JIMAH EAST POWER SDN BHD - BIX Malaysia

Strictly Private & Confidential No:

JIMAH EAST POWER SDN BHD (Company No. 1053111-D)

INFORMATION MEMORANDUM

PROPOSED ISSUE OF, OFFER FOR SUBSCRIPTION OR PURCHASE OF, OR

INVITATION TO SUBSCRIBE FOR OR PURCHASE OF SUKUK BASED ON THE SHARIAH PRINCIPLE OF MURABAHAH (VIA A TAWARRUQ ARRANGEMENT)

(“SUKUK MURABAHAH”) OF UP TO RINGGIT TEN BILLION (RM10,000,000,000.00) IN NOMINAL VALUE

Joint Lead Arrangers

CIMB Investment Bank Berhad (Company No. 18417-M)

HSBC Amanah Malaysia Berhad (Company No. 807705-X)

Joint Lead Managers and Joint Bookrunners

CIMB Investment Bank

Berhad (Company No. 18417-M)

HSBC Amanah Malaysia Berhad

(Company No. 807705-X)

Maybank Investment Bank Berhad

(Company No. 15938-H)

This Information Memorandum is dated 4 September 2015

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RESPONSIBILITY STATEMENT

This Information Memorandum has been approved by Jimah East Power Sdn Bhd (Company No. 1053111-D) (“JEP” or “Project Company” or the “Issuer”), Tenaga Nasional Berhad (Company No. 200866-W) (“TNB”) and 3B Power Sdn Bhd (Company No. 1079095-P) (“3B Power”) (collectively referred to as the “Shareholders”), Tenaga Nasional Berhad (“TNB”) and Mitsui & Co., Ltd. (“Mitsui”) (collectively referred to as the “Sponsors”) and the Issuer, the Shareholders and the Sponsors accept full responsibility for the accuracy of the information contained in this Information Memorandum. To the best of the knowledge and belief of the Issuer (having made all reasonable inquiries), the Shareholders and the Sponsors (having taken all reasonable care to ensure that such is the case), the information contained in this Information Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer, the Shareholders and the Sponsors, having made all reasonable enquiries, confirm that this Information Memorandum contains all information which is material in the context of the Islamic securities based on the Shariah principle of Murabahah (via a Tawarruq arrangement) (“Sukuk Murabahah”) of up to RM10 billion in nominal value, that the information contained in this Information Memorandum is true and accurate in all respects and is not misleading, that the opinions and intentions expressed in this Information Memorandum are honestly held and that there are no other facts the omission of which would make this Information Memorandum or any of such information or the expression of any such opinions or intentions misleading.

E-DISCLAIMER This Information Memorandum may be sent to you in an electronic form. Distribution of the Information Memorandum to any persons, other than the person receiving the electronic transmission from the Issuer, CIMB Investment Bank Berhad (Company No. 18417-M) (“CIMB”) and HSBC Amanah Malaysia Berhad (Company No. 807705-X) (“HSBC”) as the joint lead arrangers (the “Joint Lead Arrangers”) or CIMB, HSBC and Maybank Investment Bank Berhad (Company No. 15938-H) (“Maybank IB”) as the joint lead managers and joint bookrunners (“Joint Lead Managers and Joint Bookrunners”) and their respective agents and any person retained to advise the person receiving the electronic transmission with respect thereto, is unauthorised. The person receiving the electronic transmission from any of the Issuer, the Joint Lead Arrangers or the Joint Lead Managers and the Joint Bookrunners or their respective agents is prohibited from disclosing the Information Memorandum, altering the contents of the Information Memorandum or forwarding a copy of the Information Memorandum or any portion thereof by electronic mail or otherwise to any person. By opening and accepting this electronic transmission of the Information Memorandum, the recipient agrees to the foregoing. Transmission over the internet may be subject to interruptions, transmission blackout, delayed transmission due to internet traffic, incorrect data transmission due to the public nature of the internet, data corruption, interception, unauthorised amendment, tampering, viruses or other technical, mechanical or systemic risks associated with internet transmissions. None of the Issuer, the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners or their respective agents have accepted or will accept any responsibility and/or liability for any such interruption, transmission blackout, delayed transmission, incorrect data transmission, corruption, interception, amendment, tampering or viruses or any consequences thereof. The electronic transmission of the Information Memorandum is intended only for use by the addressee named in the email and may contain legally privileged and/or confidential

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information. If you are not the intended recipient of the e-mail, you are hereby notified that any dissemination, distribution or copying of the email, and any attachments thereto, is strictly prohibited. If you have received the email in error, please immediately notify by reply email and permanently delete all copies of the e-mail and destroy all printouts of it.

