team

Name: Jurgen De Vyt

Position: Chief Executive Officer

Year of Joining: 2014

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Education: Master’s degree in Business Administration (Executive Management) from the Vlerick Leuven Ghent Management School and a Master’s degree in Electrical Engineering.

Experience: Mr. De Vyt joined Al Batinah Power in January 2014. He has over 22 years of experience in the management of major, international projects in industry, infrastructure and power sectors. Since he joined the GDF SUEZ group in 1991, he has been in charge of multicultural teams responsible for the realization of projects in Europe and Northern Africa. Between 2003 till 2006, Mr. De Vyt was the project director for the Sonatrach Gazoduc renovation project in Algeria. From 2007 to 2008, Mr. De Vyt was in charge of business development for renewable energy projects in Belgium and from 2008 till 2013, Mr. De Vyt worked on a new 800MW power plant in northern Germany, responsible for complex organisational and technical matters.

Name: Mitsuo Nakamoto

Position: Chief Financial Officer

Year of Joining: 2010

Education: Bachelor’s degree in Business Administration from the Yokohama National University.

Experience: Mr. Nakamoto joined Al Batinah Power in September 2010. Mr.Nakamoto has more than 20 years of experience in the energy infrastructure industry. Since joining Sojitz in 1994, he has been involved in development of various infrastructure projects in Japan and overseas. From 2006 till 2010, he was the chief financial officer in Phu My 3 IPP project (715 MW, gas fired) which has been operating since 2004 in southern part of Vietnam.

Name: Naveen Kumar

Position: Technical Manager (services provided pursuant to the services and cost sharing agreement entered into by Al Batinah Power with Al Suwadi Power)

Year of Joining: 2011

Education: Bachelors Degree in Mechanical Engineering, Bangalore University. Associate Member of the Institution of Engineers – India

Experience: Mr. Kumar joined in March 2011. Earlier he worked with Kharafi National for one and half years as Country Manager - Business Development. Earlier he worked with W.J Towell in Oman for 6 years as Manager - Projects. Before coming to Oman he has worked with Reliance Energy – India as Deputy Manager Operations. He started his career with Chambal Fertilisers – Rajasthan India in 1995. Over this last 19 years, Mr. Naveen has gained multi-functional experience in the field of business development, engineering, operations and maintenance in power, desalination and utilities in India and Middle East

Name: Daraius Basu

Position: Finance Manager (services provided pursuant to the services and cost sharing agreement entered into by Al Batinah Power with Al Suwadi Power)

Year of Joining: 2010

Education: Chartered Accountant from the Institute of Chartered Accountants of India in 1986

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Experience: Mr. Basu joined as a Financial Controller in October 2010, having 27 years of experience with capabilities in statutory & internal audits, corporate accounting & financial operations, project finance management and system & policy development. He has worked with the top tier companies in India and Oman, including the power sector, both from audit and industry perspective.

The operation and maintenance activities are defined under the terms of the O&M contract entered into between Al Batinah Power and STOMO. The services, involving around 33 experienced employees, are being provided by STOMO, the largest provider of operation and maintenance services, in Oman responsible for approximately 3,675 MW of electricity and a net capacity of 270,000m3 per day of potable water.

Brief details of the key members of STOMO active in operation and maintenance activities for the Project are set out below:

Name Position

Mr. Michael Craig Maudsley General Manager

Mr. Michael Mosley Plant Manager

Biographical Information

Name: Michael Craig Maudsley

Position: General Manager

Year of Joining: 2014

Education: Mr. Maudsley is a Chartered Engineer and Fellow of the IMechE, with MBA from Aston Business School-Birmingham.

Experience: Mr. Maudsley has a successful track record of more than 20 years of achievements set against an extensive electricity supply industry background, covering engineering, operations, trading and senior management responsibility in coal, gas and pumped storage power stations in the United Kingdom. He took up the position of General Manager of STOMO in March 2014.

Name: Michael Mosley

Position: Plant Manager

Year of Joining: 2008

Education: Navy Trained, Steam Plant Engineer

Experience: Mr. Mosley joined the GDF SUEZ group in March, 2008 as Operations Manager at Rusail power plant, Oman. In November 2008, Mr.Mosley relocated to Sohar as plant manager of the Sohar 1 power plant. Then in early 2011 Mr.Mosley was entrusted with the added responsibility of acting as the plant manager of the Sohar-2 power plant. Mr.Mosley has experience with geothermal, coal and gas fired units, in both commissioning and commercial operations positions.

Internal Regulations

In accordance with the provisions set out in Article 68 of the CCL, Al Batinah Power is required to lay down internal regulations for regulating its management, business and personnel affairs through its Board of Directors, within one year from the date of registration of the transformation of Al Batinah Power with the Commercial Registrar. Al Batinah Power shall put in place a number of corporate governance processes that meet the CMA’s requirements for an SAOG as mandated by the regulations issued by the CMA dealing with corporate governance and it will make any appropriate changes that are required in light of its transformation to an SAOG. These regulations shall cover at least

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the following, separately from the rules and regulations of the CMA:

Organisational structure of Al Batinah Power, including the responsibilities related to the various posts within Al Batinah Power and the reporting structure/procedures;

Specifying the extent of the authority vested with each post with regard to approval of financial expenditure;

Specifying the allowance for meetings, remuneration and other privileges as prescribed in respect of the members of the Board of Directors and Board committees, and the basis for their calculation;

Policies related to the purchases and service contracts;

The minimum level of information required to be submitted to the Board of Directors;

Authorities, duties and responsibilities relevant to executive management and Board committees;

Policies related to human resources including salaries, appointment, development, training, promotions and termination of services etc., covering other relevant aspects;

Investment policies;

Policies in relation to related party transactions;

Policies and measures for submission of material information in a transparent manner to the CMA and the MSM within the specified time, including a definition of “material information”; and

Any other regulations that the Board may deem necessary to achieve an adequate level of corporate governance.

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Chapter XIX: Rights and Liabilities of Shareholders

Shareholders’ liabilities

The liability of a Shareholder will be limited to payment of the value of the Shares for which the Shareholder has subscribed. The Shareholder will not be liable for the debts of Al Batinah Power except to the limit of the nominal value of the subscribed Shares.

Shareholders’ rights

All the Shares enjoy equal and inherent rights, which, in accordance with the CCL, are:

the right to receive dividends declared in the general meeting;

preferential rights to subscribe for any new Shares, except as provided for under applicable law;

the right to share in the distribution of the proceeds of Al Batinah Power’s surplus assets on liquidation;

the right to transfer Shares in accordance with applicable law;

the right to access Al Batinah Power’s balance sheet, profit and loss account and Shareholders’ register;

the right to be invited to attend the general meeting and vote in such meetings personally or by proxy (each Shareholder will have one vote for each Share owned);

the right to apply for annulment of any resolution made by the general meeting or the Board of Directors if such resolution(s) are contrary to applicable law or the Articles or the internal regulations of Al Batinah Power;

the right to institute legal proceedings on behalf of the Shareholders or Al Batinah Power against the Board of Directors or the auditors of Al Batinah Power; and

the right to approach the CMA (provided that the move is supported by Shareholders who own at least 5 per cent of the Shares), to request the CMA to exercise its authority to suspend resolutions of the general meeting which are made in favour of a certain category of Shareholders or against a certain category of Shareholders, or in the interest of the members of the Board of Directors or others.

Reports and statements

The Board shall prepare unaudited quarterly financial statements for the first, second and third quarter of each financial year. It shall also prepare an annual report within two months from the end of each financial year, comprising the audited balance sheet, profit and loss statement, cash flow statement, changes in shareholder’s equity, report of the Board of Directors, report on the discussions held by the Board and their analysis and report on the organisation and management of Al Batinah Power. These statements should be disclosed at least two weeks prior to the OGM through the electronic transmission system on the MSM website.

The unaudited quarterly financial statements shall be forwarded to the information centre of the MSM within thirty days from the end of each quarter, or any other legal period prescribed by the disclosure rules and conditions issued by CMA, through the private electronic transmission system of the MSM’s information centre. The said centre shall also be provided with two copies duly endorsed by the Board of Directors.

Ordinary General Meetings

The OGM meeting shall be held, at least once in every year during the three (3) months following end of Al Batinah Power’s Financial Year, at such venue, day and time as incorporated in the notice of the meeting. The Board shall establish the agenda of the OGM. If the meeting is convened by the auditors, the agenda shall then be established by them. The Board, or the auditors if necessary, shall include in the agenda any proposal put forward by Shareholders who represent more than 10 per cent of the Issued and Paid Up Share Capital of Al Batinah Power provided that such proposal is submitted for inclusion in the agenda at least one month before the date of the meeting. The resolutions of the OGM shall not be valid unless the meeting is attended by Shareholders or their proxies who represent at least half

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of the Issued and Paid Up Share Capital of Al Batinah Power. If such a quorum is not formed, a second meeting shall be called to discuss the same agenda. The second OGM shall be notified to the Shareholders in the same manner as the first meeting, at least one week prior to the date set for the second meeting. The resolution of the meeting shall be valid regardless of the number of shares represented, provided that such meeting is held within one month from the date of the first meeting. The resolution of the OGM shall be adopted by simple majority of votes cast. The agenda of the annual OGM shall include the following:

consideration and approval of the Boards’ report;

consideration of the auditors’ report and approval of the balance sheet and the profit and loss account;

declaration of dividend distribution, provided that the dividends may be declared only out of net profits or out of special reserves and only if the requirements of Article 106 of the CCL have been met;

election of the Board members if the term of office of one or more Board members has expired or if there is a vacant position on the Board;

consideration and approval of the sitting fees of the members of the Board and its sub-committees (if any);

consideration of the annual remuneration (if any) for the members of the Board of Directors for the previous financial year;

disclosure of any related party transactions, which were entered into by the Company during the previous financial year (if any)’

notice of any related party transactions that are envisaged during the present financial year (if any); and

appointment of auditors for the next financial year, if for any reason the Company has resolved to change Auditors, and the determination of their fees.

Extraordinary General Meetings

An EGM will be convened to decide on issues such as:

a reduction or increase in the authorised share capital of Al Batinah Power;

the dissolution, liquidation or merger of Al Batinah Power;

the sale of Al Batinah Power’s business or its disposal in any form or manner;

an amendment to the Articles; and

the issue of negotiable bonds by public subscription or private placement.

The resolutions of the EGM shall not be valid unless the meeting is attended by Shareholders or proxies representing at least three quarters of Al Batinah Power’s Issued and Paid-Up Share Capital. Failing such a quorum, a second meeting shall be convened to discuss the same agenda. The Shareholders shall be notified of the second EGM in the same manner as the first EGM, at least two weeks prior to the date set for the second meeting.

The resolutions of the second EGM shall be valid if the meeting is attended by Shareholders or proxies representing more than half of Al Batinah Power’s Issued and Paid Up Share Capital, provided such meeting is held within six weeks of the date of the first EGM. The resolutions of the EGM shall be adopted by a majority of three quarters of the votes cast in respect of a certain resolution, provided such resolution must receive votes in favour representing more than fifty per cent of Al Batinah Power’s Issued and Paid-Up Share Capital.

Any shareholder or any interested party may refer to the primary commercial court within five years from the date on which the meeting was held, to decide on nullification of any decision if taken during a general meeting in violation of the CCL, the provisions of the Articles, the company’s internal regulations, or through deceit or misuse of authority.

General restrictions on transfer of ownership of the Shares

The shareholding of each Shareholder may not exceed the maximum limit prescribed and provided for in the Articles, the CCL and the Capital Market Law respectively, unless the necessary approvals are secured.

Any person whose shareholding, along with his minor children’s shareholding, reaches 10 per cent or more of Al

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Batinah Power’s Issued and Paid-Up Share Capital, is required to advise the CMA of the same in writing. Further, the Shareholder must inform the CMA in writing of any transaction or dealing which leads to any change in this percentage immediately after it happens.

No single person or related person up to second degree may hold 25 per cent or more of the shares of a public joint stock company, save in accordance with the rules issued by the CMA on the subject.

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Chapter XX: Market Information

Background

The MSM was established on 21 June 1988 by Royal Decree 53/88 and is the only stock exchange in Oman. Subsequently, on 9 November 1998, Royal Decree 80/98 promulgating the Capital Market Law established the CMA as regulator of the stock exchange. The MSM is a governmental entity subject to the supervision of the CMA. The CMA has issued a Code of Corporate Governance for companies listed on the MSM, which was most recently amended in October 2012.

The MSM Index was established in 1992 with a base date of June 1990. The number of companies included in the index sample has increased over time, and currently stands at 30 companies.

Listing Requirements

Prior to applying for listing on the MSM, a company is required to obtain the approval of the CMA and the General Manager of the MSM. The applicant is required to submit a listing application to the MSM within one month from the date of registration along with the following documents and information:

certificate of commercial registration;

list of authorised signatories and specimens of their signatures;

copies of the company’s memorandum and articles of association;

the prospectus relating to the offering;

an attested copy of the minutes of the constitutive general meeting; and

any additional requirements of the CMA.

Reporting Requirements

Each listed company must, amongst other things:

prepare quarterly unaudited financial statements for the first, second and third quarters of the financial year in the prescribed form within 30 days from the end of the quarter (45 days for those with subsidiaries) and disclose the same immediately after approval by the Board;

the quarterly unaudited financial statements referred to in the previous paragraph would include total sales or revenues, sales costs or total expenses, net profit after deduction of tax and any other items required by CMA;

prepare annual audited financial statements in accordance with IFRS and file the same to the CMA within two months from the end of the financial year or 14 days prior to the general meeting of the company;

immediately inform the CMA in the event of, amongst other things: a change of name or address; amendment to its memorandum and/or articles of association of the company; a change of any director or member of the management team of the company, giving reasons; closure of any branch or termination of dealing with any agent; change of external auditor of the company; any attachment or mortgage on the company’s assets; any unexpected losses affecting the financial position of the company, giving reasons; and any proceedings instituted by or against the company that may have a material impact on the financial position of the company.

Clearance and Settlement

MCDC is responsible for maintaining shareholder records and providing custody services for securities and investment funds listed on the MSM, bonds traded on the MSM, and other securities issued by the Government. All transactions in the MSM are settled on a book-entry clearing basis on T+3.

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Settlement Method

The MSM has adopted a multilateral netting system under which transactions are cleared and settled on a net basis by a broker. After the clearing of the transactions by the MSM, the transfers of securities ownership is done through the book-entry system which is operated by the MSM.

Settlement Procedure

At the end of each trading session, the amount of securities and money to be delivered and/or paid on the settlement day is determined through the netting process and reflected in the MCDC settlement report. Transactions are finally settled on T+3 in the way of delivery against payment. Ownership of purchased securities are transferred among investors’ trading accounts and the cash settlement is done among brokers through the designated settlement bank.

Trading

Trading in securities is carried out on the MSM over five working days per week, excluding official holidays, and for not less than two hours a day.

The MSM has an electronic trading system which:

automatically blocks purchase orders which exceed the limits of the broker’s bank guarantee or reach the limit of the special order provided by law; and

enables all companies and entities whose securities are listed in the MSM, and their registrars, to view the register of their own shares.

Before an investor can trade in securities on the MSM, it needs to apply for and obtain a shareholder’s number from the MCDC, the issuance of which automatically triggers the creation of an investor account for the custody of securities traded in the MSM. Each investor can be allocated a shareholder’s number, only. Once the investor has received its shareholder’s number, the MSM allocates the investor a trading account with a licensed broker. Individual investors who seek to trade securities on the MSM need to maintain a direct securities account with the MCDC and a trading account with an accredited broker.

Investors must establish a trading account with an MSM-accredited broker before they can commence trading. When an account is opened, the applicant becomes an investor participant and is entitled to issue instructions for trading in securities. Trades in all securities are settled in dematerialised form.

The shareholder’s number identifies the investor account at the MCDC used to transfer shares to and from the account each time the investor buys or sells shares. When the investor intends to sell shares, he is required to transfer the quantities of shares to his broker trading account.

The process of securities trading starts when an investor formally requests his broker to purchase or sell a security, according to specific conditions.

An investor is responsible for all costs associated with trading securities and is required to pay, upon request of his broker, all the amounts necessary to cover his transactions, in particular the purchasing price and commissions or other fees required by the MSM.

Trading System

The MSM operates on an automated screen-based and order-driven trading system which matches buying and selling orders of the investors. Investors can place their orders with the MSM accredited brokers, who enter these orders into the trading system. Then, the system automatically matches buy and sell orders of a particular security based on the price and quantity requirements.

The trading system also generates and displays details of current and historical trading activity, including prices, volumes traded and outstanding buy and sell orders.

An off-market trading mechanism also exists, known as the ‘special order’ process.

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Trading Sessions

Trading sessions take place from Sunday to Thursday (except public holidays in Oman) as follows:

Time

Pre-Opening Session 09:00 to 10:00

Trading Session 10:00 to 13:00

Closing 13:00

Suspension of Trading

The MSM may temporarily suspend trading of any listed security if there is information or rumour that may affect the price of the security or in case the company restructures its capital or splits its shares. Trading of the securities of any company shall also be suspended if the company is dissolved or liquidated. In certain circumstances the company may request a suspension of trading.

Trading Performance

The table below shows the number of listed companies, the number of traded shares, the value of traded shares and the number of executed transactions as at 31 December for each of the years indicated.

2011 2012 2013

Number of listed companies 114 115 118

Number of traded shares (millions) 2,366 4,319 7,949

Value of traded shares (OMR millions) 981 1,025 2,208

Number of executed transactions (thousands) 359,596 328,809 455,496

Market capitalisation (OMR millions) 10,342 11,665 13,038

Source: MSM Annual Statistics Data

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Chapter XXI: Subscription Conditions and Procedures

Offer Structure

Category I Investors Category II Investors

No. of Offer Shares 153,536,891 82,673,710

Percentage of Offer Shares 65 35

Basis of Allotment Pro-rata Pro-rata

Minimum Subscription 1,000 Shares and thereafter in multiples of 100 Shares

600,100

Maximum Subscription 600,000 23,621,000

Terms of Payment of Application Money 100% on application 100% on application

Eligibility for the Subscription of Offer Shares

The Offer will be open to Omani and non-Omani individuals and juristic persons. All GCC individuals and juristic persons are treated as Omani individuals and juristic persons for the purpose of owning shares in Omani companies.

No single person or related person up to a second degree can hold 25 per cent. or more of the shares of a public joint stock company, except with the explicit approval of the CMA.

Prohibitions with Regard to the Applications for Subscription

In accordance with the Capital Market Law, the following Applicants shall not be permitted to subscribe to the Offer:

Sole proprietorship establishments: The owners of sole proprietorship establishments may only submit Applications in their personal names.

Trust accounts: Customers registered under trust accounts may only submit Applications in their personal names.

Multiple Applications: An Applicant may not submit more than one Application.

Joint Applications: Applicants may not submit applications in the name of more than one individual (including on behalf of legal heirs).

All such Applications will be rejected without contacting the Applicant.

Subscription on Behalf of Minor Children

For the purpose of this Offer, any person under 18 years of age on the date of submission of an Application will be defined as a minor.

Only a father may subscribe on behalf of his minor children.

If an Application is made on behalf of a minor by any person other than the minor’s father, the person submitting the Application will be required to attach a valid Shariah (Legal) Power of Attorney issued by the competent authorities authorising him or her to deal in the funds of the minor through sale, purchase and investment.

Applicant’s Number with MCDC

Any Applicant who subscribes for the Offer Shares must have an account and Investor Number with the MCDC. Any Applicant may apply to obtain an Investor Number and open an account by completing the MCDC application form.This may be obtained from the MCDC’s Head Office or its website at www.csdoman.co.om, or from brokerage companies licensed by the MSM. The completed form may be submitted by an Applicant through any of the following channels:

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At the head office of the MCDC, at P.O. Box 952, Postal Code 112, Ruwi, Muscat, Sultanate of Oman.

At the branch of the MSM based in Salalah, Oman, Tel:+968 23299822, Fax:+968 23299833.

At the office of any brokerage company licensed by the MSM.

By sending a facsimile to MCDC at +968 24817491.

By opening an account through the MCDC website at www.csdoman.co.om.

In order to open an account with the MCDC, a juristic person will be required to furnish a copy of its constitutional documents, in the form prescribed by the MCDC, along with a completed MCDC application form in order to open an account and receive an Investor Number.

Applicants who already hold accounts with the MCDC are advised, before the Offer, to confirm their details as noted in the Application. Applicants may update their particulars through any of the channels mentioned above.

All correspondence including allocation notices and dividend cheques will be sent to Applicant’s address as recorded at the MCDC. Applicants should ensure that their addresses as provided to the MCDC are correct and kept up-to-date.

Each Applicant should secure from the MCDC its Investor Number as the Investor Number will be required in order to complete the Application. Each Applicant is responsible for ensuring that the Investor Number set out in their Application is correct. Applications not bearing the correct Investor Number will be rejected without contacting the Applicant.

For more information on these procedures, Applicants should contact the MCDC:

Muscat Clearing & Depository Co., SAOC P.O. Box 952, Postal Code 112, Ruwi, Muscat, Sultanate of Oman Tel: +968 2482 2222; Fax: +968 2481 7491 www.csdoman.co.om

Offer Period

The Offer Period will commence on 11 May 2014 and end on 9 June 2014 with the end of the official working hours of the Collecting Banks.

Allocation in Case of Oversubscription

In case of oversubscription, the Offer shall be split among the eligible investor groups, in the following portions:

Category I Investors: 153,536,891 Offer Shares, being 65 per cent. of the Offer, for individuals and juristic persons applying for a maximum of 600,000 Offer Shares. Distribution of Offer Shares shall be on a pro-rata basis.

Category II Investors: 82,673,710 Offer Shares, being 35 per cent. of the Offer, for individuals and juristic persons applying for more than 600,100 Offer Shares. Distribution of Offer Shares shall be on a pro-rata basis.

In accordance with Article 65 of the CCL, a minimum number of Offer Shares may be distributed equally among subscribers, taking into consideration small subscribers and the remaining Offer Shares shall be allocated on a pro-rata basis.

Allocation in Case of Undersubscription

In case of undersubscription, the Offer Shares to the extent of undersubscription will be available to EHC as per its share option under the PFA. In case the EHC does not exercise its share option, the Selling Shareholders are required to re-offer the unsubscribed Shares annually thereafter for three consecutive years.

Any undersubscription in any category shall be carried to the other category. The final allocation on the above basis will be decided by the Financial Adviser & Issue Manager and Al Batinah Power in consultation with the CMA.

Minimum Limit of Public Subscription

The minimum number of Offer Shares for Category I Investors will be 1,000 Offer Shares and in multiples of 100 Offer Shares thereafter. For Category II Investors, it will be 600,100 Offer Shares and in multiples of 100 Offer Shares thereafter.

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Maximum Limit of Public Subscription

The maximum number of Offer Shares that can be applied for by a Category I Investor is 600,000 Offer Shares. The maximum limit for a Category II investor is 10 per cent. of the total Offer size which equates to 23,621,000 Offer Shares. It is not permissible for any Applicant to subscribe for more than this amount.

For the purpose of calculation of this percentage, the application for the subscription of the father (or guardian) shall be merged with the applications of the minor children. If the volume of the Offer Shares subscribed exceeds the said percentage, the Offer Shares registered under each application shall be reduced proportionately before making the allotment.

None of Al Batinah Power and the Financial Adviser & Issue Manager is liable for any changes in applicable laws or regulations that occur after the date of this Prospectus. Applicants are advised to make their own independent investigations to ensure that their Applications comply with prevailing laws and regulations.

Terms of Payment

The Selling Shareholders will open an escrow account entitled the “Al Batinah Power IPO” account with each of the Collecting Banks for the collection of the Application Money.

This account will be managed by each Collecting Bank, which, after allotment and refunds, will transfer the balances in such account to the Issue Manager.

Each Applicant can pay by cash, draw a cheque or demand draft or instruct an account transfer for the amount payable at the time of submission of the Application and/or on allocation.

Particulars of the Bank Account of the Investor

Each Applicant is required to furnish the particulars of its bank account (registered in the name of the Applicant). The Applicant must not use the bank account number of any other person except in the case of minor children only.

If the bank account of the Applicant is registered with a bank other than one of the Collecting Banks, the Applicant will be required to submit a document to confirm the details of the bank account particulars as provided in the Application.This can be done by submitting any document from the bank of the Applicant that states the account number and name of the account holder. Documents that may be accepted include account statements or a letter or any document issued by the bank confirming this information. The Applicant is responsible for ensuring that the evidence submitted is legible and contains the required information.The Applicant is not obliged to submit any evidence with regard to the accuracy of its bank account if it is subscribing through the Collecting Bank where it maintains its account. In this case, the bank will be required to verify and confirm the correctness of the Applicant’s account through its own system and procedures or through the evidence submitted to it by the Applicant.

All Category II Investors who have an account with a bank will be required to submit a document to confirm the details of the bank account particulars as provided in the Application.This can be done by submitting any document from the bank of the Applicant that states the account number and name of the account holder. Documents that may be accepted include account statements or a letter or any document issued by the bank confirming this information.The Applicant is responsible for ensuring that the evidence submitted is legible and contains the required information.

In accordance with the instructions of the CMA, the details of the bank account will be listed in the records of the MCDC for transferring any refund as well as for crediting the dividends distributed by the companies listed on the MSM. For Applicants who already have bank accounts registered with the MCDC the account mentioned in the Application will be used for the transfer of refunds only.

Any Application containing the bank account number of a person other than the Applicant will be rejected, with the exception of Applications made on behalf of minors that contain bank accounts particulars of their fathers.

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Documentation Required

Submission of a document confirming the accuracy of the bank account number provided in the Application is only required where the bank account is registered with a bank that is not the Collecting Bank.

A copy of a valid power of attorney duly endorsed by the competent legal authorities must be included in the event the subscription is on behalf of another person (with the exception of a subscription made by a father on behalf of his minor children).

In case of applications by juristic persons (non-individuals) which are signed by a person in his or her capacity as an authorised signatory, a copy of adequate and valid documentation should be attached.

Mode of Application

The Applicant will be responsible for furnishing all particulars and will ensure the correctness and validity of the information set out in the Application. The Applicant will be required, before completing the Application, to carefully read this Prospectus, including the conditions and procedures governing the subscription.

The Applicant will be required to fill in the Application and furnish copies of all particulars as noted on the Application.

The Applicant will be required to submit the Application to one of the Collecting Banks, together with the Application Money and the documents in support of the Application.