IMPORTANT NOTICE AND GENERAL STATEMENT OF DISCLAIMER This Information Memorandum may not be, in whole or in part, reproduced or used for any other purpose, or shown, given, copied to or filed with any other person including, without limitation, any government or regulatory authority except with the prior written consent of the Issuer or as required under Malaysian laws, regulations or guidelines. None of the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners accept any responsibility for the contents of this Information Memorandum or for any other statement, made or purported to be made by any of the Joint Lead Arrangers or the Joint Lead Managers and the Joint Bookrunners or on their behalf in connection with the Issuer, the Shareholders or the Sponsors or the issue and offering of the Sukuk Murabahah. The Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners accordingly disclaim all and any liability whether arising in tort or contract or otherwise which they might otherwise have in respect of this Information Memorandum or any such statement. This Information Memorandum is not and is not intended to be a prospectus. Unless otherwise specified in this Information Memorandum, the information contained in this Information Memorandum is correct as at the date hereof. The distribution or possession of this Information Memorandum in Malaysia may be restricted or prohibited by law. Each recipient is required by the Issuer, the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners to seek appropriate professional advice regarding, and to observe, any such restriction or prohibition. None of the Issuer, the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners accepts any responsibility or liability to any person in relation to the distribution or possession of this Information Memorandum in Malaysia. This Information Memorandum does not constitute an offer of securities for sale in the United States or elsewhere (other than Malaysia), and the Sukuk Murabahah may not be offered or sold in the United States absent registration or an exemption from registration. The Issuer does not intend to register any portion of the offering of the Sukuk Murabahah in the United States or to conduct a public offering in the United States. This Information Memorandum should not be used in the United States for any purpose. It may be unlawful to distribute this Information Memorandum in certain jurisdictions. This Information Memorandum is not for distribution directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia), Australia, Canada or Japan or anywhere else outside Malaysia. The information contained in these materials does not constitute an offer of securities for sale in Australia, Canada or Japan or anywhere else outside Malaysia. By accepting delivery of this Information Memorandum, each recipient agrees to the terms upon which this Information Memorandum is provided to such recipient as set out in this Information Memorandum, and further agrees and confirms that: (a) it will keep confidential all of such information and data, (b) it is lawful for the recipient to receive this Information Memorandum and to subscribe for or purchase the Sukuk Murabahah under all jurisdictions to which the recipient is subject, (c) the recipient will comply with all the

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applicable laws in connection with such subscription or purchase of the Sukuk Murabahah, (d) the Issuer, the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners and their respective directors, officers, employees, agents and professional advisers are not and will not be in breach of the laws of any jurisdiction to which the recipient is subject as a result of such subscription or purchase of the Sukuk Murabahah and they shall not have any responsibility or liability in the event that such subscription or purchase of the Sukuk Murabahah is or shall become unlawful, unenforceable, voidable or void, (e) it is aware that the Sukuk Murabahah can only be transferred or otherwise disposed of in accordance with the relevant selling restrictions and all applicable laws, (f) it has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of subscribing for or purchasing the Sukuk Murabahah and is able and prepared to bear the economic and financial risks of investing in or holding the Sukuk Murabahah, (g) it is a person falling within Section 4(6) of the Companies Act 1965 (“Companies Act”) (as amended from time to time); and Part I of Schedule 6, and Part I of Schedule 7 read together with Schedule 9 of the Capital Markets and Services Act 2007 (“CMSA”) (as amended from time to time) at issuance, and Section 4(6) of the Companies Act; and Part I of Schedule 6 read together with Schedule 9 of the CMSA thereafter. This Information Memorandum is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, the Joint Lead Arrangers or the Joint Lead Managers and the Joint Bookrunners that any recipient of this Information Memorandum should purchase any of the Sukuk Murabahah. Each investor contemplating purchasing any of the Sukuk Murabahah should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and the terms of the offering of the Sukuk Murabahah, including the merits and risks involved.