Cheque or demand draft for the Application Money will be in favour of “Al Batinah Power IPO”.

Banks Receiving the Applications

Applications will be accepted by any one of the Collecting Banks during official bank hours only. The Collecting Bank receiving the subscription is required to accept the Application after confirmation of compliance with the procedures set out in this Prospectus.The Collecting Bank must instruct the Applicants to comply and fulfil any requirements set out in the Application.

Applicants must submit an Application to one of the Collecting Banks on or before the Offer Closing Date.The Collecting Bank shall refuse any Application received after the official working hours on the Offer Closing Date.

Payment into Escrow Account

All Investors will, with the submission of the Application, pay by cash, draw a cheque or demand draft or instruct an account transfer for the amount payable at the time of submission of the Application and/or on allocation in favour of “Al Batinah Power IPO”.

Where an Investor has been allocated fewer Offer Shares than indicated in the Application or at a price lower than the price at which the Application money was calculated, the excess amount, if any, paid on Application, will be refunded to the Investor from the escrow account of “Al Batinah Power IPO”.

Acceptance of the Applications

The Collecting Banks willnot accept Applications in the following circumstances:

If the Application does not bear the signature of the Applicant.

If the Application Money is not paid by the Applicant in accordance with the conditions set out in this Prospectus.

If the Application Money is paid by cheque and the cheque is dishonoured for whatever reason.

If the Application does not include the Applicant’s Investor Number registered with the MCDC.

If the Application is submitted in joint names.

If the Applicant is a sole proprietorship or trust account.

If the Investor Number furnished in the Application is incorrect.

If the Applicant submits more than one Application in the same name, all of them will be rejected.

If the supporting documents are not enclosed with the Application.

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If the Application does not contain all the particulars of the bank account of the Applicant.

If the particulars of the bank account provided in the Application are found to be incorrect or not relevant to the Applicant, with the exception of Applications submitted in the names of minor children, who are allowed to make use of the particulars of the bank accounts held by their fathers.

If the power of attorney is not attached to the Application in respect of an Applicant who subscribes on behalf of another person (with the exception of the fathers who subscribe on behalf of their minor children).

If the Application does not comply with the legal requirements as provided for in this Prospectus.

If the Collecting Bank receives an Application that does not comply with the procedures set out in this Prospectus, due effort will be taken to contact the Applicant so that the mistake may be corrected.If the Applicant does not rectify the Application within a specified period, the Collecting Bank will return the Application together with the Application Money to the Applicant.

Refusal of Applications

The Financial Adviser & Issue Manager may reject any Application under any of the conditions referred to above, subject to securing the approval of the CMA and submission of a comprehensive report furnishing the details of the Applications that are rejected and the reasons behind the rejections.

Enquiry and Complaints

Any Applicant who intends to seek clarification or file complaints with regard to issues related to the allotment or rejected Applications or refund of the Application Money in excess of the subscription, may contact the branch of the Collecting Bank where the subscription was made. In case there is no response from the Collecting Bank, the Applicant may contact the person whose details are set out below:

Bank Contact Name Postal Address Contact Details

Bank Muscat SAOG Loay Al Lawati P.O. 134, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2476 8215Fax: +968 2478 7764Email: loaym@bankmuscat.com

Bank Dhofar SAOG Hussain Iqbal Ali Al Lawati P.O. 1507, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2479 0466 (Ext. 423)Fax: +968 2478 4428Email: hialawati@bankdhofar.com

National Bank of Oman SAOG

Hussain Ali Abdullah Al Lawati

P.O. 751, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2477 8757Fax: +968 2477 8993Email: nbobackoffice@nbo.co.om

Oman Arab Bank SAOC

Zaydoon A. Qarmool P.O. 2010, P.C. 112, Ruwi, Sultanate of Oman

Tel: +968 2482 7304Fax: +968 2482 7367Email: zaydoon@oabinvest.com

Bank Sohar SAOG Iman Shahab Al Zadjali P.O. 44, P.C. 114, Sultanate of Oman

Tel: +968 2476 1938Fax: +968 2476 1741Email: iman.alzadjali@banksohar.net

Ahli Bank SAOG Arun Bhat P.O. 545, P.C. 116, Sultanate of Oman

Tel: +968 2457 7082Fax: +968 2456 7841Email: arun.bhat@ahlibank-oman.com

If the Collecting Bank fails to resolve the complaint with the Applicant, it will refer the subject matter to the Financial Adviser & Issue Manager and keep the Applicant informed of the progress and development in respect of the subject matter of the dispute.

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Allotment Letters and Refund of Money

The Financial Adviser & Issue Manager will arrange to allot the Offer Shares to Applicants within 15 days after the end of the Offer Period after receiving the approval of the CMA on the basis of allotment.The Financial Adviser & Issue Manager will also refund the excess money to eligible Applicants within 15 days after the end of the Offer Period and after receiving the approval of the CMA.The Financial Adviser & Issue Manager will arrange to send allotment letters to Applicants who have been allotted Shares through MCDC to their addresses registered with the MCDC.

Proposed Timetable

The following table shows the expected time schedule for completion of the subscription procedures:

Procedure Date

Commencement of subscription 11 May 2014

Closing of subscription 9 June 2014

Due date for the Financial Adviser & Issue Manager to receive the subscription data and final registers from the Collecting Banks

16 June 2014

Notification of the CMA of the outcome of the subscription and the proposed allotment 18 June 2014

Approval of the CMA of the proposed allotment 19 June 2014

Commencement of refund and dispatch of the notices regarding allotment 22 June 2014

Listing of the Offer Shares with MSM 23 June 2014

Listing and Trading of the Offer Shares

The Offer Shares will be listed with MSM in accordance with the laws and procedures in force on the date the application is made for the listing and registration.The above listing date is an estimated date and the exact date will be published on the MSM website.

Responsibilities and Obligations

The Financial Adviser & Issue Manager, the Collecting Banks and the MCDC must abide by the responsibilities and obligations set out by the directives and regulations issued by the CMA. The Financial Adviser & Issue Manager and the Collecting Banks must also abide by any other responsibilities that are provided for in the agreements entered into among them and Al Batinah Power and the Selling Shareholders.

The parties concerned will be required to take remedial measures with regard to any liability arising from any negligence committed in the performance of the functions and responsibilities assigned to them.The Financial Adviser & Issue Manager will be the entity responsible before the regulatory authorities for taking suitable steps and measures for redressing such liability.

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Chapter XXII: Financial Statements

Page

Audited Financial Statements for the Year Ended 31 December 2011 ............................................................... 103-126

Audited Financial Statements for the Year Ended 31 December 2012 ............................................................... 127-152

Audited Financial Statements for the Year Ended 31 December 2013 ............................................................... 153-184

Condensed Financial Statements for the Three Months Ended 31 March 2014 ................................................ 185-198

103

Financial Statements

31 December 2011

Contents Page

Report of the Auditors ................................................................................................................................................ 104

Statement of comprehensive income......................................................................................................................... 105

Statement of financial position ................................................................................................................................... 106

Statement of cash flows ............................................................................................................................................. 107

Statement of changes in equity .................................................................................................................................. 108

Notes ................................................................................................................................................................... 109-126

104

INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF

AL BATINAH POWER COMPANY SAOC

Report on the financial statements

We have audited the financial statements of Al Batinah Power Company SAOC (“the Company”), set out on pages 105 to 126, which comprise the statement of financial position as at 31 December 2011, and the statements of comprehensive income, changes in equity and cash flows for the year ended 31 December 2011, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, the disclosure requirements of the Commercial Companies Law of 1974, as amended, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2011, and its financial performance and its cash flows for the year ended 31 December 2011 in accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements

In our opinion, the financial statements of the Company as at and for the year ended 31 December 2011, in all material respects, comply with the Commercial Companies Law of 1974, as amended.

Sd/-________________________

KPMG

105

Statement of comprehensive income

for the year ended 31 December 2011

2011 2011 2010 2010

Notes RO USD RO USD

General and administrative expenses (71,064) (184,823) (35,001) (91,031)

Depreciation 11 (31,231) (81,225) - -

Loss for the year/period (102,295) (266,048) (35,001) (91,031)

Other comprehensive income, net of income tax:

Effective portion of change in fair value of cash flow hedge 15 (23,098,573) (60,074,312) 7,793,753 20,269,840

Total comprehensive income for the year/period (23,200,868) (60,340,360) 7,758,752 20,178,809

The notes on pages 109 to 126 form an integral part of these financial statements.The report of the Auditors is set forth on page 104.

106

Statement of financial position

as at 31 December

Notes 2011 2011 2010 2010

RO USD RO USD

Non-current assets

Furniture and equipment 11 68,780 178,883 32,010 83,251

Capital work in progress 4 216,348,371 562,674,568 85,351,434 221,980,323

Deferred tax asset 10 &15 2,087,021 5,427,883 - -

Derivative instruments 15 - - 8,856,538 23,033,909

Total non-current assets 218,504,172 568,281,334 94,239,982 245,097,483

Current assets

Inventory 176,552 459,173 - -

Prepaid expenses and other receivables 6 720,508 1,873,883

748,528 1,946,756

Cash and cash equivalents 7 747,942 1,945,233 9,248,632 24,053,659

Total current assets 1,645,002 4,278,289 9,997,160 26,000,415

Total assets 220,149,174 572,559,623 104,237,142 271,097,898

Equity

Share capital 8(a) 500,000 1,300,390 500,000 1,300,390

Accumulated losses (137,296) (357,079) (35,001) (91,031)

Shareholder's fund 362,704 943,311 464,999 1,209,359

Hedging reserve 15& 8(c) (15,304,820) (39,804,472) 7,793,753 20,269,840

Total equity (14,942,116) (38,861,161) 8,258,752 21,479,199

Non-current liabilities

Shareholders loan 13 21,436,398 55,751,360 21,436,398 55,751,360

Equity bridge loan 12 45,414,906 118,114,190 45,304,959 117,828,240

Term loan 5 140,605,156 365,683,111 596,640 1,551,729

Derivative instruments 15 17,391,841 45,232,355 - -

End of service benefits 2,942 7,653 - -

Deferred tax liability 10&15 - - 1,062,785 2,764,069

Total non-current liabilities 224,851,243 584,788,669 68,400,782 177,895,398

Current liabilities

Trade and other payable 9 10,240,047 26,632,115 27,577,608 71,723,301

Total liabilities 235,091,290 611,420,784 95,978,390 249,618,699

Total equity and liabilities 220,149,174 572,559,623 104,237,142 271,097,898

The financial statements were approved and authorised for issue in accordance with a resolution of the Board of Directors on 29 February 2012.

Sd/- Sd/-___________________________ ___________________________ Chairman DirectorThe notes on pages 109 to 126 form an integral part of these financial statements.The report of the Auditors is set forth on page 104.

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Statement of cash flows

for the year ended 31 December

2011 2011 2010 2010

RO USD RO USD

Cash flows from operating activities:

Loss for the year/period (102,295) (266,048) (35,001) (91,031)

Add: depreciation 31,231 81,225 - -

Add: end of service benefits 2,942 7,653 - -

(68,122) (177,170) (35,001) (91,031)

Changes in working capital:

Increase in inventory (176,552) (459,173) - -

Decrease (increase) in trade and other receivables 28,020 72,873 (748,528) (1,946,756)

(Decrease) increase in trade and other payables (17,337,561) (45,091,186) 27,577,608 71,723,301

Net cash (used in) flow from operating activities (17,554,215) (45,654,656) 26,794,079 69,685,514

Cash flows from investing activities:

Addition to property, plant and equipment (68,001) (176,857) (32,010) (83,251)

Addition to capital work in progress (130,996,937) (340,694,245) (85,351,434) (221,980,323)

Net cash used in investing activities (131,064,938) (340,871,102) (85,383,444) (222,063,574)

Cash flows from financing activities:

Proceeds from share capital issued - - 500,000 1,300,390

Proceeds from shareholders loan - - 21,436,398 55,751,360

Proceeds from equity bridge loan 109,947 285,950 45,304,959 117,828,240

Proceeds from term loan 140,008,516 364,131,382 596,640 1,551,729

Net cash flow from financing activities 140,118,463 364,417,332 67,837,997 176,431,719

Net change in cash and cash equivalents (8,500,690) (22,108,426) 9,248,632 24,053,659

Cash and cash equivalents at beginning of the year/period 9,248,632 24,053,659 - -

Cash and cash equivalents at end of the year/period 747,942 1,945,233 9,248,632 24,053,659

The notes on pages 109 to 126 form an integral part of these financial statements.The report of the Auditors is set forth on page 104.

108

Statement of changes in equity

for the year ended 31 December

Share Accumulated Hedgingcapital losses reserve Total

RO RO RO RO

Balance as at 1 January 2011 500,000 (35,001) 7,793,753 8,258,752Total comprehensive loss for the year - (102,295) - (102,295)Other comprehensive income, net of income taxChanges in fair value of cash flow hedge, net of income tax - - (23,098,573) (23,098,573)Total comprehensive income for the year - (102,295) (23,098,573) (23,200,868)At 31 December 2011 500,000 (137,296) (15,304,820) (14,942,116)

USD USD USD USDBalance as at 1 January 2011 1,300,390 (91,031) 20,269,840 21,479,199Total comprehensive loss for the year - (266,048) - (266,048)Other comprehensive income, net of income taxChanges in fair value of cash flow hedge, net of income tax - - (60,074,312) (60,074,312)Total comprehensive income for the year - (266,048) (60,074,312) (60,340,360)At 31 December 2011 1,300,390 (357,079) (39,804,472) (38,861,161)

RO RO RO ROTransactions with owners of the CompanyShare capital issued 500,000 - - 500,000Total comprehensive loss for the period - (35,001) - (35,001)Other comprehensive income, net of income taxChanges in fair value of cash flow hedge, net of income tax - - 7,793,753 7,793,753Total comprehensive income for the year - (35,001) 7,793,753 7,758,752At 31 December 2010 500,000 (35,001) 7,793,753 8,258,752

USD USD USD USDTransactions with owners of the CompanyShare capital issued 1,300,390 - - 1,300,390Total comprehensive loss for the period - (91,031) - (91,031)Other comprehensive income, net of income taxChanges in fair value of cash flow hedge, net of income tax - - 20,269,840 20,269,840Total comprehensive income for the year - (91,031) 20,269,840 20,178,809At 31 December 2010 1,300,390 (91,031) 20,269,840 21,479,199

The notes on pages 109 to 126 form an integral part of these financial statements.The report of the Auditors is set forth on page 104.

109

Notes

(forming part of the financial statements)

1. Legal status and principal activities

Al Batinah Power Company SAOC (the “Company”) is a closed Omani joint stock company registered on 2 August 2010 under the Commercial Companies Law of Oman.

The Company’s principal activities are as follows:

- Design, procurement, construction, commissioning and financing of the Sohar 2 Power Plant (“the Plant”) with a capacity of about 750 MW.

- The full operation and maintenance of the Plant in accordance with good practices throughout the useful life time of the Plant from the Commercial Operation Date (“COD”).

- Making available the demonstrated power capacity.

- Selling the electricity energy delivered to Oman Power & Water Procurement Company SAOC (“OPWP”).

The Company’s issued share capital is owned 46% by Kahrabel FZE, UAE (“Kahrabel”) (a IPR GDF Suez entity), 22% by Multitech LLC (“Multitech”), Oman (a Suhail Bahwan group company), 11% each by Blue Horizon Sohar Power BV (“Sojitz”,a Sojitz Corporation group company) and Shikoku Electric Power Co. Inc, Japan (“Yonden”) and 10% by Public Authority for Social Insurance, Oman (“PASI”), (“together the Founder Shareholders”).

2 Significant agreements

i. Power Purchase Agreement (“PPA”) dated 10 August 2010 with OPWP for a period of 15 years from the scheduled Commercial Operation Date (“COD”).

ii. Natural Gas Sales Agreement (“NGSA”) dated 31 August 2010 with the Ministry of Oil and Gas (“MOG”) for the purchase of natural gas for a period of 15 years from the scheduled COD.

iii. Sub Usufruct Agreement (“SUA”) relating to the Sohar site dated 10 August 2010 with Sohar Industrial Port Co. SAOC (“SIPC”) for grant of exclusive right to use and benefit from the land upto 20 October 2028.

iv. License Agreement related to the Temporary Areas dated 15 August 2010 with the Sohar Industrial Port Co. SAOC for grant of temporary license to use the temporary site upto 20 October 2013.

v. Turnkey Engineering, Procurement and Construction (“EPC”) Contract dated 15 September 2010 with Siemens AG and GS Engineering and Construction Corp. to perform the engineering, procurement and construction of the Plant.

vi. Operation & Maintenance (“O & M”) Agreement with Suez Tractebel Operation and Maintenance Oman LLC (“STOMO”) dated 24 September 2010 for a period of 15 years from COD.

vii. Common Terms Agreement (“CTA”) and Facility Agreements dated 16 September 2010 for long term loans with international and local banks.

viii. First Amendment Agreement to the Common Terms Agreement and Facility Agreements with the parties dated 29 September 2010.

ix. Equity Bridge Loan Agreement (“GDF Suez Equity Bridge Loan Agreement”) dated 16 September 2010 between the Company as the “Borrower”, and KfW IPEX Bank GMBH as the “Original EBL Lender” & “EBL Facility Agent”.

x. Equity Bridge Loan Agreements (“Sojitz and Yonden Equity Bridge Loan Agreement”) dated 16 September 2010 between the Company as the “Borrower”, and Mizuho Corporate Bank Limited as the “Original EBL Lender” and “EBL Facility Agent”. (all the Original EBL Lenders and Original EBL Facility agents together referred to as “EBL Finance Parties”)

xi. Shareholder Loan Agreements (“SHA”) dated 16 September 2010 with Multitech and PASI in respect of the shareholders’ loan (note 13).

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xii. Hedging Agreements for LIBOR Rate Swaps with Credit Agricole Corporate & Investment Bank (dated 5 October 2010), KfW IPEX Bank GMBH (dated 6 October 2010), HSBC Bank Middle East Limited (6 October 2010) and Standard Chartered Bank (dated 19 December 2011).

xiii. Hedging Agreement dated 12 October 2010 with Standard Chartered Bank for USD / Euro exchange rate.

xiv. Performance Bond dated 9 August 2010 issued by Bank Muscat SAOG in favour of OPWP.

xv. EPC Performance Bond issued by Credit Agricole Corporate & Investment Bank in favour of the Company dated 20 September 2010.

xvi. Project Founders’ Agreement (“PFA”) dated 10 August 2010 between Electricity Holding Company and the Founder Shareholders.

xvii. Equity Subscription and Retention Agreement (“ESRA”) dated 16 September 2010 with the Founder Shareholders.

xviii. O & M guarantee dated 24 September 2010 made between GDF Suez cc SCRL, Brussels, as “Guarantor” and the Company as “Beneficiary”.

xix. Seawater Extraction Agreement (“SEA”) dated 10 August 2010 with Majis Industrial Services SAOC for 15 years from COD.

xx. Shareholders Agreement dated 29 November 2010.

xxi. Electrical Connection Agreement dated December 2011 with Oman Electricity Transmission Company S.A.O.C for connection of the Company’s equipment to the transmission system.

xxii. Secondment Services Agreements dated 13 July, 2011 with Kahrabel Operations and Maintenance Oman LLC towards secondment services of the Chief Executive Officer, Chief Financial Officer and HSE Manager.

xxiii. Secondment Services Agreements dated 12 October, 2011 with Tractebel Engineering S.A. Engineering Consultancy (Oman Branch) towards secondment services of the Construction Manager.

Security documents

xxiv. Intercreditor Deed dated 16 September 2010 with The Export-Import Bank of Korea, Credit Agricole Corporate & Investment Bank (as the “Global Facility Agent” and “Offshore Security Trustee”), Bank Muscat SAOG (as the “Onshore Account Bank”) and Others.

xxv. Offshore Deed of Charge and Assignment dated 16 September 2010 with Credit Agricole Corporate & Investment Bank as “Offshore Security Trustee”.

xxvi. Commercial Mortgage over Project Company Assets (including receipt) dated 21 September 2010 between the Company as “Mortgagor”; and Bank Muscat SAOG as “Mortgagee”.

xxvii. Legal Mortgage dated 21 September 2010 between the Company as “Mortgagor”; and Bank Muscat SAOG as “Mortgagee”.

xxviii. Other security documents (direct agreements)

PPA Direct Agreement dated 20 September 2010 between OPWP as the “Buyer”, the Company as “Generator”, Credit Agricole Corporate & Investment Bank as the “Global Facility Agent” and Bank Muscat SAOG as “Onshore Agent”.

NGSA Direct Agreement dated 19 October 2010 between the Government of the Sultanate of Oman represented by the MOG as the “Seller”), the Company as the “Generator”, Credit Agricole Corporate & Investment Bank as the “Offshore Trustee” and Bank Muscat SAOG as the “Onshore Agent”.

O&M Direct Agreement dated 24 September 2010 between STOMO as the “Operator”, GDF Suez cc SCRL as the “O&M Guarantor”, the Company as the “Owner”,and Credit Agricole Corporate & Investment Bank as the “Agent”.

EPC Direct Agreement dated 22 September 2010 between Siemens AG and GS Engineering & Construction

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Corp. as the “EPC Contractor”, the Company as the “Owner”, and Credit Agricole Corporate & Investment Bank as the “Offshore Security Trustee”.

3 Basis of preparation and significant accounting policies

Basis of preparation

a) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards

as issued by the International Accounting Standards Board (“IASB”) and applicable requirements of the Oman Commercial Companies Law of 1974 (as amended).

b) Basis of measurement These financial statements are prepared on historical cost basis except for deferred finance cost which is

measured at amortised cost and certain financial instruments which are measured at fair value.

c) Use of estimates and judgements The preparation of the financial statements in conformity with IFRSs requires Management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in financial valuation of derivative financial instruments.

Significant accounting policies

a) Foreign currency

i) Functional and presentation currency These financial statements are presented in United States Dollars (“USD”), which is the Company’s functional

currency and also in Rial Omani (“RO”). The Omani Rial amounts, which are presented in these financial statements have been translated from the USD amounts at an exchange rate of US $ 1 = RO 0.3845.

ii) Foreign currency transactions Transactions in foreign currencies are translated to the functional currency of the Company at exchange rates at

the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the reporting period.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences arising on the retranslation of available for sale equity instruments or qualifying cash flow hedges, which are recognised in other comprehensive income. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

b) Financial instruments

i) Non derivative financial instrument Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans

and borrowings, and trade and other payables. Cash and cash equivalents comprise cash balances, demand deposits, fixed deposits and term deposits with original maturity not greater than three months. Bank overdrafts

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that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.

ii) Derivative financial instruments, including hedge accounting The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.

On initial designation of the hedge, the Company formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

The Company makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of 80% to 125%. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported net income.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

iii) Cash flow hedges When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable

to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in other comprehensive income is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the same line item in the statement of comprehensive income as the hedged item. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively.

The cumulative gain or loss previously recognised in other comprehensive income and presented in the hedging reserve in equity remains there until the forecast transaction affects profit or loss. When the hedged item is a non-financial asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset when the asset is derecognised. If the forecast transaction is no longer expected to occur, then the balance in other comprehensive income is recognised immediately in profit or loss. In other cases the amount recognised in other comprehensive income is transferred to profit or loss in the same period that the hedged item affects profit or loss.

c) Property, plant and equipment

i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated

impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

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Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and the difference is recognised in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.

ii) Subsequent expenditure Subsequent expenditure is capitalised only when it increases future economic benefits embodied in the specific

asset to which it relates.

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Company. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

iii) Depreciation Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated

useful lives of items of furniture and equipment. The estimated useful economic life of furniture and equipment is 3 years.

Management reassess the useful lives, residual values and depreciation methods for plant and equipment annually.

iv) Capital work in progress Capital work in progress is measured at cost and is not depreciated until it is transferred into one of the fixed

asset categories, which occurs when the assets is ready for intended use.

c) Inventory Inventory comprises of fuel oil and is stated at lower of cost and net realisable value.

d) Impairment

i) Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a

negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.

ii) Non – financial assets The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets

are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss unless it reverses a previous revaluation that was credited to equity, in which case it is charged to equity.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets’ carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

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e) Financial liabilities Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using

the effective interest method.

Interest-bearing liabilities are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

f) Employee terminal benefits Obligations for contributions to a defined contribution retirement plan for Omani employees, in accordance with

the Oman Social Insurance Scheme, are recognised as an expense in profit or loss as incurred. The Company’s obligation in respect of terminal benefits of non-Omani employees, is the amount of future benefit that such employees have earned in return for their service in the current and prior periods.

g) Provisions A provision is recognised when the Company has a legal or constructive obligation as a result of a past event,

and it is probable that an outflow of economic benefits will be required to settle the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

h) Borrowing costs Interest expense and similar charges are expensed in profit or loss in the period in which they are incurred, except

to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of a qualifying asset which necessarily takes a substantial period of time to prepare for its intended use or sale.

i) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit

or loss except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.

Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

j) New standards and interpretation not yet effective A number of new standards, amendments to standards and interpretations are not yet effective for the year

ended 31 December 2011, and have not been applied in preparing these financial statements. None of these will have an effect on the financial statements of the Company.

Determination of fair value

Derivative financial instruments Fair value of forward exchange contracts is estimated by discounting the difference between the contractual

forward price and the current forward price for the residual maturity of the contract using yield curves of the respective currencies.

The fair value of interest rate swaps is based on estimated future cash flows based on the terms and maturity of each contract and using market interest rates. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Company and counterparty when appropriate.

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4 Capital work in progress

2011 2011 2010 2010

RO USD RO USD

Construction cost 187,128,247 486,679,446 73,214,613 190,415,118

Mobilisation fee 7,328,126 19,058,846 - -

Insurance cost 1,003,978 2,611,126 377,269 981,195

Financing cost 6,232,029 16,208,136 308,618 802,648

Development cost 10,812,461 28,120,835 9,981,910 25,960,754

Salaries and wages 557,673 1,450,386 116,719 303,560

Other directly attributable expenses 3,285,857 8,545,793 1,352,305 3,517,048

At 31 December 216,348,371 562,674,568 85,351,434 221,980,323

Capital work in progress represents costs incurred towards construction of the Plant.

Development costs represent:

costs and expenses incurred by the Shareholders (and reimbursed by the Company in accordance with the Shareholders Agreement) in connection with the development, preparation and submission of bid, establishment of the Company and cost and expenses of external lawyers, consultants and advisors engaged in setting up the Company; and

Project closure fee payable by the Company in accordance with the Shareholders Agreement for successful financial close of the project.

5 Term loan

Maturity 2011 2011 2010 2010

RO USD RO USD

Non-current 2 to 18 years

Less:Unamortised transaction cost 154,066,074 400,692,000 12,688,500 33,000,000

(13,460,918) (35,008,889) (12,091,860) (31,448,271)

On 16 September 2010, the Company entered into a Common Terms Agreement (“CTA”), for credit facilities with a consortium of international banks and local banks with Credit Agricole Corporate and Investment Bank as the Global Facility Agent; Offshore Security Trustee, Offshore Account Bank, KEXIM Facility Agent and Commercial Facility Agent, Bank Muscat SAOG as Onshore Account Bank; Performance Bond Issuing Bank and Performance Bond Facility Agent, KfWIpex Bank GMBH as the Hermes Facility Agent and the Export-Import Bank of Korea as KEXIM Facility Agent.

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At 31 December 2011, the facility limits and draw down amounts were as follows:

Limit Drawdown

2011 2011 2011 2011

RO USD RO USD

Hermes Covered Variable Facility 72,286,000 188,000,000 49,408,250 128,500,000

KEXIM Direct Facility 44,923,058 116,835,000 - -

Commercial Facility 50,357,196 130,968,000 37,488,750 97,500,000

Hermes Covered Fixed Facility 46,140,000 120,000,000 46,140,000 120,000,000

KEXIM Covered Facility 21,029,074 54,692,000 21,029,074 54,692,000

Commercial Standby Facility 5,967,440 15,520,000 - -

240,702,768 626,015,000 154,066,074 400,692,000

At 31 December 2010, the facility limits and drawdown amounts were as follows:

Limit Drawdown

2010 2010 2010

RO USD USD

31 December 2010

Hermes Covered Variable Facility 72,286,000 188,000,000 - -

KEXIM Direct Facility 44,923,058 116,835,000 - -

Commercial Facility 50,357,196 130,968,000 - -

Hermes Covered Fixed Facility 46,140,000 120,000,000 12,688,500 33,000,000

KEXIM Covered Facility 21,029,074 54,692,000 - -

Commercial Standby Facility 5,967,440 15,520,000 - -

240,702,768 626,015,000 12,688,500 33,000,000

Repayments The aggregate amount of drawdowns under the above facilities is repayable in half yearly instalments commencing

from 31 October, 2013, with the final instalment being due on 31 March 2028.

Interest

i) Interest on Hermes Covered Fixed Facility is charged at a fixed rate of 3.60% per annum, including margin.

ii) Interest on the remaining facilities is charged at a floating rate of US LIBOR plus applicable margin. The Company has entered into interest rate swap contracts to cap its obligations against unfavorable US LIBOR rate changes.

The margins vary between 1.40% and 3.50% per annum depending on the type of facility and the interest payment period.

Other fees Under the terms of the above facilities, the Company is required to pay commitment fees, front end fees, export

credit agency premium, performance bond fees, agency fees and all other bank fees

Securities The above facilities are secured by comprehensive legal and commercial mortgages on all the assets of the

Company.

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Covenants The term loan facilities contains certain covenants pertaining to, amongst other things, liquidation and merger,

entering into material new agreements, negative pledge, disposal of asset, granting of loan and guarantee, acquisition of capital assets, debt service coverage ratio, change of business, loan and guarantee, hedging agreement, etc, which the Company is required to comply.

6 Prepaid expenses and other receivables

2011 2011 2010 2010

RO USD RO USD

Prepaid expenses 630,446 1,639,651 733,161 1,906,791

Due from related parties ( note 14) 37,798 98,305 13,164 34,237

Other receivables 52,264 135,927 2,203 5,728

720,508 1,873,883 748,528 1,946,756

7 Cash and cash equivalents

Cash in hand and at bank 747,942 1,945,233 9,248,632 24,053,659

8 Equity

(a) Share capital The Company’s registered capital comprises 2,000,000 shares of RO 1 each of which 500,000 shares of RO 1

each are fully paid.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

(b) Legal reserve Article 106 of the Commercial Companies Law of 1974 requires that 10% of a company’s net profit be transferred

to a non-distributable legal reserve until the amount of legal reserve becomes equal to at least one-third of the company’s issued share capital.

(c) Hedging reserve Hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow

hedging instruments related to hedged transactions that have not yet occurred (note 15).

9 Trade and other payables

2011 2011 2010 2010

RO USD RO USD

Due to related parties ( note 14) 96,940 252,120 665,538 1,730,918

Accrued EPC cost 9,302,347 24,193,360 18,475,748 48,051,361

Accrued commitment fee 25,075 65,215 524,075 1,363,003

Accrued export credit insurance premium - - 6,916,796 17,989,066

Other payable and accruals 815,685 2,121,420 995,451 2,588,953

10,240,047 26,632,115 27,577,608 71,723,301

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10 Income tax

The Company is liable to income tax, in accordance with the income tax laws of Sultanate of Oman, at the rate of 12% of the taxable income in excess of RO 30,000.

No current income tax recognised in the income statement in view of losses incurred during the period.

Deferred tax assets/liability has been recognised directly in equity in respect of the changes in fair values of interest rate swap and forward rate contracts (note 15).

11 Furniture and equipment

Furniture and equipment represents the net book value of furniture and computer equipment at the Head Office and Site.

12 Equity contribution

The Company, its shareholders and lenders as defined under CTA entered into Equity Subscription and Retention Agreement (“ESRA”) dated 16 September 2010. Under the ESRA, the shareholders are required to provide base equity contribution as follows:

– Equity bridge advances from GDF Suez, Sojitz and Yonden (“EBL Shareholders”); and

– Subordinated advances from Multitech and PASI (note 13).

EBL shareholders irrevocably and unconditionally guarantee to the EBL Finance Parties for punctual payments and performance of their obligation.

Equity bridge loan On 16 September 2010, the Company entered into the GDF Suez Equity Bridge Loan Agreement and Sojitz and

Yonden Equity Bridge Loan Agreements.

2011 2011 2010 2010

RO USD RO USD

Equity bridge loan 48,239,632 125,460,680 48,239,631 125,460,680

Less: Unamortised transaction cost (145,687) (378,899) (262,235) (682,016)

48,093,945 125,081,781 47,977,396 124,778,664

Facility limit The facility limit of GDF Suez, Sojitz and Yonden Equity Bridge Loan Agreements is in the amount of approximately

RO 32,632,691 (USD 84,870,460), RO 7,803,470 (USD 20,295,110) and RO 7,803,470 (USD 20,295,110) respectively.

Repayments The aggregate amount of the loan will be repaid at the earlier of 1 April 2013 and the COD (scheduled for 1 April

2013)

Interest The GDF Suez equity bridge loans carry interest rates at US LIBOR plus agreed margins of 0.79% per annum

and Sojitz and Yonden equity bridge loans carry interest rates at US LIBOR plus agreed margins of 0.60% per annum.

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13 Shareholders loan

On 16 September 2010 the Company and its shareholders (Multitech and PASI) entered into Shareholder Loan Agreements (“SLA”) as required under ESRA to provide subordinated advances.

At 31 December 2011, drawdowns are as follows:

2011 2011 2010 2010

RO USD RO USD

Multitech 14,737,524 38,329,060 14,737,524 38,329,060

PASI 6,698,874 17,422,300 6,698,874 17,422,300

21,436,398 55,751,360 21,436,398 55,751,360

Repayments As per the SLA, the aggregate amount of the loan will be repaid at the earlier of 1 April, 2013 and the COD

(scheduled for 1 April 2013).

Interest SLA carry interest rate of US LIBOR plus agreed margin of 1.03% per annum .

14 Related party transactions

Related parties comprise the shareholders, directors, key management personnel, business entities that have the ability to control or exercise significant influence in financial and operating decisions of the Company and entities over which certain shareholders are able to exercise significant influence.

Prices and terms of these transactions, which are entered into in the normal course of business, are on mutually agreed terms and conditions.

The Company had the following significant transactions with related parties during the year/ period:

2011 2011 2010 2010

RO USD RO USD

Power Management Company LLC - - 66,697 173,465

Multitech 336,856 876,089 1,886,345 4,905,969

Kahrabel 660,355 1,717,439 6,582,696 17,120,145

Kahrabel Operations and Maintenance Oman (“KOMO”) 422,428 1,098,642 58,156 151,250

Suez Tractebel SA 49,234 128,046 9,555 24,850

Tractebel Engineering SA (“TE”) 1,061,154 2,759,828 926,360 2,409,260

Bahwan Engineering LLC - - 26,434 68,750

Sojitz Corporation 183,221 476,518 865,559 2,251,128

Yonden 83,242 216,493 862,978 2,244,415

PASI 153,020 397,971 90,198 234,586

Al Suwadi Power Co. SAOC (“ASP”) 26,968 70,139 - -

Suez Tractebel Operation & Maintenance Oman LLC 7,328,127 19,058,846 - -

10,304,605 26,800,011 11,374,978 29,583,818

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The nature of the above transactions is as follows:

2011 2011 2010 2010

RO USD RO USD

Interest on SLA (note13) 290,734 756,135 63,186 164,332

Project closure fee (note 4) - - 9,612,500 25,000,000

Development costs (note 4) 820,746 2,134,579 369,410 960,754

Performance bond charges 324,969 845,172 129,829 337,656

Re-imbursement of land mortgage fee - - 112,851 293,501

Secondment fees 387,854 1,008,722 84,590 220,000

Fixed service fee 39,480 102,678 9,555 24,850

Owner's engineer fees 1,061,154 2,759,828 926,360 2,409,260

Mobilisation fee 7,328,127 19,058,846

Staff salary and other costs - - 3,499 9,100

Others 51,541 134,051 63,198 164,365

10,304,605 26,800,011 11,374,978 29,583,818

Balances due from related parties at the period end comprised (note 6):

KOMO 13,769 35,811 2,246 5,841

ASP 23,828 61,971 10,918 28,396

Sojitz Corporation 201 523 - -

37,798 98,305 13,164 34,237

Balances due to related parties at the period end comprised (note 9):

TE 96,940 252,120 665,538 1,730,918

15 Hedging reserve

At 31 December 2011, derivative instruments assets (liabilities) were as follows:

2011 2011 2010 2010

RO USD RO USD

Interest rate swaps: (i)

Senior debt (note 15 (a))

KfW Ipex Bank (3,166,761) (8,236,049) 2,095,050 5,448,764

Standard Chartered Bank (6,468,328) (16,822,700) 3,983,521 10,360,262

Credit Agricole Corporate & Investment Bank (2,811,631) (7,312,434) 1,968,683 5,120,111

HSBC Bank - senior debt (2,312,390) (6,014,019) 1,514,816 3,939,704

Shareholders loan and equity bridge loan (note 15 (b))

Standard Chartered Bank - equity bridge loan 214,842 558,758 222,766 579,365

HSBC Bank - equity bridge loan 42,195 109,741 39,247 102,074

(Decrease) increase in fair value of derivative instruments (14,502,073) (37,716,703) 9,824,083 25,550,280

Deferred tax asset (liability) (note 10) 1,740,249 4,526,005 (1,178,890) (3,066,034)

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2011 2011 2010 2010

RO USD RO USD

(Decrease) increase in fair value of derivative instruments net of tax (12,761,824) (33,190,698) 8,645,193 22,484,246

Forward rate contract: (note 15 (c)) (ii)

Standard Chartered Bank (2,889,768) (7,515,652) (967,545) (2,516,371)

(Decrease) increase in fair value of derivative instruments (2,889,768) (7,515,652) (967,545) (2,516,371)

Deferred tax asset (liability) (note 10) 346,772 901,878 116,105 301,965

(Decrease) increase in fair value of derivative instruments net of tax (2,542,996) (6,613,774) (851,440) (2,214,406)

Derivative instrument (i + ii)

(Decrease) increase in fair value of derivative instruments (17,391,841) (45,232,355) 8,856,538 23,033,909

Deferred tax asset (liability) (note 10) 2,087,021 5,427,883 (1,062,785) (2,764,069)

(Decrease) increase in fair value of derivative instruments net of tax (15,304,820) (39,804,472) 7,793,753 20,269,840

Hedging reserve at the end of the year (15,304,820) (39,804,472) 7,793,753 20,269,840

Less: Hedging reserve at the beginning of the year 7,793,753 20,269,840 - -

Effective portion of change in fair value of cash flow hedge for the year (23,098,573) (60,074,312) 7,793,753 20,269,840

15(a) The long term facilities in the amount of USD 490.5 million (excluding Hermes Covered Fixed Facility of USD 120 million and Commercial Standby Facility of USD 15.5 million) of the Company bear interest at US LIBOR plus applicable margins. The Company has fixed the rate of interest through Interest Rate Swap Agreements (“IRS”) entered into with HSBC Bank Middle East Limited, dated 6 October 2010, Standard Chartered Bank, dated 19 December 2011, KfWIpex Bank GMBH, dated 6 October 2010 and Credit Agricole Corporate and Investment Bank dated 5 October 2010 respectively, for 100% of the facilities amount (excluding Hermes Covered Fixed Facility and Commercial Standby Facility).

The hedged notional amounts are approximately USD 73.9 million, USD 222.7 million, USD 101.6 million and USD 92.3 million at fixed interest rates of 2.9788%, 2.9708%, 2.975% and 2.953% per annum respectively, excluding margins.

15(b) The equity bridge loans (see note 12) and shareholders loans (see note 13) in the amount of USD 174.2 million bear interest at US LIBOR plus applicable margins. The Company has entered into Interest Rate Swap Agreements (“IRS”) to hedge against fluctuation in interest rates. The IRS entered into with HSBC Bank Middle East Limited, on 6 October 2010, the Standard Chartered Bank on 7 October 2010 and an additional hedge with HSBC Bank Middle East Limited on 2 March 2011, for 100% of the equity bridge loans and shareholder loans.

The hedged notional amounts are approximately USD 24.6 million, USD 139.3 million and USD 10.3 million, at fixed interest rates of 0.7088%, 0.7085% and 0.95% per annum respectively, excluding margins.

15(c) The O&M Agreement includes an outflow of approximately Euro 127 million, payable in Euro. The Company has entered into a Forward Rate Agreement (“FRA”) on 12 October 2010 with Standard Chartered Bank to hedge against fluctuations in Euro/USD exchange rate. As per the FRA, the Company shall pay a fixed USD amount at an exchange rate of 1.4318 and receive contractual Euro amount at each maturity date.

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16 Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Market risk

Credit risk

Liquidity risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

Board of Directors has overall responsibility for establishing and overseeing the Company’s risk management framework. The Board has entrusted the Management with the responsibility of developing and monitoring the Company’s risk management policies and procedures and its compliance with them.

a) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will

affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk The Company has borrowings which are interest bearing and exposed to changes in US LIBOR rates. The

Company has entered into interest rate swaps to hedge its US LIBOR risk exposure on 100% of its total loan facilities, including equity bridge loans and shareholders loans, excluding Hermes Covered Fixed Facility and Commercial Standby Facility.

The Company does not account for any fixed rate financial liabilities at fair value through profit or loss and the Company does not designate hedging instruments under a fair value hedge accounting model. Therefore a change in interest rate at the reporting date would not affect profit or loss.

At the reporting date, the interest rate profile of the Company’s interest-bearing financial liabilities was:

Interest rate 2011 2011 2010 2010

% RO USD RO USD

Financial liabilities

Shareholders loan

- USD variable rate loans Libor + 1.03% 21,436,398 55,751,360 21,436,398 55,751,360

Equity bridge loan

- USD variable rate loans – KfW Libor + 0.79% 30,814,822 80,142,580 30,814,822 80,142,580

- USD variable rate loans – Mizuho Libor + 0.60% 14,737,524 38,329,060 14,737,524 38,329,060

Term loan

- USD fixed rate loans 3.60% 154,066,074 400,692,000 12,688,500 33,000,000

221,054,818 574,915,000 79,677,244 207,223,000

Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity

and income statement by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

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Equity

100 bps 100 bps 100 bps 100 bps

Increase Decrease Increase Decrease

RO RO USD USD

31 December 2011

Interest rate swap 15,937,428 (4,074,725) 41,449,750 (10,597,466)

31 December 2010

Interest rate swap 14,053,847 16,179,077 36,550,968 (42,078,223)

Currency risk The price under the O&M Agreement includes an amount of approximately Euro 127 million, payable in Euro. The

Company has entered into FRA to hedge against fluctuations in Euro/USD exchange rate (note 15(c)). The Euro amounts hedged cover 70% of outflows for the period upto March 2018, 50% for the period April 2018 to March 2023 and 30% thereafter.

Apart from above, Management considers that the Company is not exposed to significant foreign exchange risk because all transactions and balances are either in RO or USD and RO is effectively pegged to the USD.

b) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails

to meet its contractual obligations, and arises principally from the Company’s receivables from customers and cash balances held with banks.

At 31 December 2011, the Company has not yet commenced commercial operations and accordingly there is no credit risk arising from OPWP.

The Company limits its credit risk with regard to bank deposits by only dealing with reputable banks and financial institutions.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2011 2011 2010 2010

RO USD RO USD

Cash and cash equivalents 747,942 1,945,233 9,248,632 24,053,659

Other receivable and due from related parties 90,062 234,232 15,367 39,965

Derivative instrument - - 9,824,083 25,550,280

838,004 2,179,465 19,088,082 49,643,904

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company limits its liquidity risk by ensuring bank facilities, equity bridge loans and shareholders’ loans are available, where required. Liquidity requirements are monitored on a monthly basis and management ensures

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that sufficient liquid funds are available to meet any commitments as they arise.

The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting agreements:

Carrying amount

Contractual cash flow

Less than 1 year

More than 1 to 5 years

More than 5 years

31 December 2011 RO RO RO RO RO

Derivatives

Derivative instruments 17,391,841 (18,281,937) - (16,059,784) (2,222,153)

Non-derivatives financial liabilities

Shareholders loan 21,436,398 (21,436,398) - (21,436,398) -

Equity bridge loan 45,414,906 (45,552,346) - (45,552,346) -

Term loan 140,605,156 (154,066,074) - (31,612,011) (122,454,063)

Trade and other payables 10,240,047 (10,240,047) (10,240,047) - -

235,088,348 (249,576,802) (10,240,047) (114,660,539) (124,676,216)

USD USD USD USD USD

Derivatives

Derivative instruments 45,232,355 (47,547,300) - (41,767,970) (5,779,330)

Non-derivatives financial liabilities

Shareholders loan 55,751,360 (55,751,360) - (55,751,360) -

Equity bridge loan 118,114,190 (118,471,640) - (118,471,640 -

Term loan 365,683,111 (400,692,000) - (82,215,893) (318,476,107)

Trade and other payables 26,632,115 (26,632,115) (26,632,115) - -

611,413,131 (649,094,415) (26,632,115) (298,206,863) (324,255,437)

Carrying amount

Contractual cash flow

Less than 1 year

More than 1 to 5 years

More than 5 years

31 December 2010 RO RO RO RO RO

Derivatives

Forward exchange contracts 967,545 (1,076,900) - (728,987) (347,913)

Non-derivatives financial liabilities

Shareholders loan 21,436,398 (21,436,398) - (21,436,398) -

Equity bridge loan 45,304,959 (45,552,346) - (45,552,346) -

Term loan 596,640 (12,688,500) - (2,971,647) (9,716,853)

Trade and other payables 27,577,608 (27,577,609) (27,577,609) - -

95,883,150 (108,331,753) (27,577,609) (70,689,378) (10,064,766)

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USD USD USD USD USD

Derivatives

Forward exchange contracts 2,516,371 (2,800,780) - (1,895,935) (904,845)

Non-derivatives financial liabilities

Shareholders loan 55,751,360 (55,751,360) - (55,751,360) -

Equity bridge loan 117,828,240 (118,471,640) - (118,471,640) -

Term loan 1,551,729 (33,000,000) - (7,728,600) (25,271,400)

Trade and other payables 71,723,301 (71,723,301) (71,723,301) - -

249,371,001 (281,747,081) (71,723,301) (183,847,535) (26,176,245)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amount.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1 – Fair values are measured based on quoted prices (unadjusted) from active markets for identical financial instruments.

Level 2 – Fair values are measured using inputs, other than those used for Level 1, that are observable for the financial instruments either directly (prices) or indirectly (derived from prices)

Level 3 – Fair values are measured using inputs which are not based on observable market data (unobservable input).

2011 2011 2010 2010

Level 2 Level 2 Level 2 Level 2

RO USD RO USD

Derivative financial assets - - 9,824,083 25,550,280

Derivative financial liabilities 17,391,841 45,232,355 967,545 2,516,371

There were no transfers between level 1 and level 2 during the year.

Embedded derivatives

The following agreements contain embedded derivatives as follows:

i) The PPA between the Company and OPWP contain embedded derivatives in the pricing formulae that adjusts the charge rates for the Plant to reflect changes in USD / RO currency exchange rates and changes in US price index and the Oman price index.

ii) The O & M agreement contains embedded derivatives in the pricing formulae that adjust the payments to reflect changes in the relevant inflation indices.

These embedded derivative are not separated from the host contract, the PPA and the O&M agreements, and is not accounted for as a standalone derivative under IAS 39, as the management believes that the economic characteristics and risks associated with the embedded derivatives are closely related to those of the host contracts.

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Capital management The Company aims to maintain a strong capital base so as to maintain investor, creditor and market confidence

and to sustain future development and growth of its businesses, while at the same time maintaining an appropriate dividend policy to reward shareholders.

17. Contingent liabilities

The Company has provided a bank guarantee from Bank Muscat SAOG in the amount of RO 30,000,000 (USD 78,023,407) in favour of OPWP.

This bank guarantee is counter indemnified by Corporate Guarantees and bank guarantees fromthe Shareholders.

18. Capital commitments

At 31 December 2011, commitments in respect of contracts placed are as follows:

2011 2011 2010 2010

RO USD RO USD

Commitments in respect of contracts placed 55,107,645 143,322,875 169,797,493 441,605,963

Operating lease commitments:

At 31 December future minimum lease commitments under the Usufruct Agreement are as follows:

Due:

Within one year 220,407 573,230 220,407 573,230

Between two and five years 623,687 1,622,072 704,432 1,832,072

After five years 1,648,778 4,288,109 1,788,440 4,651,339

19. Comparative figures

The current period is for twelve months, whilst the corresponding figures are for the period from 2 August 2010 to 31 December 2010. Accordingly, corresponding figures in the income and cash flow statements are not readily comparable with the current period figures.

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Financial Statements

31 December 2012

Contents Page

Report of the Independent Auditors ........................................................................................................................... 128

Statement of comprehensive income......................................................................................................................... 129

Statement of financial position ................................................................................................................................... 130

Statement of cash flows ............................................................................................................................................. 131

Statement of changes in equity .................................................................................................................................. 132

Notes ................................................................................................................................................................... 133-152

128

INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF

AL BATINAH POWER COMPANY SAOC

Report on the financial statements

We have audited the financial statements of Al Batinah Power Company SAOC (“the Company”), set out on pages 129 to 152, which comprise the statement of financial position as at 31 December 2012, and the statements of comprehensive income, changes in equity and cash flows for the year ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, the disclosure requirements of the Commercial Companies Law of 1974, as amended, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2012, and its financial performance and its cash flows for the year ended in accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements

In our opinion, the financial statements of the Company as at and for the year ended 31 December 2012, in all material respects, comply with the Commercial Companies Law of 1974, as amended.

Sd/-________________________

KPMG

129

Statement of comprehensive income

for the year ended 31 December 2012

2012 2012 2011 2011

Notes RO USD RO USD

Revenue 17,922,161 46,611,603 - -

Direct cost 15 (9,288,204) (24,156,578) - -

Gross profit 8,633,957 22,455,025 - -

Liquidated damages (net) 12 (103) (269) - -

8,633,854 22,454,756 - -

General and administrative expenses 16 (224,711) (584,422) (102,295) (266,048)

Result from operating activities 8,409,143 21,870,334 (102,295) (266,048)

Finance costs 17 (2,877,636) (7,484,098) - -

Net profit (loss) before tax 5,531,507 14,386,236 (102,295) (266,048)

Income tax 11 (785,284) (2,042,352) - -

Net profit (loss) after tax 4,746,223 12,343,884 (102,295) (266,048)

Other comprehensive loss, net of income tax:

Effective portion of change in fair value of cash flow hedge 19 (2,728,023) (7,094,988) (23,098,573) (60,074,312)

Total comprehensive (loss) for the year 2,018,200 5,248,896 (23,200,868) (60,340,360)

The notes on pages 133 to 152 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 128.

130

Statement of financial position

as at 31 December

Notes 2012 2012 2011 2011RO USD RO USD

Non-current assetsProperty, plant and equipment 5 173,391,490 450,953,159 68,780 178,883Capital work in progress 4 102,751,344 267,233,665 216,348,371 562,674,568Deferred tax asset 11&19 2,459,024 6,395,381 2,087,021 5,427,883Total non-current assets 278,601,858 724,582,205 218,504,172 568,281,334Current assetsAccrued revenue 371,341 965,776 - -Inventories 1,802,937 4,689,044 176,552 459,173Prepaid expenses and other receivables 7 373,379 971,076 720,508 1,873,883Cash and cash equivalents 8 1,452,188 3,776,823 747,942 1,945,233Total current assets 3,999,845 10,402,719 1,645,002 4,278,289Total assets 282,601,703 734,984,924 220,149,174 572,559,623EquityShare capital 9(a) 500,000 1,300,390 500,000 1,300,390Legal reserve 9(b) 166,667 433,463 - -Retained earnings 4,442,260 11,553,342 (137,296) (357,079)Shareholder's fund 5,108,927 13,287,195 362,704 943,311Hedging reserve 19 &9(c) (18,032,843) (46,899,460) (15,304,820) (39,804,472)Total equity (12,923,916) (33,612,265) (14,942,116) (38,861,161)Non-current liabilitiesShareholders loan 17 6,698,874 17,422,300 21,436,398 55,751,360Equity bridge loan 16 60,262,377 156,729,199 45,414,906 118,114,190Term loans 6 184,951,395 481,017,935 140,605,156 365,683,111Derivative instruments 19 20,491,867 53,294,841 17,391,841 45,232,355End of service benefits 5,485 14,266 2,942 7,653Deferred tax liability 11 785,284 2,042,352 - -Total non-current liabilities 273,195,282 710,520,893 224,851,243 584,788,669Current liabilitiesTerm loans 6 9,827,787 25,559,915 - -Trade and other payables 10 12,502,550 32,516,381 10,240,047 26,632,115Total current liabilities 22,330,337 58,076,296 10,240,047 26,632,115Total liabilities 295,525,619 768,597,189 235,091,290 611,420,784Total equity and liabilities 282,601,703 734,984,924 220,149,174 572,559,623

The financial statements were approved and authorised for issue in accordance with a resolution of the Board of Directors on 19 February, 2013.