ACKNOWLEDGMENT

The Issuer hereby acknowledges and authorises the Joint Lead Managers and Joint Bookrunners to distribute this Information Memorandum on a confidential basis to potential investors for the sole purpose of assisting such investors to decide whether to subscribe for or purchase any Sukuk Murabahah. At the point of issuance of the Sukuk Murabahah, the Sukuk Murabahah may only be offered, sold or transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 4(6) of the Companies Act; and Part I of Schedule 6 and Part I of Schedule 7 read together with Schedule 9 of the CMSA.

STATEMENTS OF DISCLAIMER – SECURITIES COMMISSION MALAYSIA (“SC”)

In accordance with the CMSA, a copy of this Information Memorandum will be deposited with the SC, which takes no responsibility for its contents. The issue, offer or invitation in relation to the Sukuk Murabahah in this Information Memorandum is subject to the fulfilment of various conditions precedent including without limitation the lodgement pursuant to the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework issued by the SC on 9 March 2015 (effective on 15 June 2015) (the “Guidelines on Unlisted Capital Market Products”) in relation to the proposed issuance of the Sukuk Murabahah with the SC and each recipient of this Information Memorandum acknowledges and agrees that the lodgement to the SC shall not be taken to indicate that the SC recommends the subscription or purchase of the Sukuk Murabahah.

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The lodgement pursuant to the Guidelines on Unlisted Capital Market Products in relation to the proposed issuance of the Sukuk Murabahah has been made with the SC on 28 August 2015. The SC shall not be liable for any non-disclosure on the part of the Issuer and assumes no responsibility for the correctness of any statements made or opinions or reports expressed in this Information Memorandum.

FORWARD LOOKING STATEMENTS Certain statements in this Information Memorandum are based on historical data, which may not be reflective of future results, and others are forward-looking in nature, which are subject to uncertainties and contingencies. All forward-looking statements are based on estimates and assumptions made by the Issuer, the Shareholders and the Sponsors. Although the Board of Directors of the Issuer, the Shareholders and the Sponsors believe that these forward-looking statements are reasonable, the statements are nevertheless subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in such forward-looking statements. In light of these and other uncertainties, the inclusion of forward-looking statements in this Information Memorandum should not be regarded as a representation or warranty by the Issuer or the Shareholders or the Sponsors or its/their advisers or the Joint Lead Arrangers or the Joint Lead Managers and the Joint Bookrunners that the plans and objectives of the Issuer will be achieved.

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CONFIDENTIALITY To the recipient of this Information Memorandum This Information Memorandum and its contents are strictly confidential and the information herein contained is given to the recipient strictly on the basis that the recipient shall ensure the same remains confidential. Accordingly, this Information Memorandum and its contents, or any information, which is made available to the recipient in connection with any further enquiries, must be held in complete confidence. This Information Memorandum is submitted to selected persons specifically in reference to the Sukuk Murabahah and may not be reproduced or used, in whole or in part, for any purpose, nor furnished to any person other than those to whom copies have been sent by the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners. In the event that there is any contravention of this confidentiality undertaking or there is reasonable likelihood that this confidentiality undertaking may be contravened, each of the Issuer, the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners may, at its discretion, apply for any remedy available to the Issuer or the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners (as the case maybe) whether at law or equity, including without limitation, injunctions. Each of the Issuer and the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners is entitled to fully recover from the contravening party all costs, expenses and losses incurred and/or suffered, in this regard. For the avoidance of doubt, it is hereby deemed that this confidentiality undertaking shall be imposed upon the recipient, the recipient’s professional advisers, directors, employees and any other persons who may receive this Information Memorandum (or any part of it) from the recipient. The recipient must return this Information Memorandum and all reproductions thereof whether in whole or in part and any other information in connection therewith to the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners promptly upon the Joint Lead Arrangers’ or the Joint Lead Managers’ request, unless that recipient provides proof of a written undertaking satisfactory to the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners with respect to destroying these documents as soon as reasonably practicable after the said request from the Joint Lead Arrangers, the Joint Lead Managers and the Joint Bookrunners.

INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO ASSESS THE MERITS AND RISKS OF THE INVESTMENT. EACH SERIES OF THE SUKUK MURABAHAH WILL CARRY DIFFERENT RISKS AND ALL POTENTIAL INVESTORS ARE STRONGLY ENCOURAGED TO EVALUATE EACH SUKUK MURABAHAH SERIES ON ITS OWN MERIT. IT IS RECOMMENDED THAT PROSPECTIVE INVESTORS CONSULT THEIR FINANCIAL, LEGAL AND OTHER ADVISERS BEFORE PURCHASING OR ACQUIRING OR SUBSCRIBING FOR THE SUKUK MURABAHAH.

JIMAH EAST POWER SDN BHD Sukuk Murabahah of up to RM10 Billion in Nominal Value Information Memorandum

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TABLE OF CONTENTS

CLAUSE PAGE NO.

GLOSSARY OF DEFINITIONS AND ABBREVIATIONS ..................................................... 1

SECTION 1 ........................................................................................................................... 9

EXECUTIVE SUMMARY ..................................................................................................... 9 1.1 Introduction ..................................................................................................... 9 1.2 Issuer/Project Company ................................................................................. 9 1.3 TNB .................................................................................................................. 9 1.4 3B Power ......................................................................................................... 9 1.5 Mitsui ............................................................................................................... 9 1.6 Project Overview ........................................................................................... 10 1.7 Project Structure ........................................................................................... 10 1.8 Key Project Documents ................................................................................ 10 1.9 Brief Summary of the Structure of the Sukuk Murabahah ......................... 12

SECTION 2 ......................................................................................................................... 15

INFORMATION ON THE ISSUER ..................................................................................... 15 2.1 Incorporation................................................................................................. 15 2.2 Principal Activities ........................................................................................ 15 2.3 Share Capital ................................................................................................. 15 2.4 Shareholding Structure ................................................................................ 15 2.5 Profile of Directors........................................................................................ 16 2.6 Directors’s Confirmation .............................................................................. 19 2.7 Contingent Liabilities ................................................................................... 19 2.8 Material Litigation ......................................................................................... 19 2.9 Related Party Transactions .......................................................................... 19

SECTION 3 ......................................................................................................................... 20

INFORMATION ON TNB AND 3B POWER ....................................................................... 20 3.1 TNB ................................................................................................................ 20 3.2 3B Power ....................................................................................................... 22

SECTION 4 ...................................................................................................................... 22

INFORMATION ON MITSUI AND CHUGOKU ................................................................. 23 4.1 Mitsui ............................................................................................................. 23 4.2 Chugoku ........................................................................................................ 25

SECTION 5 ......................................................................................................................... 28

INFORMATION ON THE PROJECT ................................................................................. 28 5.1 Technical Description ................................................................................... 28 5.2 Licensing Requirement ................................................................................ 33 5.3 Project Economics........................................................................................ 33 5.4 Project Structure ........................................................................................... 35 5.5 Summary of Key Project Documents .......................................................... 36

SECTION 6 ....................................................................................................................... 107

PRINCIPAL TERMS AND CONDITIONS ........................................................................ 107


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SECTION 7 ....................................................................................................................... 194

INVESTMENT CONSIDERATIONS ................................................................................. 194 7.1 Considerations Relating to the Sukuk Murabahah ................................... 194 7.2 Risks Relating to the Issuer ....................................................................... 197 7.3 Risks Relating to the Project ..................................................................... 198 7.4 Risks Relating to TNB and Mitsui .............................................................. 211 7.5 General Consideration ............................................................................... 212

SECTION 8 ....................................................................................................................... 215