Sd/- Sd/-__________________________ ___________________________

Chairman Director

The notes on pages 133 to 152 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 128.

131

Statement of cash flows

for the year ended 31 December

2012 2012 2011 2011

RO USD RO USD

Cash flows from operating activities:

Profit (loss) after tax 4,746,223 12,343,884 (102,295) (266,048)

Add: income tax expense 785,284 2,042,352 - -

Add: depreciation 1,900,449 4,942,649 31,231 81,225

Add: movement in end of service benefits (net) 2,543 6,613 2,942 7,653

7,434,499 19,335,498 (68,122) (177,170)

Changes in working capital:

Increase in inventories (1,626,385) (4,229,871) (176,552) (459,173)

(Increase) decrease in trade and other receivables (24,212) (62,969) 28,020 72,873

Increase (decrease) in trade and other payables 2,262,503 5,884,266 (17,337,561) (45,091,186)

Net cash flow from (used in) operating activities 8,046,405 20,926,924 (17,554,215) (45,654,656)

Cash flows from investing activities:

Addition to property, plant and equipment (175,223,159) (455,716,925) (68,001) (176,857)

Decrease (increase) to capital work in progress 113,597,027 295,440,903 (130,996,937) (340,694,245)

Net cash used in investing activities (61,626,132) (160,276,022) (131,064,938) (340,871,102)

Cash flows from financing activities:

Movement in shareholders loan (14,737,524) (38,329,060) - -

Net proceeds from equity bridge loan 14,847,471 38,615,009 109,947 285,950

Net proceeds from term loan 54,174,026 140,894,739 140,008,516 364,131,382

Net cash flow from financing activities 54,283,973 141,180,688 140,118,463 364,417,332

Net change in cash and cash equivalents 704,246 1,831,590 (8,500,690) (22,108,426)

Cash and cash equivalents at beginning of the year 747,942 1,945,233 9,248,632 24,053,659

Cash and cash equivalents at end of the year 1,452,188 3,776,823 747,942 1,945,233

The notes on pages 133 to 152 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 128.

132

Statement of changes in equity

for the year ended 31 December

Share Legal Retained Hedgingcapital reserve earnings reserve Total

RO RO RO RO ROBalance at 1 January 2012 500,000 - (137,296) (15,304,820) (14,942,116)Profit for the year - - 4,746,223 - 4,746,223Transfer to legal reserve - 166,667 (166,667) - -Other comprehensive loss, net of income taxChanges in fair value of cash flow hedge, net of income tax - - - (2,728,023) (2,728,023)Total other comprehensive income (loss) for the year - 166,667 4,579,556 (2,728,023) 2,018,200At 31 December 2012 500,000 166,667 4,442,260 (18,032,843) (12,923,916)

USD USD USD USD USDBalance at 1 January 2012 1,300,390 - (357,079) (39,804,472) (38,861,161)Profit for the year - - 12,343,884 - 12,343,884Transfer to legal reserve - 433,463 (433,463) - -Other comprehensive loss, net of income taxChanges in fair value of cash flow hedge, net of income tax - - - (7,094,988) (7,094,988)Total other comprehensive income (loss) for the year - 433,463 11,910,421 (7,094,988) 5,248,896At 31 December 2012 1,300,390 433,463 11,553,342 (46,899,460) (33,612,265)

RO RO RO RO ROBalance at 1 January 2011 500,000 - (35,001) 7,793,753 8,258,752Loss for the period - - (102,295) - (102,295)Other comprehensive loss, net of income taxChanges in fair value of cash flow hedge, net of income tax - - - (23,098,573) (23,098,573)Total comprehensive loss for the year - - (102,295) (23,098,573) (23,200,868)At 31 December 2011 500,000 - (137,296) (15,304,820) (14,942,116)

USD USD USD USD USDAt January 1 2011 1,300,390 - (91,031) 20,269,840 21,479,199Loss for the year - - (266,048) - (266,048)Other comprehensive loss, net of income taxChanges in fair value of cash flow hedge, net of income tax - - - (60,074,312) (60,074,312)Total other comprehensive loss for the year - - (266,048) (60,074,312) (60,340,360)At 31 December 2011 1,300,390 - (357,079) (39,804,472) (38,861,161)

The notes on pages 133 to 152 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 128.

133

Notes

(forming part of the financial statements)

1. Legal status and principal activities

Al Batinah Power Company SAOC (the “Company”) is a closed Omani joint stock company registered on 2 August 2010 under the Commercial Companies Law of Oman.

The Company’s principal activities are as follows:

- Design, procurement, construction, commissioning and financing of the Sohar 2 Power Plant (“the Plant”) with a capacity of about 750 MW.

- The full operation and maintenance of the Plant in accordance with good practices throughout the useful life time of the Plant from the Commercial Operation Date (“COD”).

- Making available the demonstrated power capacity.

- Selling the electricity energy delivered to Oman Power & Water Procurement Company SAOC (“OPWP”).

The Company’s issued share capital is owned 46% by Kahrabel FZE, UAE (“Kahrabel”) (a IPR GDF Suez entity), 22% by Multitech LLC (“Multitech”), Oman (a SuhailBahwan group company), 11% each by Blue Horizon Sohar Power BV (“Sojitz”,a Sojitz Corporation group company) and SEP International Netherlands BV (“Yonden” a Shikoku Electric Power group company) and 10% by Public Authority for Social Insurance, Oman (“PASI”), (“together the Founder Shareholders”).

2. Significant agreements

i. Power Purchase Agreement (“PPA”) dated 10 August 2010 with OPWP for a period of 15 years from the scheduled Commercial Operation Date (“COD”).

ii Natural Gas Sales Agreement (“NGSA”) dated 31 August 2010 with the Ministry of Oil and Gas (“MOG”) for the purchase of natural gas for a period of 15 years from the scheduled COD.

iii. Sub Usufruct Agreement (“SUA”) relating to the Sohar site dated 10 August 2010 with Sohar Industrial Port Co. SAOC (“SIPC”) for grant of exclusive right to use and benefit from the land upto 20 October 2028.

iv. License Agreement related to the Temporary Areas dated 15 August 2010 with the Sohar Industrial Port Co. SAOC for grant of temporary license to use the temporary site upto 20 October 2013.

v. Turnkey Engineering, Procurement and Construction (“EPC”) Contract dated 15 September 2010 with Siemens AG and GS Engineering and Construction Corp. to perform the engineering, procurement and construction of the Plant.

vi. Operation & Maintenance (“O & M”) Agreement with Suez Tractebel Operation and Maintenance Oman LLC (“STOMO”) dated 24 September 2010 for a period of 15 years from the COD.

vii. Common Terms Agreement and Facility Agreements dated 16 September 2010 for long term loans with international and local banks.

viii. First Amendment Agreement to the Common Terms Agreement and Facility Agreements with the parties dated 16 September 2010.

ix. Equity Bridge Loan Agreement (“GDF Suez Equity Bridge Loan Agreement”) dated 16 September 2010 between the Company as the “Borrower”, and KfW IPEX Bank GMBH as the “Original EBL Lender” & “EBL Facility Agent”.

x. Equity Bridge Loan Agreements (“Sojitz and Yonden Equity Bridge Loan Agreement”) dated 16 September 2010 between the Company as the “Borrower”, and Mizuho Corporate Bank Limited as the “Original EBL Lender” and “EBL Facility Agent”. (all the Original EBL Lenders and Original EBL Facility agents together referred to as “EBL Finance Parties”)

xi. Equity Bridge Loan Agreement (“Multitech Equity Bridge Loan Agreement”) dated April 26, 2012 between

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the Company as the “Borrower” and HSBC Bank Middle East Limited as the “Original EBL Lender” & “EBL Facility Agent”.

xii. Shareholder Loan Agreements (“SLA”) dated 16 September 2010 with PASI in respect of loan from shareholder (note 17).

xiii. Hedging Agreements for LIBOR Rate Swaps made with Credit Agricole Corporate and Investment Bank (dated 5 October 2010), KfW IPEX Bank GMBH (dated 6 October 2010), HSBC Bank Middle East Limited (dated 6 October 2010) and Standard Chartered Bank (dated 7 October 2010 and reprofiled on 19 December 2011).

xiv. Hedging Agreement dated 12 October 2010 with Standard Chartered Bank for USD / Euro exchange rate.

xv. Performance Bond dated 9 August 2010 issued by Bank Muscat SAOG in favour of OPWP.

xvi. EPC Performance Bond issued by Credit Agricole Corporate & Investment Bank in favour of the Company dated 20 September 2010.

xvii. Project Founders’ Agreement (“PFA”) dated 10 August 2010 between Electricity Holding Company and the Founder Shareholders.

xviii. Equity Subscription and Retention Agreement (“ESRA”) dated 16 September 2010 with the Initial Shareholders and Sponsors.

xix. O & M guarantee dated 24 September 2010 made between GDF Suez cc SCRL, Brussels, as “Guarantor” and the Company as “Beneficiary”.

xx. Seawater Extraction Agreement (“SEA”) dated 10 August 2010 with Majis Industrial Services SAOC for 15 years from COD.

xxi. Shareholders Agreement dated 29 November 2010.

xxii. Secondment Services Agreements dated 22 August, 2011 with Kahrabel Operations and Maintenance Oman towards secondment services of the Chief Executive Officer and Construction Manager.

xxiii. Secondment Services Agreement dated 18 October 2011, with Sojitz Corporation towards secondment services of the Chief Financial Officer.

xxiv. EPC Supplemental Agreement dated June 10, 2012 for the purpose of setting an interim and permanent solution of GT Acceleration Issue and EPCC’s compensation for any delays, losses or additional costs arising from the GT Acceleration Issue during the Early Power Period.

xxv. Revolving Working Capital Facility (WCF) dated June 05, 2012 with Bank Muscat SAOG for purpose of availing overdraft and short term loan facilities up to Omani Rial 8.459 million.

xxvi. Electrical Connection Agreement dated December 2011 with Oman Electricity Transmission Company S.A.O.C for connection of the Company’s equipment to the transmission system.

Security documents

xxvii. Intercreditor Deed dated 16 September 2010 with The Export-Import Bank of Korea, Credit Agricole Corporate & Investment Bank (as the “Global Facility Agent” and “Offshore Security Trustee”), Bank Muscat SAOG (as the “Onshore Account Bank”) and Others.

xxviii. Offshore Deed of Charge and Assignment dated 16 September 2010 with Credit Agricole Corporate & Investment Bank as “Offshore Security Trustee”.

xxix. Commercial Mortgage over Project Company Assets (including receipt) dated 21 September 2010 between the Company as “Mortgagor”; and Bank Muscat SAOG as “Mortgagee”.

xxx. Legal Mortgage dated 21 September 2010 between the Company as “Mortgagor”; and Bank Muscat SAOG as “Mortgagee”.

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xxxi. Other security documents (direct agreements)

PPA Direct Agreement dated 20 September 2010 between OPWP as the “Buyer”, the Company as “Generator”, Credit Agricole Corporate & Investment Bank as the “Global Facility Agent” and Bank Muscat SAOG as “Onshore Agent”.

NGSA Direct Agreement dated 19 October 2010 between the Government of the Sultanate of Oman represented by the MOG as the “Seller”), the Company as the “Generator”, Credit Agricole Corporate & Investment Bank as the “Offshore Trustee” and Bank Muscat SAOG as the “Onshore Agent”.

O&M Direct Agreement dated 24 September 2010 between STOMO as the “Operator”, GDF Suez cc SCRL as the “O&M Guarantor”, the Company as the “Owner”,and Credit Agricole Corporate & Investment Bank as the “Agent”.

EPC Direct Agreement dated 22 September 2010 between Siemens AG and GS Engineering & Construction Corp. as the “EPC Contractor”, the Company as the “Owner”, and Credit Agricole Corporate & Investment Bank as the “Offshore Security Trustee”.

3 Basis of preparation and significant accounting policies

Basis of preparation

a) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards

as issued by the International Accounting Standards Board (“IASB”) and applicable requirements of the Oman Commercial Companies Law of 1974 (as amended).

b) Basis of measurement These financial statements are prepared on historical cost basis except for deferred finance cost which is

measured at amortised cost and certain financial instruments which are measured at fair value.

c) Use of estimates and judgements The preparation of the financial statements in conformity with IFRSs requires Management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in financial valuation of derivative financial instruments.

Significant accounting policies

d) Foreign currency i) Functional and presentation currency These financial statements are presented in United States Dollars (“USD”), which is the Company’s functional

currency and also in Rial Omani (“RO”). The Omani Rial amounts, which are presented in these financial statements have been translated from the USD amounts at an exchange rate of US $ 1 = RO 0.3845.

ii) Foreign currency transactions In preparing the financial statements, transactions in currencies other than the Company’s functional currency

(foreign currencies) are recorded at the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing at the reporting date.

Non-monetary items that are measured at historical cost in a foreign currency are not translated at the exchange rates prevailing at the reporting date. Translation gains and losses related to monetary items are recognized in

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profit or loss in the period in which they arise, with the exception of those related to monetary items that qualify as hedging instruments in a cash flow hedge that are recognized initially in other comprehensive income to the extent that the hedge is effective.

e) Financial instruments

i) Non derivative financial instrument Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans

and borrowings, and trade and other payables. Cash and cash equivalents comprise cash balances, demand deposits, fixed deposits and term deposits with original maturity not greater than three months. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.

ii) Derivative financial instruments, including hedge accounting The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.

On initial designation of the hedge, the Company formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

The Company makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of 80% to 125%. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported net income.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

iii) Cash flow hedges When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable

to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in other comprehensive income is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the same line item in the statement of comprehensive income as the hedged item. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively.

The cumulative gain or loss previously recognised in other comprehensive income and presented in the hedging reserve in equity remains there until the forecast transaction affects profit or loss. When the hedged item is a non-financial asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset when the asset is derecognised. If the forecast transaction is no longer expected to occur, then the balance in other comprehensive income is recognised immediately in profit or loss. In other cases the amount recognised in other comprehensive income is transferred to profit or loss in the same period that the hedged item affects profit or loss.

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f) Property, plant and equipment

i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated

impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and the difference is recognised in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.

ii) Subsequent expenditure Subsequent expenditure is capitalised only when it increases future economic benefits embodied in the specific

asset to which it relates. Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Company. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

iii) Depreciation Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated

useful lives of the asset less its residual value.

Management reassess the useful lives, residual values and depreciation methods for plant and equipment annually. The estimated useful lives for current and comparative periods are as follows:

Years Property, plant and equipment ............................................................................................................ 30 Technical spares .................................................................................................................................. 25 Other assets .......................................................................................................................................... 3

iv) Capital work in progress Capital work in progress is measured at cost and is not depreciated until it is transferred into one of the fixed

asset categories, which occurs when the assets is ready for intended use.

g) Inventory Inventory comprises of fuel oil and is stated at lower of cost and net realisable value.

h) Impairment

i) Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a

negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.

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ii) Non – financial assets The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets

are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss unless it reverses a previous revaluation that was credited to equity, in which case it is charged to equity.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets’ carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

i) Financial liabilities Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using

the effective interest method.

Interest-bearing liabilities are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

j) Employee terminal benefits Obligations for contributions to a defined contribution retirement plan for Omani employees, in accordance with

the Oman Social Insurance Scheme, are recognised as an expense in profit or loss as incurred.

The Company’s obligation in respect of the terminal benefits of non-Omani employees, is the amount of future benefit that such employees have earned in return or their service in the current and prior periods.

k) Provisions A provision is recognised when the Company has a legal or constructive obligation as a result of a past event,

and it is probable that an outflow of economic benefits will be required to settle the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

l) Borrowing costs Interest expense and similar charges are expensed in profit or loss in the period in which they are incurred, except

to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of a qualifying asset which necessarily takes a substantial period of time to prepare for its intended use or sale.

m) Revenue Revenue comprises tariffs for power capacity and electrical energy charges. Tariffs are calculated in accordance

with the PPA. The operating revenue is recognised by the Company on an accrual basis of accounting. No revenue is recognised if there are significant uncertainities regarding recovery of the consideration due.

n) Income tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit

or loss except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity.

Deferred tax is calculated on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable

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that the related tax benefit will be realised.

o) New standards and interpretation not yet effective A number of new standards, amendments to standards and interpretations are not yet effective for the year

ended 31 December 2012, and have not been applied in preparing these financial statements. None of these will have an effect on the financial statements of the Company.

Determination of fair value

Derivative financial instruments Fair value of forward exchange contracts is estimated by discounting the difference between the contractual

forward price and the current forward price for the residual maturity of the contract using yield curves of the respective currencies.

The fair value of interest rate swaps is based on estimated future cash flows based on the terms and maturity of each contract and using market interest rates.

Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Company and counterparty when appropriate.

4 Capital work in progress

2012 2012 2011 2011

RO USD RO USD

Construction cost incurred 232,154,169 603,781,975 187,128,247 486,679,446

Mobilisation fee 8,341,540 21,694,511 7,328,126 19,058,846

Insurance cost 1,527,498 3,972,688 1,003,978 2,611,126

Financing cost 14,298,719 37,187,825 6,232,029 16,208,136

Development cost 10,812,979 28,122,181 10,812,461 28,120,835

Salaries and wages 939,564 2,443,599 557,673 1,450,386

Other directly attributable expenses 4,695,445 12,211,820 3,285,857 8,545,793

Commissioning costs (net) 3,820,607 9,936,560 - -

Transfer to plant and equipment (173,839,177) (452,117,494) - -

102,751,344 267,233,665 216,348,371 562,674,568

Capital work in progress represents costs incurred towards construction of the plant, net of transfer to property, plant and equipment which represents the proportionate cost of two gas turbines and generators that were commissioned for early power from 03 June, 2012.

Development costs represent:

costs and expenses incurred by the Shareholders (and reimbursed by the Company in accordance with the Shareholders Agreement) in connection with the development and preparation and submission of bid, the establishment of the Company the cost and expenses of external lawyers, consultants and advisors engaged in setting up the Company; and

Project closure fee payable by the Company in accordance with the Shareholders Agreement for successful financial close of the project.

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5 Property, plant and equipment

Plant and equipment

Technical spares

Others assets Total Total

USD USD USD USD RO

Cost

1 January 2011 - - 83,251 83,251 32,010

Additions during the year - - 176,857 176,857 68,001

1 January 2012 - - 260,108 260,108 100,011

Additions/transfer during the year 452,117,494 3,588,617 10,814 455,716,925 175,223,159

31 December 2012 452,117,494 3,588,617 270,922 455,977,033 175,323,170

Depreciation

1 January 2011 - - - - -

Charge for the year - - 81,225 81,225 31,231

1 January 2012 - - 81,225 81,225 31,231

Charge for the year 4,817,801 33,345 91,503 4,942,649 1,900,449

31 December 2012 4,817,801 33,345 172,728 5,023,874 1,931,680

Carrying amount

31 December 2012 447,299,693 3,555,272 98,194 450,953,159 173,391,490

31 December 2011 - - 178,883 178,883 68,780

6 Term loan

2012 2012 2011 2011

RO USD RO USD

Term loans 207,511,574 539,692,000 154,066,074 400,692,000

Less: current portion (9,827,787) (25,559,915) - -

Non-current portion 197,683,787 514,132,085 154,066,074 400,692,000

Less: Unamortised transaction cost (12,732,392) (33,114,150) (13,460,918) (35,008,889)

184,951,395 481,017,935 140,605,156 365,683,111

On 16 September 2010, the Company entered into a Common Terms Agreement (“CTA”), for credit facilities with a consortium of international bank, export credit agencies and local banks with Credit Agricole Corporate and Investment Bank as the Global Facility Agent; Offshore Security Trustee, Offshore Account Bank, KEXIM Facility Agent and Commercial Facility Agent, Bank Muscat SAOG as Onshore Account Bank; Performance Bond Issuing Bank and Performance Bond Facility Agent and KfW Ipex Bank GMBH as the Hermes Facility Agent.

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At 31 December, the facility limits and drawdown amounts were as follows:

Limit Drawdown

2012 2012 2012 2012

RO USD RO USD

31 December 2012

Hermes Covered Variable Facility 72,286,000 188,000,000 68,441,000 178,000,000

KEXIM Direct Facility 44,923,058 116,835,000 26,338,250 68,500,000

Commercial Facility 50,357,196 130,968,000 45,563,250 118,500,000

Hermes Covered Fixed Facility 46,140,000 120,000,000 46,140,000 120,000,000

KEXIM Covered Facility 21,029,074 54,692,000 21,029,074 54,692,000

Commercial Standby Facility 5,967,440 15,520,000 - -

240,702,768 626,015,000 207,511,574 539,692,000

31 December 2011

Hermes Covered Variable Facility 72,286,000 188,000,000 49,408,250 128,500,000

KEXIM Direct Facility 44,923,058 116,835,000 - -

Commercial Facility 50,357,196 130,968,000 37,488,750 97,500,000

Hermes Covered Fixed Facility 46,140,000 120,000,000 46,140,000 120,000,000

KEXIM Covered Facility 21,029,074 54,692,000 21,029,074 54,692,000

Commercial Standby Facility 5,967,440 15,520,000 - -

240,702,768 626,015,000 154,066,074 400,692,000

Repayments The aggregate amount of drawdowns under the above facilities is repayable in half yearly instalments commencing

from 31 October 2013, with the final instalment being due on 31 March 2028.

Interest

i) Interest on Hermes Covered Fixed Facility is charged at a fixed rate of 3.60% per annum, including margin.

ii) Interest on the remaining facilities is charged at a floating rate of US LIBOR plus applicable margin. The Company has entered into interest rate swap contracts to cap its obligations against unfavorable US LIBOR rate changes.

iii) The margins vary between 1.40% and 3.50% per annum depending on the type of facility and the interest payment period.

Other fees Under the terms of the above facilities, the Company is required to pay commitment fees, front end fees, export

credit agency premium, performance bond fees for the facilities, agency fees and all other bank fees.

Securities The above facilities are secured by comprehensive legal and commercial mortgages on all the assets of the

Company.

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Covenants The term loan facilities contains certain covenants pertaining to, amongst other things, liquidation and merger,

entering into material new agreements, negative pledge, disposal of asset, granting of loan and guarantee, acquisition of capital assets, debt service coverage ratio, change of business, hedging agreement, etc, which the Company is required to comply.

7 Prepaid expenses and other receivables

2012 2012 2011 2011

RO USD RO USD

Prepayments 347,704 904,300 630,446 1,639,651

Due from related parties (note 18) 8,762 22,787 37,798 98,305

Other receivable 16,913 43,989 52,264 135,927

373,379 971,076 720,508 1,873,883

8 Cash and cash equivalents

Cash in hand and at bank 1,452,188 3,776,823 747,942 1,945,233

9 Equity

(a) Share capital The Company’s authorised share capital comprises 2,000,000 shares of RO 1 each of which 500,000 shares of

RO 1 each are fully paid up.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

(b) Legal reserve Article 106 of the Commercial Companies Law of 1974 requires that 10% of a company’s net profit be transferred

to a non-distributable legal reserve until the amount of legal reserve becomes equal to at least one-third of the company’s issued share capital.

(c) Hedging reserve Hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow

hedging instruments related to hedged transactions that have not yet occurred (note 15).

10 Trade and other payables

2012 2012 2011 2011

RO USD RO USD

Trade payables 4,889,902 12,717,559 - -

Due to related parties (note 18) 82,834 215,434 96,940 252,120

Accrued EPC cost 4,790,746 12,459,676 9,302,347 24,193,360

Accrued commitment fee 10,236 26,621 25,075 65,215

Other payable and accruals 2,728,832 7,097,091 815,685 2,121,420

12,502,550 32,516,381 10,240,047 26,632,115

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11 Income tax

The Company is liable to income tax, in accordance with the income tax laws of Sultanate of Oman, at the rate of 12% of the taxable income in excess of RO 30,000.

Deferred tax asset has been recognised directly in equity in respect of the changes in fair values of interest rate swap and forward rate contract (note 19).

Income tax recognised in statement of comprehensive income.

2012 2012 2011 2011

RO USD RO USD

Deferred tax expense is relating to temporary differences 785,284 2,042,352 - -

12 Liquidated damages

As per the EPC contract the Early Power Commercial Operation Date (“EPCOD”) was scheduled for 1st May 2012. Actual commercial operation date was achieved on 3rd June 2012 resulting in a delay of 33 days for which the Company has invoiced liquidated damages (“LDs”) to the EPC Contractor (“EPCC”) and has accrued LDs payable to the Oman Power & Water Procurement Company (OPWP).

The EPCC has formally disputed a portion of the LDs charged. The Company has also formally disputed all or part of the LDs payable to OPWP. The LDs shown in the financial statements take into account the undisputed amounts.

13 Direct costs

2012 2012 2011 2011

RO USD RO USD

Fuel gas 4,696,845 12,215,462 - -

O&M fee 2,559,025 6,655,463 - -

Depreciation (note 5) 1,865,266 4,851,146 - -

Seawater extraction 17,000 44,213 - -

Generation license fee 11,639 30,270 - -

OETC connection fee 64,772 168,458 - -

Other operating expenses 73,657 191,566 - -

9,288,204 24,156,578 - -

14 General and administrative expenses

Office rent 12,010 31,234 8,982 23,360

Employment costs 66,619 173,261 33,986 88,393

Secondment fees 38,901 101,173 - -

Agency fees 9,620 25,019 - -

Audit and tax fees 8,874 23,079 6,633 17,250Other general and administrative expenses

53,504 139,153 21,463 55,820

Depreciation (note 5) 35,183 91,503 31,231 81,225

224,711 584,422 102,295 266,048

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15 Finance costs

2012 2012 2011 2011

RO USD RO USD

Swap interest 976,326 2,539,210 - -

Interest on equity bridge loan 177,476 461,575 - -

Interest on shareholder loan 52,225 135,827 - -

Interest on term loans 1,318,471 3,429,052 - -

Amortisation of deferred finance costs 334,926 871,068 - -

Interest on payables 33 86 - -

Exchange gain 18,179 47,280 - -

2,877,636 7,484,098 - -

16 Equity contribution

The Company, its shareholders and lenders as defined under CTA entered into Equity Subscription and Retention Agreement (“ESRA”) dated 16 September 2010. Under the ESRA, the shareholders are required to provide base equity contribution as follows:

– Equity bridge advances from GDF Suez, Multitech, Sojitz and Yonden (“EBL Shareholders”); and

– Subordinated advances from PASI (2011 – PASI & Multitech) (note 17).

EBL shareholders irrevocably and unconditionally guarantee to the EBL Finance Parties for punctual payments and performance of their obligation.

Equity bridge loan On 16 September 2010, the Company entered into the GDF Suez Equity Bridge Loan Agreement and Sojitz and

Yonden Equity Bridge Loan Agreements. During the year, Multitech converted their shareholder loan into an equity bridge loan (note 17).

Equity bridge loan 60,289,869 156,800,700 45,552,346 118,471,640

Less: Unamortised transaction cost (27,492) (71,501) (137,440) (357,450)

60,262,377 156,729,199 45,414,906 118,114,190

Facility limit The facility limit of GDF Suez, Sojitz, Yonden and Multitech Equity Bridge Loan Agreements is in the amount of

RO 30,814,822 (USD 80,142,580), RO 7,368,762 (USD 19,164,530), RO 7,368,762 (USD 19,164,530) and RO 14,737,524 (USD 38,329,060) respectively.

Repayments The aggregate amount of the loan will be repaid at the earlier of 1 April 2013 and the COD (scheduled for 1 April

2013).

Interest The GDF Suez equity bridge loans carry interest rates at US LIBOR plus agreed margin of 0.79% per annum,

Sojitz and Yonden equity bridge loans carry interest rates at US LIBOR plus agreed margins of 0.60% per annum and Multitech at US LIBOR plus agreed margin of 1.03% per annum.

17 Shareholders loan

On 16 September 2010, the Company and its shareholders (Multitech and PASI) entered into Shareholder Loan Agreements (“SLA”) as required under ESRA to provide subordinated advances.

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At 31 December 2012, the drawdown amounts are as follows:

2012 2012 2011 2011

RO USD RO USD

Multitech (note 17) - - 14,737,524 38,329,060

PASI (note 16) 6,698,874 17,422,300 6,698,874 17,422,300

6,698,874 17,422,300 21,436,398 55,751,360

Repayments As per the SLA, the aggregate amount of the loan will be repaid at the earlier of 1 April, 2013 and the COD

(scheduled for 1 April 2013). During the year the shareholder loan from Multitech was converted to an equity bridge loan.

Interest SLA carry interest rate of US LIBOR plus agreed margin of 1.03% per annum.

18 Related party transactions

Related parties comprise the shareholders, directors, key management personnel, business entities that have the ability to control or exercise significant influence in financial and operating decisions of the Company and entities over which certain shareholders are able to exercise significant influence.

Prices and terms of these transactions, which are entered into in the normal course of business, are on mutually agreed terms and conditions.

The Company had the following significant transactions with related parties during the year:

2012 2012 2011 2011

RO USD RO USD

Multitech 178,474 464,172 336,856 876,089

Kahrabel 149,974 390,051 660,355 1,717,439

Kahrabel Operations and Maintenance Oman (“KOMO”) 221,207 575,310 422,428 1,098,642

Suez Tractebel SA 59,323 154,285 49,234 128,046

Tractebel Engineering SA (“TE”) 395,021 1,027,363 1,061,154 2,759,828

Sojitz Corporation 141,573 368,199 183,221 476,518

Shikoku Electric Power Co. 63,005 163,861 83,242 216,493

PASI 130,076 338,299 153,020 397,971

Al Suwadi Power Co. SAOC (“ASP”) 37,060 96,384 26,968 70,139

Suez Tractebel Operation & Maintenance Oman LLC 3,572,439 9,291,129 7,328,127 19,058,846

4,948,152 12,869,053 10,304,605 26,800,011

The nature of the above transactions is as follows:

Interest on SLA (note17) 204,169 530,999 290,734 756,135

Development costs - - 820,746 2,134,579

Performance bond charges 326,027 847,924 324,969 845,172

Secondment fees 326,946 850,314 387,854 1,008,722

Fixed service fee 36,695 95,436 39,480 102,678

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Owner's engineer fees 395,021 1,027,363 1,061,154 2,759,828

Mobilisation fee 505,709 1,315,237 7,328,127 19,058,846

O&M fixed fee 2,538,524 6,602,142 - -

O&M variable fee 528,207 1,373,749 - -

Others 86,854 225,889 51,541 134,051

4,948,152 12,869,053 10,304,605 26,800,011

Balances due from related parties at the year end comprised (note 7):

KOMO 941 2,448 13,769 35,811

ASP 7,806 20,300 23,828 61,971

Shikoku Electric Power Co. 15 39 - -

Sojitz Corporation - - 201 523

8,762 22,787 37,798 98,305

Balances due to related parties at the year end comprised (note 10):

TE 82,834 215,434 96,940 252,120

19 Hedging reserve

At 31 December 2012, derivative instruments (“assets/ (liabilities)”) were as follows:

2012 2012 2011 2011

RO USD RO USD

Interest rate swaps:

Senior debt (note 19 (a))

KfW Ipex Bank (3,851,009) (10,015,628) (3,166,761) (8,236,049)

Standard Chartered Bank (8,328,222) (21,659,875) (6,468,328) (16,822,700)

Credit Agricole Corporate & Investment Bank (3,438,142) (8,941,852) (2,811,631) (7,312,434)

HSBC Bank - senior debt (2,809,408) (7,306,653) (2,312,390) (6,014,019)

Shareholders loan and equity bridge loan (note 19 (b))

Standard Chartered Bank - equity bridge loan (52,605) (136,814) 214,842 558,758

HSBC Bank - equity bridge loan (15,313) (39,827) 42,195 109,741

Total fair value of interest rate swaps (18,494,699) (48,100,649) (14,502,073) (37,716,703)

Less: Deferred tax asset (note 11) 2,219,364 5,772,078 1,740,249 4,526,005

Fair value of interest rate swaps net of tax (16,275,335) (42,328,571) (12,761,824) (33,190,698)

Forward rate contract: (note 19(c))

Fair value of forward rate contract (1,997,168) (5,194,192) (2,889,768) (7,515,652)

Less: Deferred tax asset (note 11) 239,660 623,303 346,772 901,878

Fair value of forward rate contract net of tax (1,757,508) (4,570,889) (2,542,996) (6,613,774)

147

2012 2012 2011 2011

RO USD RO USD

Total fair value of derivative instruments (20,491,867) (53,294,841) (17,391,841) (45,232,355)

Less: Deferred tax asset (note 11) 2,459,024 6,395,381 2,087,021 5,427,883

Fair value of derivative instruments net of tax (18,032,843) (46,899,460) (15,304,820) (39,804,472)

Hedging reserve net of tax at the end of the year (18,032,843) (46,899,460) (15,304,820) (39,804,472)

Less: Hedging reserve net of tax at the beginning of the year (15,304,820) (39,804,472) 7,793,753 20,269,840

Effective portion of change in fair value of cash flow hedge for the year net of tax (2,728,023) (7,094,988) (23,098,573) (60,074,312)

19(a) The long term facilities in the amount of USD 490.5 million (excluding Hermes Covered Fixed Facility of USD 120 million and Commercial Standby Facility of USD 15.5 million) of the Company bear interest at US LIBOR plus applicable margins.

The Company has fixed the rate of interest through Interest Rate Swap Agreements (“IRS”) entered into with HSBC Bank Middle East Limited, dated 6 October 2010, Standard Chartered Bank dated 19 December 2011, KfW Ipex Bank GMBH, dated 6 October 2010 and Credit Agricole Corporate and Investment Bank, dated 5 October 2010 respectively, for 100% of the facilities amount (excluding Hermes Covered Fixed Facility and Commercial Standby Facility).

The hedged notional amounts are approximately USD 73.9 million, USD 222.7 million, USD 101.6 million and USD 92.3 million at fixed interest rates of 2.9788%, 2.9708%, 2.975% and 2.953% per annum respectively, excluding margins.

19(b) Equity bridge loans (note 16) and shareholders loan (note 17) in the amount of USD 174.2 million bear interest at US LIBOR plus applicable margins.

The Company has entered into Interest Rate Swap Agreements (“IRS”) to hedge against the fluctuation in interest rate.

The IRS was entered into with HSBC Bank Middle East Limited, on 6 October 2010, Standard Chartered Bank on 7 October 2010 and an additional hedge with HSBC Bank Middle East Limited on 2 March 2011 for 100% of the equity bridge loans and shareholder loans.

The facility hedged notional amounts are approximately USD 24.6 million, USD 139.3 million and USD 10.3 million, at fixed interest rates of 0.7088%, 0.7085% and 0.95% per annum respectively, excluding margins.

19(c) The O&M Agreement includes an outflow of approximately Euro 127 million, payable in Euro. The Company has entered into a Forward Rate Agreement (“FRA”) on 12 October 2010 with Standard Chartered Bank to hedge against fluctuations in Euro/USD exchange rate.

As per the FRA, the Company shall pay a fixed USD amount at an exchange rate of 1.4318 and receive contractual Euro amount at each maturity date.

148

20 Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Market risk

Credit risk

Liquidity risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

Board of Directors has overall responsibility for establishing and overseeing the Company’s risk management framework. The Board has entrusted the Management with the responsibility of developing and monitoring the Company’s risk management policies and procedures and its compliance with them.

a) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity

prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

b) Interest rate risk The Company has borrowings which are interest bearing and exposed to changes in US LIBOR rates. The

Company has entered into interest rate swaps to hedge its US LIBOR risk exposure on 100% of its total loan facilities, including equity bridge loans and shareholders loans, and excluding Hermes Covered Fixed Facility and Commercial Standby Facility.

The Company does not account for any fixed rate financial liabilities at fair value through profit or loss and the Company does not designate hedging instruments under a fair value hedge accounting model. Therefore a change in interest rate at the reporting date would not affect profit or loss.

At the reporting date, the interest rate profile of the Company’s interest-bearing financial liabilities was:

Interest rate 2012 2012 2011 2011

% RO USD RO USD

Financial liabilities

Shareholders loan- USD variable rate loans

Libor + 1.03% 6,698,874 17,422,300 21,436,398 55,751,360

Equity bridge loan- USD variable rate loans – KfW

Libor + 0.79% 30,814,822 80,142,580 30,814,822 80,142,580- USD variable rate loans – Mizuho

Libor + 0.60% 14,737,524 38,329,060 14,737,524 38,329,060

- USD variable rate Libor +

loans – HSBC Oman 1.03% 14,737,524 38,329,060 - -

Term loan

USD variable rate Libor + 161,371,574 419,692,000 107,926,074 280,692,000

loans ranging between 1.40% and

2.56%

Term loan

- USD fixed rate loans 3.60% 46,140,000 120,000,000 46,140,000 120,000,000

274,500,318 713,915,000 221,054,818 574,915,000

149

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and income statement by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Equity

100 bps 100 bps 100 bps 100 bps

Increase Decrease Increase Decrease

RO RO USD USD

31 December 2012

Interest rate swap 14,369,670 (16,030,780) 37,372,355 (41,692,536)

31 December 2011

Interest rate swap 15,937,428 (4,074,725) 41,449,750 (10,597,466)

Currency risk The price under the O&M Agreement includes an amount of approximately Euro 127 million, payable in Euro. The

Company has entered into FRA to hedge against fluctuations in Euro/USD exchange rate (note 19(c)). The Euro amounts hedged cover 70% of outflows for the period upto March 2018, 50% for the period April 2018 to March 2023 and 30% thereafter.

Sensitivity analysis: A strengthening (weakening) of the Euro against all other currencies at 31 December would have affected the

measurement of financial instruments denominated in a foreign currency and increased (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

Equity Profit or loss

Strengthing Weakening Strengthing Weakening

31 December 2012 USD’000s USD’000s USD’000s USD’000s

EUR ( 10% movement) 7,402 (7,402) - -

RO’000s RO’000s RO’000s RO’000s

EUR ( 10% movement) 2,846 (2,846) - -

31 December 2011 USD’000s USD’000s USD’000s USD’000s

EUR ( 10% movement) 7,202 (7,202) - -

RO’000s RO’000s RO’000s RO’000s

EUR ( 10% movement) 2,769 (2,769) - -

Apart from above, Management considers that the Company is not exposed to significant foreign exchange risk because all transactions and balances are either in RO or USD and RO is effectively pegged to the USD.

b) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails

to meet its contractual obligations, and arises principally from the Company’s receivables from customers and

150

cash balances held with banks. The Company limits its credit risk with regard to bank deposits by only dealing with reputable banks and financial institutions. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2012 2012 2011 2011

RO USD RO USD

Cash and cash equivalents 1,452,188 3,776,823 747,942 1,945,233

Accrued revenue 371,341 965,776 - -

Other receivable and due from related parties 373,379 971,076 90,062 234,232

2,196,908 5,713,675 838,004 2,179,465

c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The

Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company limits its liquidity risk by ensuring bank facilities and shareholders’ loans are available, where required. Liquidity requirements are monitored on a monthly basis and management ensures that sufficient liquid funds are available to meet any commitments as they arise.

The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting agreements:

Carrying amount

Contractual

cash flowLess than 1

yearMore than 1

to 5 years

More than

5 years31 December 2012 RO RO RO RO RODerivativesDerivative instruments 20,491,867 (21,103,054) - (19,742,087) (1,360,967)Non-derivatives financial liabilitiesShareholders loan 6,698,874 (6,698,874) (6,698,874) - -Equity bridge loan 60,262,377 (60,289,869) (60,289,869) - -Term loan 194,779,182 (207,511,574) (9,827,787) (46,091,685) (151,592,102)Trade and other payables 12,502,550 (12,502,550) (12,502,550) - -

294,734,850 (308,105,921) (89,319,080) (65,833,772) (152,953,069)

USD USD USD USD USDDerivativesDerivative instruments 53,294,841 (54,884,405) - (51,344,830) (3,539,575)Non-derivatives financial liabilities 17,422,300 (17,422,300) (17,422,300) - -Shareholders loanEquity bridge loan 156,729,199 (156,800,700) (156,800,700) - -Term loan 506,577,850 (539,692,000) (25,559,915) (119,874,340) (394,257,745)Trade and other payables 32,516,381 (32,516,381) (32,516,381) - -

766,540,571 (801,315,786) (232,299,296) (171,219,170) (397,797,320)

151

Carrying amount

Contractual cash flow

Less than 1 year

More than 1 to 5 years

More than 5 years

31 December 2011 RO RO RO RO RO

Derivatives

Derivatives instruments 17,391,841 (18,281,937) - (16,059,784) (2,222,153)

Non-derivatives financial liabilities

Shareholders loan 21,436,398 (21,436,398) - (21,436,398) -

Equity bridge loan 45,414,906 (45,552,346) - (45,552,346) -

Term loan 140,605,156 (154,066,074) - (31,612,011) (122,454,063)

Trade and other payables 10,240,047 (10,240,047) (10,240,047) - -

235,088,348 (249,576,802) (10,240,047) (114,660,539) (124,676,216)

USD USD USD USD USD

Derivatives

Derivatives instruments 45,232,355 (47,547,300) - (41,767,970) (5,779,330)

Non-derivatives financial liabilities

Shareholders loan 55,751,360 (55,751,360) - (55,751,360) -

Equity bridge loan 118,114,190 (118,471,640) - (118,471,640) -

Term loan 365,683,111 (400,692,000) - (82,215,893) (318,476,107)

Trade and other payables 26,632,115 (26,632,115) (26,632,115) - -

611,413,131 (649,094,415) (26,632,115) (298,206,863) (324,255,437)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amount.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1 – Fair values are measured based on quoted prices (unadjusted) from active markets for identical financial instruments.

Level 2 – Fair values are measured using inputs, other than those used for Level 1, that are observable for the financial instruments either directly (prices) or indirectly (derived from prices).

Level 3 – Fair values are measured using inputs which are not based on observable market data (unobservable input).

2012 - Level 2 2011 - Level 2

RO USD RO USD

Derivative financial liabilities 20,491,867 53,294,841 17,391,841 45,232,355

152

There were no transfers between level 1 and level 2 during the year.

Embedded derivatives

The following agreements contain embedded derivatives as follows:

i) The PPA between the Company and OPWP contain embedded derivatives in the pricing formulae that adjusts the charge rates for the Plant to reflect changes in USD / RO currency exchange rates and changes in US price index and the Oman price index.

ii) The O & M agreement contains embedded derivatives in the pricing formulae that adjusts the payments to reflect changes in relevant inflation indices.

iii) The SUA between the Company and SIPC contain embedded derivatives in the pricing formulae that adjust the rent for the land to reflect changes in US consumer price index and the Omani consumer price index.

iv) These embedded derivative are not separated from the host contract, the PPA, the O&M agreement, and SUA and is not accounted for as a standalone derivative under IAS 39, as the management believes that the economic characteristics and risks associated with the embedded derivative are closely related to those of the host contracts.

Capital management The Company aims to maintain a strong capital base so as to maintain investor, creditor and market confidence

and to sustain future development and growth of its businesses, while at the same time maintaining an appropriate dividend policy to reward shareholders.

21 Contingent liabilities

The Company has provided a bank guarantee from Bank Muscat SAOG in the amount of RO 30,000,000 (USD 78,023,407) in favour of OPWP.

This bank guarantee is counter indemnified by Corporate Guarantees and bank guarantees fromthe Shareholders.

22 Capital commitments

At 31 December 2012, commitments in respect of contracts placed are as follows:

2012 2012 2011 2011

RO USD RO USD

Commitments in respect of contracts placed 9,076,759 23,606,656 55,107,645 143,322,875

Operating lease commitments:

At 31 December future minimum lease commitments under the Usufruct Agreement are as follows:

Within one year 223,925 582,381 220,407 573,230

Between two and five years 558,648 1,452,922 623,687 1,622,072

After five years 1,509,116 3,924,879 1,648,778 4,288,109

23 Comparative figures

Certain comparative figures have been reclassified where necessary to conform to the current year presentation.

153

Financial Statements

31 December 2013

Contents Page

Report of the Independent Auditors ........................................................................................................................... 154

Income statement ....................................................................................................................................................... 155

Statement of comprehensive income......................................................................................................................... 156

Statement of financial position ................................................................................................................................... 157

Statement of cash flows ............................................................................................................................................. 158

Statement of changes in equity ........................................................................................................................... 159-160

Notes ................................................................................................................................................................... 161-184

154

INDEPENDENT AUDITORS REPORT TO THE SHAREHOLDERS OF

AL BATINAH POWER COMPANY SAOC

Report on the financial statements

We have audited the financial statements of Al Batinah Power Company SAOC (“the Company”), set out on pages 155 to 184, which comprise the statement of financial position as at 31 December 2013, and the statements of income, comprehensive income, changes in equity and cash flows for the eight months period ended, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, the disclosure requirements of the Commercial Companies Law of 1974, as amended, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December2013, and its financial performance and its cash flows for the year ended in accordance with International Financial Reporting Standards.

Report on other legal and regulatory requirements

In our opinion, the financial statements of the Company as at and for the year ended 31 December 2013, in all material respects, comply with the Commercial Companies Law of 1974, as amended.

Sd/-________________________

KPMG

155

Income statement

for the year ended 31December

2013 2013 2012 2012

Notes RO USD RO USD

Revenue 43,164,525 112,261,441 17,922,161 46,611,603

Direct cost 14 (21,974,653) (57,151,239) (9,288,204) (24,156,578)

Gross profit 21,189,872 55,110,202 8,633,957 22,455,025

Liquidated damages (net) 13 1,283,045 3,336,918 (103) (269)

22,472,917 58,447,120 8,633,854 22,454,756

General and administrative expenses

15 (478,715) (1,245,029) (224,711) (584,422)

Profit before interest and taxes 21,994,202 57,202,091 8,409,143 21,870,334

Finance costs 16 (9,482,348) (24,661,497) (2,877,636) (7,484,098)

Net profit before tax 12,511,854 32,540,594 5,531,507 14,386,236

Income tax 11 (3,261,707) (8,482,983) (785,284) (2,042,352)

Net profit after tax 9,250,147 24,057,611 4,746,223 12,343,884

The notes on pages 161 to 184 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 154.

156

Statement of comprehensive income

for the year ended 31December

2013 2013 2012 2012

Notes RO USD RO USD

Net profit after tax 9,250,147 24,057,611 4,746,223 12,343,884

Other comprehensive income, net of tax:

Item that will be reclassified to profit and loss

Cash flow hedges - effective portion of changes in fair value 20 15,033,834 39,099,700 (2,728,023) (7,094,988)

Total comprehensive income/ (loss) for the year 24,283,981 63,157,311 2,018,200 5,248,896

The notes on pages 161 to 184 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 154.

157

Statement of financial position

as at 31 December

Notes 2013 2013 2012 2012

RO USD RO USD

Non-current assetsProperty, plant and equipment 5 290,980,174 756,775,485 173,391,490 450,953,159

Capital work in progress 4 - - 102,751,344 267,233,665

Deferred tax asset 11&20 430,743 1,120,268 2,459,024 6,395,381

Total non-current assets 291,410,917 757,895,753 278,601,858 724,582,205

Current assetsTrade and other receivables 7 2,643,075 6,874,060 744,720 1,936,852

Inventories 1,893,314 4,924,097 1,802,937 4,689,044

Cash and cash equivalents 8 5,057,149 13,152,534 1,452,188 3,776,823

Total current assets 9,593,538 24,950,691 3,999,845 10,402,719

Total assets 301,004,455 782,846,444 282,601,703 734,984,924

EquityShare capital 9(a) 67,488,743 175,523,389 500,000 1,300,390

Legal reserve 9(b) 1,091,682 2,839,224 166,667 433,463

Retained earnings 9(d) 9,114,642 23,705,192 4,442,260 11,553,342

Shareholder's fund 77,695,067 202,067,805 5,108,927 13,287,195

Hedging reserve9(c) &

20 (2,999,008) (7,799,760) (18,032,843) (46,899,460)

Total equity 74,696,059 194,268,045 (12,923,916) (33,612,265)

Non-current liabilitiesShareholders loan 18 - - 6,698,874 17,422,300

Equity bridge loan 17 - - 60,262,377 156,729,199

Term loans 6 200,686,579 521,941,686 184,951,395 481,017,935

Derivative instruments 20 3,411,782 8,873,293 20,491,867 53,294,841

End of service benefits 6,146 15,983 5,485 14,266

Asset retirement obligation 12 425,119 1,105,640 - -

Deferred tax liability 11&20 4,068,320 10,580,808 785,284 2,042,352

Total non-current liabilities 208,597,946 542,517,410 273,195,282 710,520,893

Current liabilitiesTerm loans 6 11,875,621 30,885,880 9,827,787 25,559,915

Short term borrowing 2,655,000 6,905,072 - -

Trade and other payables 10 3,179,829 8,270,037 12,502,550 32,516,381

Total current liabilities 17,710,450 46,060,989 22,330,337 58,076,296

Total liabilities 226,308,396 588,578,399 295,525,619 768,597,189

Total equity and liabilities 301,004,455 782,846,444 282,601,703 734,984,924

The financial statements were approved and authorised for issue in accordance with a resolution of the Board of Directors on 26 February 2014.

Sd/- Sd/-__________________________ ___________________________

Chairman DirectorThe notes on pages 161 to 184 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 154.

158

Statement of cash flows

for theyear ended 31December

2013 2013 2012 2012

RO USD RO USD

Cash flows from operating activities:

Net profit after tax 9,250,147 24,057,611 4,746,223 12,343,884

Adjustments for:

Income tax expense 3,261,707 8,482,983 785,284 2,042,352

Depreciation 5,561,824 14,465,081 1,900,449 4,942,649

Loss on sale of property, plant and equipment 44 114 - -

Ineffective portion of cash flow hedge 3,360 8,738 - -

End of service benefits (net) 661 1,717 2,543 6,613

18,077,743 47,016,244 7,434,499 19,335,498

Changes in:

Trade receivables (1,727,576) (4,493,047) - -

Inventories (90,377) (235,053) (1,626,385) (4,229,871)

Prepaid expenses and other receivables (170,779) (444,161) (24,212) (62,969)

Asset retirement obligation 425,119 1,105,640 - -

Trade and other payables (9,322,721) (24,246,344) 2,262,503 5,884,266

Net cash from operating activities 7,191,409 18,703,279 8,046,405 20,926,924

Cash flows from investing activities:

Acquisition of property, plant and equipment (123,150,568) (320,287,562) (175,223,159) (455,716,925)

Proceeds from sale of fixed asset 17 40 - -

Transfer of capital work in progress 102,751,344 267,233,665 113,597,027 295,440,903)

Net cash used in investing activities (20,399,207) (53,053,857) (61,626,132) (160,276,022)

Cash flows from financing activities:

Movement in share capital 66,988,743 174,222,999 - -

Movement in shareholder loan (6,698,874) (17,422,300) (14,737,524) (38,329,060)

Movement in equity bridge loan (60,262,377) (156,729,199) 14,847,471 38,615,009

Net proceeds from term loan 17,783,017 46,249,717 54,174,026 140,894,739

Dividend paid (3,652,750) (9,500,000) - -

Short term borrowing 2,655,000 6,905,072 - -

Net cash from financing activities 16,812,759 43,726,289 54,283,973 141,180,688

Net increase in cash and cash equivalents 3,604,961 9,375,711 704,246 1,831,590

Cash and cash equivalents at beginning of the year 1,452,188 3,776,823 747,942 1,945,233

Cash and cash equivalents at end of the year 5,057,149 13,152,534 1,452,188 3,776,823

The notes on pages 161 to 184 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 154.

159

Statement of changes in equity

for the year ended 31 December

Share Legal Retained Hedging

capital reserve earnings reserve Total

RO RO RO RO RO

Balance at 1 January 2013 500,000 166,667 4,442,260 (18,032,842) (12,923,915)

Total comprehensive income

Net profit for the year - - 9,250,147 - 9,250,147

Other comprehensive income

Cash flow hedges - effective portion of changes in fair value - - - 15,033,834 15,033,834

Total comprehensive income - - 9,250,147 15,033,834 24,283,981

Transactions with owners of the Company

Contribution and distribution

Conversion of equity bridge and shareholder loans 66,988,743 - - - 66,988,743

Transfer to legal reserve - 925,015 (925,015) - -

Dividend - - (3,652,750) - (3,652,750)

Total transactions with owners of the Company 66,988,743 925,015 (4,577,765) - 63,335,993

Balance at 31 December 2013 67,488,743 1,091,682 9,114,642 (2,999,008) 74,696,059

USD USD USD USD USD

Balance at 1 January 2013 1,300,390 433,463 11,553,342 (46,899,460) (33,612,265)

Total comprehensive income

Net profit for the year - - 24,057,611 - 24,057,611

Other comprehensive income

Cash flow hedges - effective portion of changes in fair value - - - 39,099,700 39,099,700

Total comprehensive income - - 24,057,611 39,099,700 63,157,311

Transactions with owners of the Company

Contribution and distribution

Conversion of equity bridge and shareholder loans 174,222,999 - - - 174,222,999

Transfer to legal reserve - 2,405,761 (2,405,761) - -

Dividend - - (9,500,000) - (9,500,000)

Total transactions with owners of the Company 174,222,999 2,405,761 (11,905,761) - 164,722,999

Balance at 31 December 2013 175,523,389 2,839,224 23,705,192 (7,799,760) 194,268,045

160

Share Legal Retained Hedging

capital reserve earnings reserve Total

RO RO RO RO RO

Balance at 1 January 2012 500,000 - (137,296) (15,304,820) (14,942,116)

Total comprehensive income

Net profit for the year - - 4,746,223 - 4,746,223

Transfer to legal reserve - 166,667 (166,667) - -

Other comprehensive income

Cash flow hedges - effective portion of changes in fair value - - - (2,728,023) (2,728,023)

Total comprehensive income - 166,667 4,579,556 (2,728,023) 2,018,200

Balance at 31 December 2012 500,000 166,667 4,442,260 (18,032,843) (12,923,916)

USD USD USD USD USD

Balance at 1 January 2012 1,300,390 - (357,079) (39,804,472) (38,861,161)

Total comprehensive income

Net profit for the year - - 12,343,884 - 12,343,884

Transfer to legal reserve - 433,463 (433,463) - -

Other comprehensive income

Cash flow hedges - effective portion of changes in fair value - - - (7,094,988) (7,094,988)

Total comprehensive income - 433,463 11,910,421 (7,094,988) 5,248,896

Balance at 31 December 2012 1,300,390 433,463 11,553,342 (46,899,460) (33,612,265)

The notes on pages 161 to 184 form an integral part of these financial statements.The report of the Independent Auditors is set forth on page 154.

161

Notes

(forming part of the financial statements)

1 Legal status and principal activities

Al Batinah Power Company SAOC (the “Company”) is a closed Omani joint stock company registered on 2 August 2010 under the Commercial Companies Law of Oman.

The Company’s principal activities are as follows:

- Design, procurement, construction, commissioning and financing of the Sohar 2 Power Plant (“the Plant”) with a capacity of about 750 MW.

- The full operation and maintenance of the Plant in accordance with good practices throughout the useful life time of the Plant from the Commercial Operation Date (“COD”).

- Making available the demonstrated power capacity.

- Selling the electricity energy delivered to Oman Power & Water Procurement Company SAOC (“OPWP”).

The Company’s issued share capital is owned 46% by Kahrabel FZE, UAE (“Kahrabel”) (a IPR GDF Suez entity), 22% by Multitech LLC (“Multitech”), Oman (a SuhailBahwan group company), 11% each by Blue Horizon Sohar Power BV (“Sojitz”,a Sojitz Corporation group company) and SEP International Netherlands BV (“Yonden” a Shikoku Electric Power group company) and 10% by Public Authority for Social Insurance, Oman (“PASI”), (“together the Founder Shareholders”).

Commercial Operation of the Plant was achieved by the Company on 3 April 2013 as compared to the originally scheduled date of 1 April 2013.

2. Significant agreements

i. Power Purchase Agreement (“PPA”) dated 10 August 2010 with OPWP for a period of 15 years from the scheduled Commercial Operation Date (“COD”).

ii. Natural Gas Sales Agreement (“NGSA”) dated 31 August 2010 with the Ministry of Oil and Gas (“MOG”) for the purchase of natural gas for a period of 15 years from the scheduled COD.

iii. Sub Usufruct Agreement (“SUA”) relating to the Sohar site dated 10 August 2010 with Sohar Industrial Port Co. SAOC (“SIPC”) for grant of exclusive right to use and benefit from the land upto 20 October 2028.

iv. License Agreement related to the Temporary Areas dated 15 August 2010 with the Sohar Industrial Port Co. SAOC for grant of temporary license to use the temporary site upto 20 October 2013.

v. Turnkey Engineering, Procurement and Construction (“EPC”) Contract dated 15 September 2010 with Siemens AG and GS Engineering and Construction Corp. to perform the engineering, procurement and construction of the Plant.

vi. Operation & Maintenance (“O & M”) Agreement with Suez Tractebel Operation and Maintenance Oman LLC (“STOMO”) dated 24 September 2010 for a period of 15 years from the COD.

vii. Common Terms Agreement and Facility Agreements dated 16 September 2010 for long term loans with international and local banks.

viii. First Amendment Agreement to the Common Terms Agreement and Facility Agreements with the parties dated 16 September 2010.

ix. Equity Bridge Loan Agreement (“GDF Suez Equity Bridge Loan Agreement”) dated 16 September 2010 between the Company as the “Borrower”, and KfW IPEX Bank GMBH as the “Original EBL Lender” & “EBL Facility Agent”.

x. Equity Bridge Loan Agreements (“Sojitz and Yonden Equity Bridge Loan Agreement”) dated 16 September 2010 between the Company as the “Borrower”, and Mizuho Corporate Bank Limited as the “Original EBL

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Lender” and “EBL Facility Agent”. (all the Original EBL Lenders and Original EBL Facility agents together referred to as “EBL Finance Parties”)

xi. Equity Bridge Loan Agreement (“Multitech Equity Bridge Loan Agreement”) dated April 26, 2012 between the Company as the “Borrower” and HSBC Bank Middle East Limited as the “Original EBL Lender” & “EBL Facility Agent”.

xii. Shareholder Loan Agreements (“SLA”) dated 16 September 2010 with PASI in respect of loan from shareholder.

xiii. Hedging Agreements for LIBOR Rate Swaps made with Credit Agricole Corporate and Investment Bank (dated 5 October 2010), KfW IPEX Bank GMBH (dated 6 October 2010), HSBC Bank Middle East Limited (dated 6 October 2010) and Standard Chartered Bank (dated 7 October 2010 and reprofiled on 19 December 2011).

xiv. Hedging Agreement dated 12 October 2010 with Standard Chartered Bank for USD / Euro exchange rate.

xv. Performance Bond dated 9 August 2010 issued by Bank Muscat SAOG in favour of OPWP.

xvi. EPC Performance Bond issued by Credit Agricole Corporate & Investment Bank in favour of the Company dated 20 September 2010.

xvii. Project Founders’ Agreement (“PFA”) dated 10 August 2010 between Electricity Holding Company and the Founder Shareholders.

xviii. Equity Subscription and Retention Agreement (“ESRA”) dated 16 September 2010 with the Initial Shareholders and Sponsors.

xix. O & M guarantee dated 24 September 2010 made between GDF Suez cc SCRL, Brussels, as “Guarantor” and the Company as “Beneficiary”.

xx. Seawater Extraction Agreement (“SEA”) dated 10 August 2010 with Majis Industrial Services SAOC for 15 years from COD.

xxi. Shareholders Agreement dated 29 November 2010.

xxii. Secondment Services Agreements dated 22 August, 2011 with Kahrabel Operations and Maintenance Oman towards secondment services of the Chief Executive Officer and Construction Manager.

xxiii. Secondment Services Agreement dated 18 October 2011, with Sojitz Corporation towards secondment services of the Chief Financial Officer.

xxiv. EPC Supplemental Agreement dated June 10, 2012 for the purpose of setting an interim and permanent solution of GT Acceleration Issue and EPCC’s compensation for any delays, losses or additional costs arising from the GT Acceleration Issue during the Early Power Period.

xxv. Revolving Working Capital Facility (WCF) dated June 05, 2012 with Bank Muscat SAOG for purpose of availing overdraft and short term loan facilities up to Omani Rial 8.459 million.

xxvi. Electrical Connection Agreement dated December 2011 with Oman Electricity Transmission Company S.A.O.C for connection of the Company’s equipment to the transmission system.

Security documents

xxvii. Intercreditor Deed dated 16 September 2010 with The Export-Import Bank of Korea, Credit Agricole Corporate & Investment Bank (as the “Global Facility Agent” and “Offshore Security Trustee”), Bank Muscat SAOG (as the “Onshore Account Bank”) and Others.

xxviii. Offshore Deed of Charge and Assignment dated 16 September 2010 with Credit Agricole Corporate & Investment Bank as “Offshore Security Trustee”.

xxix. Commercial Mortgage over Project Company Assets (including receipt) dated 21 September 2010 between the Company as “Mortgagor”; and Bank Muscat SAOG as “Mortgagee”.

xxx. Legal Mortgage dated 21 September 2010 between the Company as “Mortgagor”; and Bank Muscat SAOG

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as “Mortgagee”.

xxxi. Other security documents (direct agreements)

PPA Direct Agreement dated 20 September 2010 between OPWP as the “Buyer”, the Company as “Generator”, Credit Agricole Corporate & Investment Bank as the “Global Facility Agent” and Bank Muscat SAOG as “Onshore Agent”.

NGSA Direct Agreement dated 19 October 2010 between the Government of the Sultanate of Oman represented by the MOG as the “Seller”), the Company as the “Generator”, Credit Agricole Corporate & Investment Bank as the “Offshore Trustee” and Bank Muscat SAOG as the “Onshore Agent”.

O&M Direct Agreement dated 24 September 2010 between STOMO as the “Operator”, GDF Suez cc SCRL as the “O&M Guarantor”, the Company as the “Owner”,and Credit Agricole Corporate & Investment Bank as the “Agent”.

EPC Direct Agreement dated 22 September 2010 between Siemens AG and GS Engineering & Construction Corp. as the “EPC Contractor”, the Company as the “Owner”, and Credit Agricole Corporate & Investment Bank as the “Offshore Security Trustee”.

3. Basis of preparation and significant accounting policies

Basis of preparation

a) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards

as issued by the International Accounting Standards Board (“IASB”) and applicable requirements of the Oman Commercial Companies Law of 1974 (as amended).

b) Basis of measurement These financial statements are prepared on historical cost basis except for provision for site restoration and

deferred finance cost which are measured at amortised cost and certain financial instruments which are measured at fair value.

c) Use of estimates and judgements The preparation of the financial statements in conformity with IFRSs requires Management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in financial valuation of derivative financial instruments.

Estimation of fair value The Company measures fair values using the following fair value hierarchy that reflects the significance of the

inputs used in making the measurements:

Level 1: Quoted market price (unadjusted) in an active market for an identical instrument.

Level 2: Valuation techniques based on observable inputs. This category includes instruments valued using quoted market prices in the active market for similar instruments, quoted market prices for identical or similar instruments in markets that are considered less than active, or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level 3: Valuation techniques using significant unobservable inputs. This category includes instruments that are valued based on quoted prices of similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.

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Significant accounting policies

d) Foreign currency

i) Functional and presentation currency These financial statements are presented in United States Dollars (“USD”), which is the Company’s functional

currency and also in Rial Omani (“RO”). The Omani Rial amounts, which are presented in these financial statements have been translated from the USD amounts at an exchange rate of US $ 1 = RO 0.3845.

ii) Foreign currency transactions In preparing the financial statements, transactions in currencies other than the Company’s functional currency

(foreign currencies) are recorded at the exchange rates prevailing at the dates of the transactions.

At each reporting date, monetary items denominated in foreign currencies are translated at the rates prevailing at the reporting date.

Non-monetary items that are measured at historical cost in a foreign currency are not translated at the exchange rates prevailing at the balance sheet date.

Translation gains and losses related to monetary items are recognized in profit or loss in the period in which they arise, with the exception of those related to monetary items that qualify as hedging instruments in a cash flow hedge that are recognized initially in other comprehensive income to the extent that the hedge is effective.

e) Financial instruments

i) Non derivative financial instrument Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans

and borrowings, and trade and other payables. Cash and cash equivalents comprise cash balances, demand deposits, fixed deposits and term deposits with original maturity not greater than three months. Bank overdrafts that are repayable on demand and form an integral part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.

ii) Derivative financial instruments, including hedge accounting The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.

On initial designation of the hedge, the Company formally documents the relationship between the hedging instrument(s) and hedged item(s), including the risk management objectives and strategy in undertaking the hedge transaction, together with the methods that will be used to assess the effectiveness of the hedging relationship.

The Company makes an assessment, both at the inception of the hedge relationship as well as on an ongoing basis, whether the hedging instruments are expected to be “highly effective” in offsetting the changes in the fair value or cash flows of the respective hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within a range of 80% to 125%. For a cash flow hedge of a forecast transaction, the transaction should be highly probable to occur and should present an exposure to variations in cash flows that could ultimately affect reported net income.

Derivatives are recognised initially at fair value; attributable transaction costs are recognised in profit or loss as incurred. Subsequent to initial recognition, derivatives are measured at fair value, and changes therein are accounted for as described below.

iii) Cash flow hedges When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable

to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity. The amount recognised in other

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comprehensive income is removed and included in profit or loss in the same period as the hedged cash flows affect profit or loss under the same line item in the statement of comprehensive income as the hedged item. Any ineffective portion of changes in the fair value of the derivative is recognised immediately in profit or loss. If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated, exercised, or the designation is revoked, then hedge accounting is discontinued prospectively.

The cumulative gain or loss previously recognised in other comprehensive income and presented in the hedging reserve in equity remains there until the forecast transaction affects profit or loss. When the hedged item is a non-financial asset, the amount recognised in other comprehensive income is transferred to the carrying amount of the asset when the asset is derecognised. If the forecast transaction is no longer expected to occur, then the balance in other comprehensive income is recognised immediately in profit or loss. In other cases the amount recognised in other comprehensive income is transferred to profit or loss in the same period that the hedged item affects profit or loss.

f) Property, plant and equipment

(i) Recognition and measurement Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated

impairment losses, if any. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of selfconstructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Cost also may include transfers from other comprehensive income of any gain or loss on qualifying cash flow hedges of foreign currency purchases of property, plant and equipment.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and the difference is recognised in profit or loss. When revalued assets are sold, the amounts included in the revaluation reserve are transferred to retained earnings.

ii) Subsequent expenditure Subsequent expenditure is capitalised only when it increases future economic benefits embodied in the specific

asset to which it relates.

Subsequent expenditure relating to property, plant and equipment that has already been recognised is added to the carrying amount of the asset when it is probable that future economic benefits, in excess of the originally assessed standard of performance of the existing asset, will flow to the Company. All other subsequent expenditure is recognised as an expense in the period in which it is incurred.

iii) Depreciation Depreciation is charged to the statement of comprehensive income on a straight-line basis over the estimated

useful lives of the asset less its residual value.

Management reassess the useful lives, residual values and depreciation methods for plant and equipment annually. The estimated useful lives for current and comparative periods are as follows:

Years

Property, plant and equipment ......................................................................................40

De-commissioning asset ...............................................................................................40

Technical spares ............................................................................................................25

Other assets ....................................................................................................................3

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iv) Capital work in progress Capital work in progress is measured at cost and is not depreciated until it is transferred into one of the fixed

asset categories, which occurs when the assets is ready for intended use.

v) Asset retirement obligation A liability for asset retirement obligation is recognized as the activities giving rise to the obligation of future site

restoration take place. The liability is measured at the present value of the estimated future cash outflows to be incurred on the basis of current technology. The liability includes all costs associated with site restoration, including plant closure and monitoring costs.

g) Inventory Inventory comprises of fuel oil and is stated at lower of cost and net realisable value.

h) Impairment

i) Financial assets A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a

negative effect on the estimated future cash flows of that asset. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in profit or loss. An impairment loss is reversed if reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss.

ii) Non – financial assets The carrying amounts of the Company’s non-financial assets, other than inventories and deferred tax assets

are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss unless it reverses a previous revaluation that was credited to equity, in which case it is charged to equity.

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets’ carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

i) Financial liabilities Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using

the effective interest method.

Interest-bearing liabilities are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference between cost and redemption value being recognised in profit or loss over the period of the borrowings on an effective interest basis.

j) Employee terminal benefits Obligations for contributions to a defined contribution retirement plan for Omani employees, in accordance with

the Oman Social Insurance Scheme, are recognised as an expense in profit or loss as incurred. The Company’s obligation in respect of terminal benefits of non-Omani employees, is the amount of future benefit that such employees have earned in return for their service in the current and prior periods.

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k) Provisions A provision is recognised when the Company has a legal or constructive obligation as a result of a past event,

and it is probable that an outflow of economic benefits will be required to settle the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

l) Borrowing costs Interest expense and similar charges are expensed in profit or loss in the period in which they are incurred, except

to the extent that they are capitalised as being directly attributable to the acquisition, construction or production of a qualifying asset which necessarily takes a substantial period of time to prepare for its intended use or sale.

m) Deferred financing cost The cost of obtaining long-term financing is deferred and amortised over the period of the long term loan using

the effective interest rate method. Deferred financing costs less accumulated amortisation are offset against the drawn amount of the term loans. The amortization of the deferred financing costs will be capitalized during construction period of the plant except during the early power period during which period a proportionate amount of the amortization will be charged to the profit or loss. Subsequent to the PCOD, the amortization of the deferred financing costs is charged to the profit or loss.

n) Revenue Revenue comprises tariffs for power capacity and electrical energy charges. Tariffs are calculated in accordance

with the PPA. The operating revenue is recognised by the Company on an accrual basis of accounting. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due.

o) New standards and interpretation not yet effective A number of new standards, amendments to standards and interpretations are not yet effective for the period

ended 31 December 2013, and have not been applied in preparing these financial statements. Those which may be relevant to the Company are set out below.

IFRS 9: Financial Instruments IFRS 9 introduces new requirements for the classification and measurement of financial assets. Under IFRS

9, financial assets are classified and measured based on the business model in which they are held and the characteristics of their contractual cash flows. IFRS 9 introduces additions relating to financial liabilities. The IASB currently has an active project to make limited amendments to the classification and measurement requirements of IFRS 9 and add new requirements to address the impairment of financial assets and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2015 with early adoption permitted. The Company is currently assessing the impact of this standard and does not plan to adopt early.

p) New standards and interpretation applied during the year During the year, following new standards were applied in preparing the financial statements with no significant

effect on the current year.

IAS 1: Presentation of financial statements IAS 1 has amended and the name of statement of comprehensive income is changed to statement of profit or

loss and other comprehensive income.

IFRS 13: Fair value measurements IFRS 13 provides a single source of guidance on how fair value is measured, and replaces the fair value

measurement guidance that is currently dispersed throughout IFRS. Subject to limited exceptions, IFRS 13 is applied when fair value measurements or disclosures are required or permitted by other IFRSs.

q) Determination of fair value

i) Derivative financial instruments Fair value of forward exchange contracts is estimated by discounting the difference between the contractual

forward price and the current forward price for the residual maturity of the contract using yield curves of the

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respective currencies.

The fair value of interest rate swaps is based on estimated future cash flows based on the terms and maturity of each contract and using market interest rates.

Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Company and counterparty when appropriate.

ii) Non-derivative financial liabilities Fair value, which is determined for disclosure purposes, is calculated based on the present value of future

principal and interest cash flows, discounted at the market rate of interest at the reporting date.

4 Capital work in progress

2013 2013 2012 2012

RO USD RO USD

Construction cost incurred 241,221,179 627,363,274 232,154,169 603,781,975

Mobilisation and fixed fee 9,035,237 23,498,666 8,341,540 21,694,511

Insurance cost 1,761,438 4,581,112 1,527,498 3,972,688

Financing cost 17,511,102 45,542,529 14,298,719 37,187,825

Development cost 10,812,979 28,122,181 10,812,979 28,122,181

Salaries and wages 1,120,051 2,913,006 939,564 2,443,599

Other directly attributable expenses 8,745,474 22,745,058 4,695,445 12,211,820

Commissioning costs (net) 6,382,773 16,600,190 3,820,607 9,936,560

Transfer to property, plant and equipment (296,590,233) (771,366,016) (173,839,177) (452,117,494)

- - 102,751,344 267,233,665

Capital work in progress represents costs incurred towards construction of the plant, net of transfer to property, plant and equipment. Since the Company achieved COD on 3 April 2013, all capital work in progress costs have been transferred to property, plant and equipment.

Development costs represent:

costs and expenses incurred by the Shareholders (and reimbursed by the Company in accordance with the Shareholders Agreement) in connection with the development and preparation and submission of bid, the establishment of the Company the cost and expenses of external lawyers, consultants and advisors engaged in setting up the Company; and

Project closure fee payable by the Company in accordance with the Shareholders Agreement for successful financial close of the project.

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5 Property, plant and equipment

Property, plant and

equipment

De-com-missioning

assetTechnical

sparesOthers assets Total Total

USD USD USD USD USD RO

Cost

1 January 2012 - - - 260,108 260,108 100,011

Additions during the year 452,117,494 - 3,588,617 10,814 455,716,925 175,223,159

1 January 2013 452,117,494 - 3,588,617 270,922 455,977,033 175,323,170

Additions/transfers during the year (note 4) 318,383,936 1,036,723 856,448 10,455 320,287,562 123,150,568

Disposal during the year - - - (1,930) (1,930) (743)

Transfer during the year 864,586 - (864,586) - - -

31 December 2013 771,366,016 1,036,723 3,580,479 279,447 776,262,665 298,472,995

Depreciation

1 January 2012 - - - 81,225 81,225 31,231

Charge for the year 4,817,801 - 33,345 91,503 4,942,649 1,900,449

1 January 2013 4,817,801 - 33,345 172,728 5,023,874 1,931,680

Disposal during the year - - - (1,775) (1,775) (683)

Charge for the year 14,260,947 19,800 94,787 89,547 14,465,081 5,561,824

31 December 2013 19,078,748 19,800 128,132 260,500 19,487,179 7,492,821

Carrying amount

31 December 2013 752,287,268 1,016,923 3,452,347 18,947 756,775,485 290,980,174

31 December 2012 447,299,693 - 3,555,272 98,194 450,953,159 173,391,490

Change in accounting estimates

Useful life of the property, plant and equipment

During the year, the Company has conducted and considered an operational efficiency review of its plant and machinery, which resulted in changes in the expected useful lives of items of property, plant and equipment.

The plant and machinery, buildings and pipelines related to the power plant which Management previously expected to be in use for 30 years is now expected to remain in operation for 40 years. As a result, the expected useful lives of these assets have increased. The effect of these changes on actual and expected depreciation expenses, included in statement of comprehensive income, in current and future years, respectively, is as follows:

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2013 2014 2015 2016 2017 Later

USD USD USD USD USD USD

Decrease/ (increase) in depreciation expense 4,694,178 6,425,479 6,425,479 6,425,479 6,425,479 (30,396,094)

RO RO RO RO RO RO

Decrease/ (increase) in depreciation expense

1,804,911

2,470,597

2,470,597

2,470,597

2,470,597

(11,687,298)

6 Term loan

2013 2013 2012 2012

RO USD RO USD

Term loans 223,916,175 582,356,761 207,511,574 539,692,000

Less: current portion (11,875,621) (30,885,880) (9,827,787) (25,559,915)

Non-current portion 212,040,554 551,470,881 197,683,787 514,132,085

Less: Unamortised transaction cost (11,353,975) (29,529,195) (12,732,392) (33,114,150)

200,686,579 521,941,686 184,951,395 481,017,935

On 16 September 2010, the Company entered into a Common Terms Agreement (“CTA”), for credit facilities with a consortium of international bank, export credit agencies and local banks with Credit Agricole Corporate and Investment Bank as the Global Facility Agent; Offshore Security Trustee, Offshore Account Bank, KEXIM Facility Agent and Commercial Facility Agent, Bank Muscat SAOG as Onshore Account Bank; Performance Bond Issuing Bank and Performance Bond Facility Agent and KfW Ipex Bank GMBH as the Hermes Facility Agent.

The commercial standby facility was cancelled on 19 June 2013 on achievement of Commercial Operation Date (COD) as per terms of the CTA.

At 31 December the facility limits and outstanding amounts were as follows:

Limit Outstanding

RO USD RO USD

31 December 2013

Hermes covered variable facility 72,286,000 188,000,000 68,368,099 177,810,400

KEXIM direct facility 44,923,058 116,835,000 42,488,228 110,502,543

Commercial facility 50,357,196 130,968,000 49,531,338 128,820,125

Hermes covered fixed facility 46,140,000 120,000,000 43,639,212 113,496,000

KEXIM covered facility 21,029,074 54,692,000 19,889,298 51,727,693

234,735,328 610,495,000 223,916,175 582,356,761

31 December 2012

Hermes covered variable facility 72,286,000 188,000,000 68,441,000 178,000,000

KEXIM direct facility 44,923,058 116,835,000 26,338,250 68,500,000

Commercial facility 50,357,196 130,968,000 45,563,250 118,500,000

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Hermes covered fixed facility 46,140,000 120,000,000 46,140,000 120,000,000

KEXIM covered facility 21,029,074 54,692,000 21,029,074 54,692,000

Commercial standby facility 5,967,440 15,520,000 - -

240,702,768 626,015,000 207,511,574 539,692,000

Repayments The aggregate amount of drawdown under the above facilities is repayable in half yearly instalments commencing

from 31 October 2013, with the final instalment being due on 31 March 2028.

Interest

i) Interest on Hermes Covered Fixed Facility is charged at a fixed rate of 3.60% per annum, including margin.

ii) Interest on the remaining facilities is charged at a floating rate of US LIBOR plus applicable margin. The Company has entered into interest rate swap contracts to cap its obligations against unfavorable US LIBOR rate changes.

The margins vary between 1.45% and 3.50% per annum depending on the type of facility and the interest payment period.

Other fees Under the terms of the above facilities, the Company is required to pay commitment fees, front end fees, export

credit agency premium, performance bond fees for the facilities, agency fees and all other bank fees.

Securities The above facilities are secured by comprehensive legal and commercial mortgages on all the assets of the

Company.

Covenants The term loan facilities contains certain covenants pertaining to, amongst other things, liquidation and merger,

entering into material new agreements, negative pledge, disposal of asset, granting of loan and guarantee, acquisition of capital assets, debt service coverage ratio, change of business, hedging agreement, etc, which the Company is required to comply.

7 Trade and other receivables

2013 2013 2012 2012

RO USD RO USD

Trade receivables 2,098,917 5,458,823 371,341 965,776

Prepayments 363,456 945,270 347,704 904,300

Due from related parties (note 19) 11,124 28,932 8,762 22,787

Other receivable 169,578 441,035 16,913 43,989

2,643,075 6,874,060 744,720 1,936,852

8 Cash and cash equivalents

Cash in hand and at bank 1,827,349 4,752,534 1,452,188 3,776,823

Short term deposit with a bank 3,229,800 8,400,000 - -

5,057,149 13,152,534 1,452,188 3,776,823

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9 Equity

(a) Share capital The Company’s authorised share capital comprises 2,000,000 shares of RO 1 each of which 500,000 shares of

RO 1 each are fully paid up. During the year ended 31 December 2013 the Company increased its issued share capital from RO 500,000 to RO 67,488,743 by means of a debt/equity conversion of the equity bridge loans and shareholder loans. The details of the shareholders are as follows:

31 December 2013

Nationality

No. of shares held of nominal

value RO 1 each

% of total

Aggregate nominal value of shares held

(RO’000s)

Kahrabel FZE UAE 31,044,822 46% 31,045

Multitech LLC Omani 14,847,523 22% 14,847

SEP International Netherlands B.V Netherlands 7,423,762 11% 7,424

Blue Horizon Sohar Power B.V Netherlands 7,423,762 11% 7,424

Public Authority for Social Insurance Omani 6,748,874 10% 6,749

67,488,743 100% 67,489

31 December 2012

Kahrabel FZE UAE 230,000 46% 230

Multitech LLC Omani 110,000 22% 110

SEP International Netherlands B.V Netherlands 55,000 11% 55

Blue Horizon Sohar Power B.V Netherlands 55,000 11% 55

Public Authority for Social Insurance Omani 50,000 10% 50

500,000 100% 500

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

(b) Legal reserve Article 106 of the Commercial Companies Law of 1974 requires that 10% of a company’s net profit be transferred

to a non-distributable legal reserve until the amount of legal reserve becomes equal to at least one-third of the company’s issued share capital.

(c) Hedging reserve Hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow

hzdging instruments related to hedged transactions that have not yet occurred (note 20).

(d) Dividend During the Ordinary General Meeting held on 27 March 2013, the shareholders approved the payment of interim

dividend from the retained earnings of the Company, to the registered shareholders at a percentage not exceeding 6% of the paid-up share capital of the Company.

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10 Trade and other payables

2013 2013 2012 2012

RO USD RO USD

Trade payables 56,905 147,997 4,889,902 12,717,559

Due to related parties (note 19) - - 82,834 215,434

Accrued EPC cost (note 13) - - 4,790,746 12,459,676

Accrued MOG 600,489 1,561,741 501,596 1,304,540

Accrual interest cost 1,800,904 4,683,756 807,095 2,099,078

Other payable and accruals 721,531 1,876,543 1,430,377 3,720,094

3,179,829 8,270,037 12,502,550 32,516,381

11 Income tax

The Company is liable to income tax, in accordance with the income tax laws of Sultanate of Oman, at the rate of 12% of the taxable income in excess of RO 30,000.

Deferred tax asset has been recognised directly in equity in respect of the changes in fair values of interest rate swap and forward rate contract (note 20).

a) Income tax recognised in statement of comprehensive income.

Deferred tax expense is relating to temporary differences 3,261,707 8,482,983 785,284 2,042,352

b) Reconciliation

The following is a reconciliation of income taxes with the income tax expense at the applicable tax rate

Net profit before tax 12,511,854 32,540,594 5,531,507 14,386,236

Income tax as per rates mentioned above 1,501,423 3,904,871 663,781 1,726,348

Unrecognised deferred tax asset 1,760,284 4,578,112 121,503 316,004

Deferred tax expense for the period 3,261,707 8,482,983 785,284 2,042,352

12. Asset retirement obligation

Under the Sub-Usufruct agreement, the Company has a legal obligation to remove the Plant at the end of its useful life and restore the land. The Company shall at its sole cost and expense dismantle, demobilise, safeguard and transport the assets, eliminate soil and ground water contamination, fill all excavation and return the surface to grade of the designated areas.The fair value of ARO provision has been calculated using an expected present value technique. This technique reflects assumptions such as costs, plant useful life, inflation and profit margin that third parties would consider to assume the settlement of the obligation. The movement in ARO provision is as follows:

2013 2013 2012 2012

RO USD RO USD

Provision made during the year 398,620 1,036,723 - -

Amortisation during the year 26,499 68,917 - -

Closing balance 425,119 1,105,640 - -

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13. Liquidated damages

As per the EPC contract, the Early Power Commercial Operation Date (“EPCOD”) was scheduled for 1 May 2012. Actual commercial operation date was achieved on 3 June, 2012 resulting in a delay of 33 days for which the Company has invoiced liquidated damages (“LDs”) to the EPC Contractor (“EPCC”). The full amount of the 33 days LDs have been acknowledged by the EPCC and offset by the Company against EPCC progress payments as at 31 December 2013. Similarly LDs payable to the OPWP have been accrued for 30 days (3 days relief granted by OPWP) of which LDs for 29 days have been have been offset by OPWP against invoices raised by the Company as at 31 December 2013.

As per the EPC contract the Commercial Operation Date (“COD”) was scheduled for 1 April 2013. The actual COD was achieved on 3 April 2013 resulting in a delay of 2 days. The Company has invoiced LDs to the EPCC for the 2 days delay which have been acknowledged by EPCC. EPCC has agreed to settle the second day LD (note 7). No LDs have been accrued as payable to OPWP since they have granted relief for the 2 days.

On 28 September 2013 the Company entered into a Settlement Agreement with the EPC Contractor, which determined all outstanding matters between the two parties. As part of this Settlement Agreement, the EPC Contractor agreed to compensate the Company for claims regarding liquidated damages and other payments to be made by the EPC to the Company (note 10).

14 Direct costs

2013 2013 2012 2012

RO USD RO USD

Fuel gas 9,940,269 25,852,456 4,696,845 12,215,462

O&M fee 4,921,958 12,800,931 2,559,025 6,655,463

Depreciation (note 5) 5,527,393 14,375,534 1,865,266 4,851,146

Seawater extraction 650,496 1,691,796 17,000 44,213

Generation license fee 32,818 85,352 11,639 30,270

OETC connection fee 134,516 349,845 64,772 168,458

Unwinding of discount (note 12) 26,499 68,917 - -

Insurance 527,304 1,371,403 49,541 128,845

Other operating expenses 213,400 555,005 24,116 62,721

21,974,653 57,151,239 9,288,204 24,156,578

15 General and administrative expenses

2013 2013 2012 2012

RO USD RO USD

Office rent 15,750 40,961 12,010 31,234

Employment costs 95,995 249,661 66,619 173,261

Secondment fees 175,322 455,974 38,901 101,173

Agency fees 37,119 96,539 9,620 25,019

Audit and tax fees 13,476 35,048 8,874 23,079

Other general and administrative expenses 106,622 277,299 53,504 139,153

Depreciation (note 5) 34,431 89,547 35,183 91,503

478,715 1,245,029 224,711 584,422

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16 Finance costs

2013 2013 2012 2012

RO USD RO USD

Swap interest 3,782,397 9,837,183 976,326 2,539,210

Interest on equity bridge loan - - 177,476 461,575

Interest on shareholder loan - - 52,225 135,827

Interest on term loans 4,471,817 11,630,213 1,318,471 3,429,052

Interest on working capital 17,221 44,788 - -

Amortisation of deferred finance costs 1,110,436 2,888,001 334,926 871,068

Interest on payables 4 11 33 86

DSRA LC cost 41,760 108,606 - -

Ineffective portion of hedge (note 20) 3,360 8,738 - -

Exchange gain 55,353 143,957 18,179 47,280

9,482,348 24,661,497 2,877,636 7,484,098

17 Equity contribution

The Company, its shareholders and lenders as defined under Common Terms Agreement (CTA) entered into Equity Subscription and Retention Agreement (“ESRA”) dated 16 September 2010. Under the ESRA, the shareholders are required to provide base equity contribution as follows:

– Equity bridge advances from GDF Suez, Multitech, Sojitz and Yonden (“EBL Shareholders”); and

– Subordinated advances from PASI (2011 – PASI & Multitech).

EBL shareholders irrevocably and unconditionally guarantee to the EBL Finance Parties for punctual payments and performance of their obligation.

Equity bridge loan

On 16 September 2010, the Company entered into the GDF Suez Equity Bridge Loan Agreement and Sojitz and Yonden Equity Bridge Loan Agreements. During 2012, Multitech converted their shareholder loan into an equity bridge loan (note 17).

Equity bridge loan - - 60,289,869 156,800,700

Less: Unamortised transaction cost - - (27,492) (71,501)

- - 60,262,377 156,729,199

Facility limit

The facility limit of GDF Suez, Sojitz, Yonden and Multitech Equity Bridge Loan Agreements is in the amount of RO 30,814,822 (USD 80,142,580), RO 7,368,762 (USD 19,164,530), RO 7,368,762 (USD 19,164,530) and RO 14,737,524 (USD 38,329,060) respectively.

Repayments The aggregate amount of the loan to be repaid at the earlier of 1 April 2013 and the COD (scheduled for 1 April

2013). On 1 April 2013, the shareholders, on whose behalf the banks had injected the EBL, repaid the loan on behalf of the Company. In order to maintain the base equity contributions in line with the terms and conditions of ESRA, the full amount of the loan was converted into share capital on 1 April 2013 by way of a debt/equity swap.

176

Interest The GDF Suez equity bridge loans carry interest rates at US LIBOR plus agreed margins of 0.79% per annum,

Sojitz and Yonden equity bridge loans carry interest rates at US LIBOR plus agreed margin of 0.60% per annum and Multitech at US LIBOR plus agreed margin of 1.03% per annum.

18 Shareholders loan

On 16 September 2010, the Company and its shareholders (Multitech and PASI) entered into Shareholder Loan Agreements (“SLA”) as required under ESRA to provide subordinated advances.

At 31 December 2013, the drawdown amounts were as follows:

2013 2013 2012 2012

RO USD RO USD

PASI - - 6,698,874 17,422,300

Repayments As per the SLA, the aggregate amount of the loan will be repaid at the earlier of 1 April, 2013 and the COD

(scheduled for 1 April 2013). In order to maintain the base equity contributions in line with the terms and conditions of ESRA, the shareholder agreed to the conversion of the SHL into share capital on 1 April 2013 by way of a debt/equity swap.

Interest SLA carry interest rate of US LIBOR plus agreed margin of 1.03% per annum.

19. Related party transactions

Related parties comprise the shareholders, directors, key management personnel, business entities that have the ability to control or exercise significant influence in financial and operating decisions of the Company.

Prices and terms of these transactions, which are entered into in the normal course of business, are on mutually agreed terms and conditions.

The Company had the following significant transactions with related parties during the year:

2013 2013 2012 2012

RO USD RO USD

Multitech 46,067 119,810 178,474 464,172

Kahrabel 82,610 214,851 149,974 390,051

Kahrabel Operations and Maintenance Oman (“KOMO”) 128,817 335,024 221,207 575,310

Suez Tractebel SA 64,388 167,459 59,323 154,285

Tractebel Engineering SA (“TE”) 249,574 649,087 395,021 1,027,363

Sojitz Corporation 131,899 343,040 141,573 368,199

Shikoku Electric Power Co. 24,609 64,002 63,005 163,861

PASI 43,410 112,901 130,076 338,299

Al Suwadi Power Co. SAOC (“ASP”) 43,442 112,983 37,060 96,384

Tracteblel Engg S.A Engg.Consultancy (Oman Branch) 47,644 123,912 - -

Electrabel S.A 19,209 49,958 - -

Suez Tractebel Operation & Maintenance Oman LLC 5,515,125 14,343,627 3,572,439 9,291,129

6,396,794 16,636,654 4,948,152 12,869,053

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The nature of the above transactions is as follows:

Interest on SLA (note18) 22,497 58,509 204,169 530,999

Performance bond charges 167,460 435,527 326,027 847,924

Secondment fees 235,507 612,502 326,946 850,314

Professional services fees 112,032 291,371 36,695 95,436

Owner's engineer fees 249,574 649,087 395,021 1,027,363

Mobilisation fee 275,363 716,158 505,709 1,315,237

O&M fixed fee 3,945,792 10,262,139 2,538,524 6,602,142

O&M variable fee 1,003,218 2,609,151 528,207 1,373,749

O&M capacity incentive fee 230,700 600,000 - -

Minor inspection fees 58,940 153,287 - -

DSRA LC cost 41,759 108,606 - -

Others 53,952 140,317 86,854 225,889

6,396,794 16,636,654 4,948,152 12,869,053

Balances due from related parties at period end comprised (note 7):

Kahrabel Operations and Maintenance Oman 1,178 3,064 941 2,448

Al Suwadi Power Co. SAOC 9,946 25,868 7,806 20,300

Shikoku Electric Power Co. - - 15 39

11,124 28,932 8,762 22,787

Balances due to a related party at period end comprised (note 10):

Tractebel Engineering SA - - 82,834 215,434

20. Hedging reserve

At 31 December 2013, derivative instruments assets (liabilities) were as follows:

2013 2013 2012 2012

RO USD RO USD

Interest rate swaps:

Senior debt (note 20 (a))

KfW Ipex Bank (660,501) (1,717,817) (3,851,009) (10,015,628)

Standard Chartered Bank (1,893,758) (4,925,249) (8,328,222) (21,659,875)

Credit Agricole Corporate & Investment Bank (546,976) (1,422,564) (3,438,142) (8,941,852)

HSBC Bank - senior debt (488,292) (1,269,939) (2,809,408) (7,306,653)

Shareholders loan and equity bridge loan (note 20 (b))

Standard Chartered Bank - equity bridge loan - - (52,605) (136,814)

HSBC Bank - equity bridge loan - - (15,313) (39,827)

Total fair value of interest rate swaps (3,589,527) (9,335,569) (18,494,699) (48,100,649)

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2013 2013 2012 2012

RO USD RO USD

Less: deferred tax asset (note 11) 430,743 1,120,268 2,219,364 5,772,078

Fair value of interest rate swaps net of tax (3,158,784) (8,215,301) (16,275,335) (42,328,571)

Forward rate contract: (note 20(c))

Fair value of forward rate contract 177,745 462,276 (1,997,168) (5,194,192)

Less: deferred tax liability (note 11) (21,329) (55,473) 239,660 623,303

Fair value of forward rate contract, net of tax 156,416 406,803 (1,757,508) (4,570,889)

Total fair value of derivative instruments (3,411,782) (8,873,293) (20,491,867) (53,294,841)

Less: ineffective portion of hedge 3,360 8,738

Less: deferred tax asset (note 11) 409,414 1,064,795 2,459,024 6,395,381

Fair value of derivative instruments net of tax (2,999,008) (7,799,760) (18,032,843) (46,899,460)

Hedging reserve net of tax at the end of the year (2,999,008) (7,799,760) (18,032,843) (46,899,460)

Less: hedging reserve net of tax at the beginning of the year (18,032,842) (46,899,460) (15,304,820) (39,804,472)

Effective portion of change in fair value of cash flow hedge for the year net of tax 15,033,834 39,099,700 (2,728,023) (7,094,988)

20(a) The long term facilities in the amount of USD 490.5 million (excluding Hermes Covered Fixed Facility of USD 120 million and Commercial Standby Facility of USD 15.5 million) of the Company bear interest at US LIBOR plus applicable margins.

The Company has fixed the rate of interest through Interest Rate Swap Agreements (“IRS”) entered into with HSBC Bank Middle East Limited, dated 6 October 2010, Standard Chartered Bank dated 19 December 2011, KfW Ipex Bank GMBH, dated 6 October 2010 and Credit Agricole Corporate and Investment Bank, dated 5 October 2010 respectively, for 100% of the facilities amount (excluding Hermes Covered Fixed Facility and Commercial Standby Facility).

The hedged notional amounts are approximately USD 73.9 million, USD 222.7 million, USD 101.6 million and USD 92.3 million at fixed interest rates of 2.9788%, 2.9708%, 2.975% and 2.953% per annum respectively, excluding margins.

20(b) Equity bridge loans (note 17) and shareholders loan (note 18) in the amount of USD 174.2 million bear interest at US LIBOR plus applicable margins.

The Company has entered into Interest Rate Swap Agreements (“IRS”) to hedge against the fluctuation in interest rate.

The IRS was entered into with HSBC Bank Middle East Limited, on 6 October 2010, Standard Chartered Bank on 7 October 2010 and an additional hedge with HSBC Bank Middle East Limited on 2 March 2011 for 100% of the equity bridge loans and shareholder loans.

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The facility hedged notional amounts are approximately USD 24.6 million, USD 139.3 million and USD 10.3 million, at fixed interest rates of 0.7088%, 0.7085% and 0.95% per annum respectively, excluding margins.

The equity bridge loans and shareholder loan IRS agreements were terminated on 1 April 2013.

20(c) The O&M Agreement includes an outflow of approximately Euro 127 million, payable in Euro. The Company has entered into a Forward Rate Agreement (“FRA”) on 12 October 2010 with Standard Chartered Bank to hedge against fluctuations in Euro/USD exchange rate.

As per the FRA, the Company shall pay a fixed USD amount at an exchange rate of 1.4318 and receive contractual Euro amount at each maturity date.

21 Financial risk management

The Company has exposure to the following risks from its use of financial instruments:

Market risk

Credit risk

Liquidity risk

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these financial statements.

Board of Directors has overall responsibility for establishing and overseeing the Company’s risk management framework. The Board has entrusted the Management with the responsibility of developing and monitoring the Company’s risk management policies and procedures and its compliance with them.

a) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity

prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

Interest rate risk The Company has borrowings which are interest bearing and exposed to changes in US LIBOR rates. The

Company has entered into interest rate swaps to hedge its US LIBOR risk exposure on 100% of its total loan facilities, including equity bridge loans and shareholders loans, and excluding Hermes Covered Fixed Facility and Commercial Standby Facility.

The Company does not account for any fixed rate financial liabilities at fair value through profit or loss and the Company does not designate hedging instruments under a fair value hedge accounting model. Therefore a change in interest rate at the reporting date would not affect profit or loss.

At the reporting date, the interest rate profile of the Company’s interest-bearing financial liabilities was:

Interest rate 2013 2013 2012 2012

% RO USD RO USD

Financial liabilities

Shareholders loan

- USD variable rate loansLibor + 1.03% - - 6,698,874 17,422,300

Equity bridge loan

- USD variable rate loans – KfW

Libor + 0.79% - - 30,814,822 80,142,580

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- USD variable rate loans – Mizuho

Libor + 0.60% - - 14,737,524 38,329,060

- USD variable rate Libor +

loans – HSBC Oman 1.03% - - 14,737,524 38,329,060

Term loan

USD variable rate Libor + 180,276,963 468,860,761 161,371,574 419,692,000

loans ranging between 1.40% and

2.56%

Term loan

- USD fixed rate loans 3.60% 43,639,212 113,496,000 46,140,000 120,000,000

223,916,175 582,356,761 274,500,318 713,915,000

Cash flow sensitivity analysis for variable rate instruments

A change of 100 basis points in interest rates at the reporting date would have increased/ (decreased) equity and income statement by the amounts shown below. This analysis assumes that all other variables, in particular foreign currency rates, remain constant.

Equity

100 bps 100 bps 100 bps 100 bps

Increase Decrease Increase Decrease

RO RO USD USD

31 December 2013

Interest rate swap 11,472,530 (12,963,569) 29,837,529 (33,715,395)

31 December 2012

Interest rate swap 14,369,670 (14,369,670) 37,372,355 (37,372,355)

Currency risk The price under the O&M Agreement includes an amount of approximately Euro 127 million, payable in Euro. The

Company has entered into FRA to hedge against fluctuations in Euro/USD exchange rate (note 20(c)). The Euro amounts hedged cover 70% of outflows for the period upto March 2018, 50% for the period April 2018 to March 2023 and 30% thereafter.

Sensitivity analysis: A strengthening/ (weakening) of the Euro against all other currencies at 31 December would have affected the

measurement of financial instruments denominated in a foreign currency and increased/ (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases.

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Equity Profit or loss

Strengthing Weakening Strengthing Weakening

31 December 2013 USD’000s USD’000s USD’000s USD’000s

EUR ( 10% movement) 3,818 (4,194) - -

RO’000s RO’000s RO’000s RO’000s

EUR ( 10% movement) 1,468 (1,612) - -

31 December 2012 USD’000s USD’000s USD’000s USD’000s

EUR ( 10% movement) 7,402 (7,402) - -

EUR ( 10% movement) 2,846 (2,846) - -

Apart from above, Management considers that the Company is not exposed to significant foreign exchange risk because all transactions and balances are either in RO or USD and RO is effectively pegged to the USD.

b) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails

to meet its contractual obligations, and arises principally from the Company’s receivables from customers and cash balances held with banks. The Company limits its credit risk with regard to bank deposits by only dealing with reputable banks and financial institutions. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2013 2013 2012 2012

RO USD RO USD

Cash and cash equivalents 5,057,149 13,152,534 1,452,188 3,776,823

Trade receivables 2,098,917 5,458,823 371,341 965,776

Other receivables and due from related parties 180,702 469,967 373,379 971,076

7,336,768 19,081,324 2,196,998 5,713,675

c) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The

Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company limits its liquidity risk by ensuring bank facilities and shareholders’ loans are available, where required. Liquidity requirements are monitored on a monthly basis and management ensures that sufficient liquid funds are available to meet any commitments as they arise.

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The following are the contractual maturities of financial liabilities, including interest payments and excluding the impact of netting agreements:

Carrying amount

Contractual cash flow

Less than 1 year

More than 1 to 5 years

More than 5 years

31 December 2013 RO RO RO RO RO

Derivatives

Derivative instruments 3,589,527 (1,750,430) - (10,924,319) 9,173,889

Non-derivatives financial liabilities

Term loan 212,562,200 (223,916,175) (11,875,621) (54,633,271) (157,407,283)

Working capital loan 2,655,000 (2,655,000) (2,655,000)

Trade and other payables 3,179,829 (3,179,829) (3,179,829) - -

221,986,556 (231,501,434) (17,710,450) (65,557,590) (148,233,394)

USD USD USD USD USD

Derivatives

Derivative instruments 9,335,569 (4,552,485) - (28,411,754) 23,859,269

Non-derivatives financial liabilities

Term loan 552,827,567 (582,356,761) (30,885,880) (142,089,131) (409,381,750)

Working capital loan 6,905,072 (6,905,072) (6,905,072) - -

Trade and other payables 8,270,037 (8,270,037) (8,270,037) - -

577,338,245 (602,084,355) (46,060,989) (170,500,885) (385,522,481)

Carrying amount

Contractual cash flow

Less than 1 year

More than 1 to 5 years

More than 5 years

31 December 2012 RO RO RO RO RO

Derivatives

Derivatives instruments 20,491,867 (21,103,054) - (19,742,087) (1,360,967)

Non-derivatives financial liabilities

Shareholders loan 6,698,874 (6,698,874) (6,698,874) - -

Equity bridge loan 60,262,377 (60,289,869) (60,289,869) - -

Term loan 194,779,182 (207,511,574) (9,827,787) (46,091,685) (151,592,102)

Trade and other payables 12,502,550 (12,502,550) (12,502,550) - -

294,734,850 (308,105,921) (89,319,080) (65,833,772) (152,953,069)

USD USD USD USD USD

Derivatives

Derivatives instruments 53,294,841 (54,884,405) - (51,344,830) (3,539,575)

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Non-derivatives financial liabilities

Shareholders loan 17,422,300 (17,422,300) (17,422,300) - -

Equity bridge loan 156,729,199 (156,800,700) (156,800,700) - -

Term loan 506,577,850 (539,692,000) (25,559,915) (119,874,340) (394,257,745)

Trade and other payables 32,516,381 (32,516,381) (32,516,381) - -

766,540,571 (801,315,786) (232,299,296) (171,219,170) (397,797,320)

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amount.

Fair value hierarchy

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

Level 1 – Fair values are measured based on quoted prices (unadjusted) from active markets for identical financial instruments.

Level 2 – Fair values are measured using inputs, other than those used for Level 1, that are observable for the financial instruments either directly (prices) or indirectly (derived from prices).

Level 3 – Fair values are measured using inputs which are not based on observable market data (unobservable input).

31 December 2013 - Level 2 31 December 2012 - Level 2

RO USD RO USD

Derivative financial liabilities 3,589,527 9,335,569 20,491,867 53,294,841

There were no transfers between level 1 and level 2 during the year.

The Company has not disclosed the fair values of short term trade and other receivables, cash and cash equivalents and trade and other payables because their carrying amounts are a reasonable approximation of fair values.

Measurement of fair values

Type Valuation techniqueSignificant unobservable inputs

Derivative instrument (Interest rate swaps)

Market comparison technique: fair value is calculated by the respective financial institutions.

Not applicable

Other financial liabilities Discounted cash flows Not applicable

Embedded derivatives The following agreements contain embedded derivatives as follows:

i) The PPA between the Company and OPWP contain embedded derivatives in the pricing formulae that adjusts the charge rates for the Plant to reflect changes in USD / RO currency exchange rates and changes in US price index and the Oman price index.

ii) The O & M agreement contains embedded derivatives in the pricing formulae that adjusts the payments to reflect changes in relevant inflation indices.

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iii) The SUA between the Company and SIPC contain embedded derivatives in the pricing formulae that adjust the rent for the land to reflect changes in US consumer price index and the Omani consumer price index.

These embedded derivative are not separated from the host contract, the PPA, the O&M agreement, and SUA and is not accounted for as a standalone derivative under IAS 39, as the management believes that the economic characteristics and risks associated with the embedded derivative are closely related to those of the host contracts.

Capital management The Company aims to maintain a strong capital base so as to maintain investor, creditor and market confidence

and to sustain future development and growth of its businesses, while at the same time maintaining an appropriate dividend policy to reward shareholders.

22 Contingent liabilities

The Company provided a bank guarantee from Bank Muscat SAOG in the amount of RO 30,000,000 (USD 78,023,407) in favour of OPWP.

This bank guarantee is counter indemnified by Corporate Guarantees and bank guarantees from the Shareholders.

Both the bank guarantee from Bank Muscat SAOG as well as the counter guarantees from Shareholders was terminated on 7 July 2013.

23 Capital commitments

Commitments in respect of contracts placed are as follows:

2013 2013 2012 2012

RO USD RO USD

Commitments in respect of contracts placed - - 9,076,759 23,606,656

Operating lease commitments:

At 31 December future minimum lease commitments under the Usufruct Agreement are as follows:

Within one year 139,662 363,230 223,925 582,381

Between two and five years 558,648 1,452,922 558,648 1,452,922

After five years 1,331,004 3,461,648 1,509,116 3,924,879

24 Comparative figures

Certain comparative figures have been reclassified where necessary to conform to the current year presentation.

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Condensed interim financial statements

31 March 2014

Contents Page

Independent Auditors’ report on review of interim financial information ................................................................... 186

Condensed statement of profit or loss ..................................................................................................................... 187

Condensed statement of comprehensive income .................................................................................................... 188

Condensed statement of financial position ................................................................................................................ 189

Condensed statement of cash flows .......................................................................................................................... 190

Condensed statement of changes in equity............................................................................................................... 191

Notes to condensed interim financial statements ............................................................................................... 192-198

186

INDEPENDENT AUDITORS’ REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION TO THE SHAREHOLDERS OF AL BATINAH POWER COMPANY SAOC

Introduction

We have reviewed the accompanying condensed statement of financial position of Al Batinah Power Company SAOC (“the Company”) as at 31 March 2014, the condensed statements of profit or loss, comprehensive income, changes in equity and cash flows for the period then ended, and notes to the interim financial information (“the condensed interim financial information”). Management is responsible for the preparation and presentation of this condensed interim financial information in accordance with IAS 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this condensed interim financial information based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity.

A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information as at 31 March 2014 is not prepared, in all material respect, in accordance with IAS 34 Interim Financial Reporting.

Sd/-________________________

KPMG

187

Condensed statement of profit or loss

for the three month period ended 31 March

Unaudited Unaudited

2014 2014 2013 2013

Notes RO USD RO USD

Revenue 3 6,449,269 16,773,130 3,017 7,845

Direct cost 10 (5,860,648) (15,242,257) - -

Gross profit 588,621 1,530,873 3,017 7,845

General and administrative expenses

11 (309,447) (804,804) (31,727) (82,515)

Profit (loss) before interest and taxes 279,174 726,069 (28,710) (74,670)

Finance costs 12 (3,059,713) (7,957,629) (8,992) (23,386)

Net loss before tax (2,780,539) (7,231,560) (37,702) (98,056)

Tax expense (933,303) (2,427,317) - -

Net loss after tax (3,713,842) (9,658,877) (37,702) (98,056)

The notes on pages 192 to 198 form an integral part of these condensed interim financial statements.The review report of the Independent Auditors is set forth on page 186.

188

Condensed statement of comprehensive income

for the three month period ended 31 March

Unaudited Unaudited

2014 2014 2013 2013

RO USD RO USD

Net loss after tax (3,713,842) (9,658,877) (37,702) (98,056)

Other comprehensive income, net of tax:

Item that will be reclassified to profit and loss

Cash flow hedges - effective portion of changes in fair value (1,769,283) (4,601,515) 1,640,764 4,267,266

Total comprehensive (loss) income for the period (5,483,125) (14,260,392) 1,603,062 4,169,210

The notes on pages 192 to 198 form an integral part of these condensed interim financial statements.The review report of the Independent Auditors is set forth on page 186.

189

Condensed statement of financial position

as at

Notes 31 March 2014 31 March 201431 December

201331 December

2013

RO USD RO USD

Non-current assets

Property, plant and equipment 4 289,162,504 752,048,123 290,980,174 756,775,485

Deferred tax asset 693,536 1,803,736 430,743 1,120,268

Total non-current assets 289,856,040 753,851,859 291,410,917 757,895,753

Current assets

Trade and other receivables 6 2,822,184 7,339,884 2,643,075 6,874,060

Inventories 1,893,314 4,924,097 1,893,314 4,924,097

Cash and cash equivalents 7 4,335,586 11,275,906 5,057,149 13,152,534

Total current assets 9,051,084 23,539,887 9,593,538 24,950,691

Total assets 298,907,124 777,391,746 301,004,455 782,846,444

Equity

Share capital 8(a) 67,488,743 175,523,389 67,488,743 175,523,389

Legal reserve 8(b) 1,091,682 2,839,224 1,091,682 2,839,224

Retained earnings 5,400,800 14,046,315 9,114,642 23,705,192

Shareholder's fund 73,981,225 192,408,928 77,695,067 202,067,805

Hedging reserve 8(c) (4,768,291) (12,401,275) (2,999,008) (7,799,760)

Total equity 69,212,934 180,007,653 74,696,059 194,268,045

Non-current liabilities

Term loans 5 201,049,737 522,886,183 200,686,579 521,941,686

Derivative instruments 5,416,940 14,088,268 3,411,782 8,873,293

End of service benefits 6,998 18,200 6,146 15,983

Asset retirement obligation 434,170 1,129,176 425,119 1,105,640

Deferred tax liability 5,025,182 13,069,396 4,068,320 10,580,808

Total non-current liabilities 211,933,027 551,191,223 208,597,946 542,517,410

Current liabilities

Term loans 5 11,875,621 30,885,880 11,875,621 30,885,880

Short term borrowing 2,025,000 5,266,580 2,655,000 6,905,072

Trade and other payables 9 3,860,542 10,040,410 3,179,829 8,270,037

Total current liabilities 17,761,163 46,192,870 17,710,450 46,060,989

Total liabilities 229,694,190 597,384,093 226,308,396 588,578,399

Total equity and liabilities 298,907,124 777,391,746 301,004,455 782,846,444

The financial statements were approved and authorised for issue in accordance with a resolution of the Board of Directors on 13 April 2014.

Sd/- Sd/-___________________________ ___________________________ Director DirectorThe notes on pages 192 to 198 form an integral part of these condensed interim financial statements.The review report of the Independent Auditors is set forth on page 186.

190

Condensed statement of cash flows

for the three month period ended 31 March

Unaudited Unaudited

2014 2014 2013 2013

RO USD RO USD

Cash flows from operating activities:

Net profit after tax (3,713,842) (9,658,877) (37,702) (98,056)

Adjustments for:

Income tax expense 933,303 2,427,317 - -

Depreciation 1,861,539 4,841,455 8,625 22,433

Ineffective portion of hedge (3,359) (8,737) - -

End of service benefits (net) 852 2,217 689 1,793

(921,507) (2,396,625) (28,388) (73,830)

Changes in:

Trade and other receivables (179,109) (465,824) (333,946) (868,520)

Inventories - - (130,015) (338,140)

Asset retirement obligation 9,051 23,536 - -

Trade and other payables 680,713 1,770,373 (3,196,138) (8,312,452)

Net cash used in operating activities (410,852) (1,068,540) (3,688,487) (9,592,942)

Cash flows from investing activities:

Acquisition of property, plant and equipment (43,869) (114,093) (59,710) (155,293)

Transfer of capital work in progress - - (11,545,256) (30,026,673)

Net cash used in investing activities (43,869) (114,093) (11,604,966) (30,181,966)

Cash flows from financing activities:

Movement in equity bridge loan - - 27,492 71,501

Net proceeds from term loan 363,158 944,497 13,554,989 35,253,547

Short term borrowing (630,000) (1,638,492) 1,854,000 4,821,847

Net cash from (used in) financing activities (266,842) (693,995) 15,436,481 40,146,895

Net change in cash and cash equivalents (721,563) (1,876,628) 143,028 371,987

Cash and cash equivalents at beginning of the period 5,057,149 13,152,534 1,452,188 3,776,823

Cash and cash equivalents at end of the period (note 7) 4,335,586 11,275,906 1,595,216 4,148,810

The notes on pages 192 to 198 form an integral part of these condensed interim financial statements.The review report of the Independent Auditors is set forth on page 186.

191

Statement of changes in equity

for the three months period ended 31 March

Share capitalHedging reserve

Legal reserve

Retained earnings

(accumulated losses) Total

RO RO RO RO ROUnauditedAt 1 January 2013 500,000 (18,032,842) 166,667 4,442,260 (12,923,915)Total comprehensive income (loss) for the periodLoss for the period - - - (37,702) (37,702)Changes in fair value of cash flow hedge, net of income tax - 1,640,764 - - 1,640,764Total comprehensive income (loss) for the period - 1,640,764 - (37,702) 1,603,062At 31 March 2013 500,000 (16,392,078) 166,667 4,404,558 (11,320,853)

USD USD USD USD USDAt 1 January 2013 1,300,390 (46,899,460) 433,463 11,553,342 (33,612,265)Total comprehensive income (loss) for the periodLoss for the period - - - (98,056) (98,056)Changes in fair value of cash flow hedge, net of income tax - 4,267,266 - - 4,267,266Total comprehensive income for the period - 4,267,266 - (98,056) 4,169,210At 31 March 2013 1,300,390 (42,632,194) 433,463 11,455,286 (29,443,055)

RO RO RO RO ROAt 1 January 2014 67,488,743 (2,999,008) 1,091,682 9,114,642 74,696,059Total comprehensive income (loss) for the periodLoss for the period - (1,769,283) - (3,713,842) (5,483,125)Total comprehensive loss for the period - (1,769,283 - (3,713,842) (5,483,125)At 31 March 2014 67,488,743 (4,768,291) 1,091,682 5,400,800 69,212,934

USD USD USD USD USDAt 1 January 2014 175,523,389 (7,799,760) 2,839,224 23,705,192 194,268,045Total comprehensive income (loss) for the periodLoss for the period - (4,601,515) - (9,658,877) (14,260,392)Total comprehensive loss for the period - (4,601,515) - (9,658,877) (14,260,392)At 31 March 2014 175,523,389 (12,401,275) 2,839,224 14,046,315 180,007,653

The notes on pages 192 to 198 form an integral part of these condensed interim financial statements.The review report of the Independent Auditors is set forth on page 186.

192

Notes to the condensed interim financial statements

(forming part of the condensed interim financial statements)

1. Legal status and principal activities

Al Batinah Power Company SAOC (the “Company”) is a closed Omani joint stock company registered on 2 August 2010 under the Commercial Companies Law of Oman.

The Company’s principal activities are as follows:

- Design, procurement, construction, commissioning and financing of the Sohar 2 Power Plant (“the Plant”) with a capacity of about 750 MW.

- The full operation and maintenance of the Plant in accordance with good practices throughout the useful life time of the Plant from the Commercial Operation Date (“COD”).

- Making available the demonstrated power capacity.

- Selling the electricity energy delivered to Oman Power & Water Procurement Company SAOC (“OPWP”).

The Company’s issued share capital is owned 46% by Kahrabel FZE (“Kahrabel”), UAE (a IPR GDF Suez entity), 22% by Multitech LLC (“Multitech”), Oman (a Suhail Bahwan group company), 11% each by Blue Horizon Barka Power BV (“Sojitz”,a Sojitz Corporation group company) and SEP International Netherlands BV (“Yonden” a Shikoku Electric Power group company) and 10% by Public Authority for Social Insurance, Oman (“PASI”), (“together the Founder Shareholders”).

Commercial Operation of the Plant was achieved by the Company on 3 April 2013 as compared to the originally scheduled date of 1 April 2013.

During the three months period ended 31 March 2014, the shareholders resolved to list the Company on the Muscat Securities Market through an Initial Public Offering (“the IPO”) of shares to the public. The IPO is expected to be finalised by 30 June, 2014. On 31 March 2014, the Shareholders passed a resolution to transform the Company into a SAOG company.

2 Basis of preparation and significant accounting policies

Basis of preparation

a) Statement of compliance The condensed interim financial statements have been prepared in accordance with IAS 34 Interim Financial

Reporting. Selected explanatory notes are included to explain events and transactions that are significant to an understanding of the changes in financial position and performance of the Company since the last annual financial statement as at and for the year ended 31 December 2013. The condensed interim financial statements does not include all the information required for full annual financial statements prepared in accordance with Interim Financial Reporting Standards (IFRSs).

b) Basis of measurement These financial statements are prepared on historical cost basis except where otherwise described in the

accounting policies below.

c) Use of estimates and judgements Preparing the interim financial statements requires management to make judgements, estimates and assumptions

that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, except as described below, significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements as at and for the year ended 31 December 2013.

193

Significant accounting policies The accounting policies applied by the Company in this condensed interim financial statements are consistent

with those applied by the Company in its financial statements as at and for the year ended 31 December 2013.

3 Revenue

Unaudited Unaudited

31 March 2014 31 March 2014 31 March 2013 31 March 2013

RO USD RO USD

Capacity charge 4,174,155 10,856,060 3,017 7,845

Energy charge 168,500 438,230 - -

Fuel charge 2,106,614 5,478,840 - -

6,449,269 16,773,130 3,017 7,845

4 Property, plant and equipment

Property, plant and

equipment

De-com-missioning

assetTechnical

sparesOthers assets Total Total

USD USD USD USD USD ROCost1 January 2014 771,366,016 1,036,723 3,580,479 279,447 776,262,665 298,472,995Additions during the period 27,750 - 85,667 676 114,093 43,86931 March 2014 771,393,766 1,036,723 3,666,146 280,123 776,376,758 298,516,864

Depreciation1 January 2014 19,078,748 19,800 128,132 260,500 19,487,180 7,492,821Charge for the period 4,791,100 6,480 36,650 7,225 4,841,455 1,861,53931 March 2014 23,869,848 26,280 164,782 267,725 24,328,635 9,354,360

Carrying amount

31 March 2014 747,523,918 1,010,443 3,501,364 12,398 752,048,123 289,162,50431 December 2013 752,287,268 1,016,923 3,452,347 18,947 756,775,485 290,980,174

5 Term loan

31 March 2014 31 March 2014 31 December

2013 31 December

2013

RO USD RO USD

Term loans 223,916,175 582,356,761 223,916,175 582,356,761

Less: current portion (11,875,621) (30,885,880) (11,875,621) (30,885,880)

Non-current portion 212,040,554 551,470,881 212,040,554 551,470,881Less: Unamortised transaction cost (10,990,817) (28,584,698) (11,353,975) (29,529,195)

201,049,737 522,886,183 200,686,579 521,941,686

194

On 16 September 2010, the Company entered into a Common Terms Agreement (“CTA”), for credit facilities with a consortium of international bank, export credit agencies and local banks with Credit Agricole Corporate and Investment Bank as the Global Facility Agent; Offshore Security Trustee, Offshore Account Bank, KEXIM Facility Agent and Commercial Facility Agent, Bank Muscat SAOG as Onshore Account Bank; Performance Bond Issuing Bank and Performance Bond Facility Agent and KfW Ipex Bank GMBH as the Hermes Facility Agent.

At 31 March 2014 and 31 December 2013 the facility limits and outstanding amounts were as follows:

Limit Outstanding

RO USD RO USD

31 March 2014

Hermes covered variable facility 72,286,000 188,000,000 68,368,099 177,810,400

KEXIM direct facility 44,923,058 116,835,000 42,488,228 110,502,543

Commercial facility 50,357,196 130,968,000 49,531,338 128,820,125

Hermes covered fixed facility 46,140,000 120,000,000 43,639,212 113,496,000

KEXIM covered facility 21,029,074 54,692,000 19,889,298 51,727,693

234,735,328 610,495,000 223,916,175 582,356,761

31 December 2013

Hermes covered variable facility 72,286,000 188,000,000 68,368,099 177,810,000

KEXIM direct facility 44,923,058 116,835,000 42,488,228 110,502,543

Commercial facility 50,357,196 130,968,000 49,531,338 128,820,125

Hermes covered fixed facility 46,140,000 120,000,000 43,639,212 113,496,000

KEXIM covered facility 21,029,074 54,692,000 19,889,298 51,727,693

234,735,328 610,495,000 223,916,175 582,356,761

6 Trade and other receivables

31 March 2014

31 March 2014

31 December 2013

31 December 2013

RO USD RO USD

Trade receivables 2,447,600 6,365,670 2,098,917 5,458,823

Prepayments 173,584 451,454 363,456 945,270

Due from related parties (note 13) 27,422 71,321 11,124 28,932

Other receivable 173,578 451,439 169,578 441,035

2,822,184 7,339,884 2,643,075 6,874,060

7 Cash and cash equivalents

Cash in hand and at bank 1,105,786 2,875,906 1,827,349 4,752,534

Short term deposit with a bank 3,229,800 8,400,000 3,229,800 8,400,000

4,335,586 11,275,906 5,057,149 13,152,534

195

8 Equity

(a) Share capital The Company’s authorised share capital comprises 2,000,000 shares of RO 1 each of which 500,000 shares of

RO 1 each are fully paid up. As at 31 December 2013, the Company increased its issued share capital from RO 500,000 to RO 67,488,743 by means of a debt/equity conversion of the equity bridge loans and shareholder loans. The details of the shareholders are as follows:

31 March 2014

Nationality

No. of shares held of nominal

value RO 1 each% of total

Aggregate nominal value of shares held

RO’000s

Kahrabel FZE UAE 31,044,822 46% 31,045

Multitech LLC Omani 14,847,523 22% 14,847

SEP International Netherlands B.V Netherlands 7,423,762 11% 7,424

Blue Horizon Sohar Power B.V Netherlands 7,423,762 11% 7,424

Public Authority for Social Insurance Omani 6,748,874 10% 6,749

67,488,743 100% 67,489

31 December 2013

Kahrabel FZE UAE 31,044,822 46% 31,045

Multitech LLC Omani 14,847,523 22% 14,847

SEP International Netherlands B.V Netherlands 7,423,762 11% 7,424

Blue Horizon Sohar Power B.V Netherlands 7,423,762 11% 7,424

Public Authority for Social Insurance Omani 6,748,874 10% 6,749

67,488,743 100% 67,489

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company. All shares rank equally with regard to the Company’s residual assets.

(b) Legal reserve Article 106 of the Commercial Companies Law of 1974 requires that 10% of a company’s net profit be transferred

to a non-distributable legal reserve until the amount of legal reserve becomes equal to at least one-third of the Company’s issued share capital.

(c) Hedging reserve Hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow

hedging instruments related to hedged transactions that have not yet occurred.

196

9 Trade and other payables

31 March 2014

31 March 2014

31 December 2013

31 December 2013

RO USD RO USD

Trade payables 56,559 147,096 56,905 147,997

Accrued fuel costs 872,737 2,269,794 600,489 1,561,741

Accrual interest cost 2,190,818 5,697,832 1,800,904 4,683,756

Other payable and accruals 740,428 1,925,688 721,531 1,876,543

3,860,542 10,040,410 3,179,829 8,270,037

10 Direct cost

Fuel gas 2,090,970 5,438,152 - -

Operation and maintenance fee 1,408,585 3,663,419 - -

Depreciation (note 4) 1,858,761 4,834,230 - -

Seawater extraction 222,819 579,504 - -

Generation license fee 12,475 32,445 - -

OETC connection fee 44,101 114,698 - -

Unwinding of discount 9,050 23,536 - -

Insurance 173,830 452,094 - -

Other operating expenses 40,057 104,179 - -

5,860,648 15,242,257 - -

11 General and administrative expenses

Unaudited Unaudited

31 March 2014

31 March 2014 31 March 2013

31 March 2013

RO USD RO USD

Office rent 4,429 11,519 2,215 5,759

Employment costs 24,140 62,783 10,693 27,811

Secondment fees 58,877 153,126 - -

Agency fees 11,878 30,892 - -

Audit and tax fees 2,719 7,072 2,494 6,486

Plant inauguration costs 117,211 304,839 - -

IPO Costs 55,828 145,198 - -

Depreciation (note 4) 2,778 7,225 8,625 22,433

Other general and administrative expenses 31,587 82,150 7,700 20,026

309,447 804,804 31,727 82,515

197

12 Finance costs

Unaudited Unaudited

31 March 2014

31 March 2014

31 March 2013

31 March 2013

RO USD RO USD

Swap interest 1,231,736 3,203,474 - -

Interest on term loans 1,425,334 3,706,980 - -

Interest on working capital 11,980 31,152 5,867 15,258

Amortisation of deferred finance costs 363,159 944,496 - -

Interest on payables - - 6 16

Effective portion of hedge (3,359) (8,737)

DSRA LC cost 23,832 61,980 - -

Exchange loss 7,031 18,284 3,119 8,112

3,059,713 7,957,629 8,992 23,386

13 Related party transactions

Related parties comprise the shareholders, directors, key management personnel, business entities that have the ability to control or exercise significant influence in financial and operating decisions of the Company. Prices and terms of these transactions, which are entered into in the normal course of business, are on mutually agreed terms and conditions.

The Company had the following significant transactions with related parties during the year:

Unaudited Unaudited

31 March 2014

31 March 2014

31 March 2013

31 March 2013

RO USD RO USD

Multitech 24,054 62,560 89,452 232,645

Kahrabel 1,400 3,641 186,841 485,935

Kahrabel Operations and Maintenance Oman (“KOMO”) 32,205 83,757 31,477 81,866

Suez Tractebel SA 8,621 22,421

Tractebel Engineering SA (“TE”) - - 76,171 198,105

Sojitz Corporation 31,670 82,368 71,084 184,874

Shikoku Electric Power Co. 4,798 12,479 44,654 116,134

PASI 3,998 10,399 62,849 163,456

Al Suwadi Power Co. SAOC (“ASP”) 20,392 53,034 4,777 12,425

Electrabel S.A 18,393 47,835 - -

Suez Tractebel Operation & Maintenance Oman LLC 1,396,431 3,631,811 275,363 716,158

1,533,341 3,987,884 851,289 2,214,019

198

Unaudited Unaudited

31 March 2014

31 March 2014

31 March 2013

31 March 2013

RO USD RO USDThe nature of the above transactions is as follows:

Interest on shareholder loan - - 22,252 57,873

Performance bond charges - - 406,193 1,056,420

Secondment fees 58,877 153,126 57,912 150,617

Professional services fees 15,258 39,682 8,621 22,421

Owner's engineer fees - - 76,171 198,105

Mobilisation fee - - 275,363 716,158

Operation and maintenance fixed fee 1,245,371 3,238,935 - -Operation and maintenance variable fee 151,061 392,876 - -

Directors’ sitting fee 2,400 6,241 - -

DSRA LC cost 39,984 103,990 - -

Others 20,390 53,034 4,777 12,425

1,533,341 3,987,884 851,289 2,214,019

Balances due from related parties at period end comprised (note 6):

31 March 2014

31 March 2014

31 December 2013

31 December 2013

RO USD RO USD

KOMO 2,059 5,355 1,178 3,064

ASP 25,363 65,966 9,946 25,868

27,422 71,321 11,124 28,932

14 Financial risk management

The Company’s financial risk management objectives and policies are consistent with those disclosed in the financial statements as at and for the year ended 31 December 2013.

15 Operating commitments

At 31 March 2014 and 31 December 2013 future minimum lease commitments under the Usufruct Agreement are as follows:

31 March 2014

31 March 2014

31 December 2013

31 December 2013

RO USD RO USD

Within one year 139,662 363,230 139,662 363,230

Between two and five years 558,648 1,452,922 558,648 1,452,922

After five years 1,296,088 3,370,840 1,331,004 3,461,648

16 Comparative figures

Certain comparative figures have been reclassified where necessary to conform to the current period presentation.

199

Chapter XXIII: Undertakings

1) Al Batinah Power Company SAOG (under transformation)

The Board of Directors of Al Batinah Power Company SAOG (under transformation) jointly and severally hereby confirm that:

The information provided in this Prospectus is true and complete.

Due diligence has been taken to ensure that no material information has been omitted, the omission of which would render this Prospectus misleading.

All the provisions set out in the Capital Market Law, the CCL, and the rules and regulations issued pursuant to them have been complied with.

On behalf of the Board of Directors (Authorised Signatories):

Name Signature

Mr. Johan Van Kerrebroeck Sd/-

Mr. P. Ananthan Sd/-

200

2) Issue Manager

Pursuant to our responsibilities under Article 3 of the Capital Market Law, Article 13 of the Executive Regulations of the Capital Market Law, issued under CMA Board No. 1/2009 (as amended), and the directives issued by the CMA, we have reviewed all the relevant documents and other material required for the preparation of this Prospectus pertaining to the issue of the shares of Al Batinah Power Company SAOG (under transformation).

The Board of Directors of Al Batinah Power Company SAOG (under transformation) will bear the responsibility with regard to the correctness of the information provided for in this Prospectus, and they have confirmed that they have not omitted any material information from it, the omission of which would render this Prospectus misleading.

We confirm that we have undertaken the due diligence required by our profession with regard to this Prospectus which was prepared under our supervision and, based on the reviews and discussions with Al Batinah Power, its directors, officers and other related parties, we confirm the following:

We have undertaken reasonable due diligence to ensure the information given to us by Al Batinah Power and included in this Prospectus is conformant with the facts in the documents and other material of the Offer.

To the best of our knowledge and from the information available from Al Batinah Power, Al Batinah Power has not omitted any material information, the omission of which would render this Prospectus misleading.

This Prospectus and the Offer to which it relates, is conformant with all the rules and terms of disclosure stipulated for in the Capital Market Law, the Executive Regulations of the Capital Market Law, the prospectus models applied by the CMA, the CCL and the directives and decisions issued in this regard.

The information contained in this Prospectus in the Arabic language (and the unofficial translation into the English language) is true, sound and adequate to assist the investor to take the decision as to whether or not to invest in the securities offered.

Financial Adviser & Issue Manager

Sd/-

________________________________

Bank Muscat SAOG

201

3) Legal Adviser

The legal adviser whose name appears below, hereby confirms that all the procedures taken for the offering of the securities as described in this Prospectus are in line with the laws and legislations related to Al Batinah Power’s business and the CCL, the CML and the regulations and directives issued pursuant to them, the requirements and rules for the issue of shares issued by the CMA, the Articles of Al Batinah Power, and the resolutions of the general meeting and Board of Directors of Al Batinah Power. Al Batinah Power has obtained all the consents and approvals of the official authorities required to carry out the activities described in this Prospectus.

Legal Adviser

Sd/-

______________________________________

Al Busaidy, Mansoor Jamal & Co.