POTENTIAL CONFLICT OF INTEREST ......................................................................... 215

APPENDIX 1 ..................................................................................................................... 219

BASE CASE CASHFLOW PROJECTIONS....................................................................... 219

APPENDIX 2 .................................................................................................................................... 222

SUMMARY OF SOURCES AND USES OF FUNDS OF THE PROJECT ............................... 222

APPENDIX 3 .................................................................................................................................... 223

ASSUMPTIONS OF BASE CASE CASHFLOW PROJECTIONS ........................................... 223

APPENDIX 4 .................................................................................................................................... 228

OVERVIEW OF THE SITE ........................................................................................................... 228

APPENDIX 5 .................................................................................................................................... 229

SITE PLAN OF THE SITE ............................................................................................................ 229



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Glossary of Definitions and Abbreviations

The following definitions (in addition to the definitions contained in the body herein) shall apply throughout this Information Memorandum except where the context otherwise requires:

3B Power : 3B Power Sdn Bhd (Company No. 1079095-P);

ADA : Ash Disposal Agreement, being collectively, the BADA and FADA;

Ashpond Land Sale and Purchase Agreement

: a proposed agreement to be entered into between the Project Company and MBI for the purchase by the Project Company of land for the construction of an ash pond for the disposal of ash produced from the Project (“Ashpond Land”);

BADA : Bottom Ash Disposal Agreement, the agreement to be entered into by the Project Company enabling the Project Company to dispose of all of the bottom ash produced during the operation of the Facility (which includes any supplemental entered into from time to time);

BNM : Bank Negara Malaysia;

Bursa : Bursa Malaysia Securities Berhad;

Capital Contribution : capital contribution to the Project Company in Ringgit is made by:

(a) subscribing for Shares; and/or

(b) subscribing for Redeemable Preference Shares (including the payment to the Project Company of any premium in respect thereof);

and shall include any amounts deemed to be Capital Contributions under the Equity Contribution Agreement (as defined in the PTC);

Chugoku : Chugoku Electric Power Co., Inc;

Commercial Operation Date or COD

: with respect to either of Unit 1 or Unit 2, the date upon which each of the conditions to the Commercial Operation Date for such Unit under the PPA have been satisfied;

Commission : the Energy Commission of Malaysia;

Companies Act : the Companies Act 1965, as amended from time to time;

CMSA : the Capital Markets and Services Act 2007, as amended from time to time;

CSTA : Coal Supply and Transportation Agreement dated 22 July 2014 entered into between JEP and TFS as supplemented by the Supplemental CSTA (as may


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be amended or supplemented from time to time);

DOE : Department of Environment;

EIA Approval : all the requisite approvals required from the DOE under the Environmental Quality Act 1974 in respect of the Project pursuant to the submission of an Environmental Impact Assessment Report by JEP in relation thereto;

Electricity Supply Act : the Electricity Supply Act 1990, as amended from time to time;

EPC Contract : EPC Contract dated at 29 August 2014 entered into between JEP and the EPC Contractors as supplemented by the Supplemental EPC Contract (as may be amended or supplemented from time to time);

EPC Contractors : IHI Corporation, ISHI Power Sdn Bhd, Toshiba Corporation, TOS Energy Malaysia Sdn Bhd, Hyundai Engineering Co., Ltd. and Hyundai Engineering & Construction Co., Ltd.;

Facility : the electricity generating facility located at the Site comprising two (2) coal fired generating Units with an aggregate net capacity of two thousand (2,000) MW and ancillary equipment and facilities as more specifically described in the PPA and includes any modification thereto as permitted under the PPA;

Financial Adviser : HSBC Bank Malaysia Berhad (Company No. 127776-V);

FADA : Fly Ash Disposal Agreement, the agreement to be entered into by the Project Company enabling the Project Company to dispose of all of the fly ash produced during the operation of the Facility (which includes any supplemental entered into from time to time);

Facility Agent : CIMB;

Financial Close : the date upon which all the conditions precedents for the issuance of the Sukuk Murabahah have been fulfilled or waived, as the case may be;

Fuel : coal and any combustion support or other fuels used by the Facility for the start-up and the generation of electrical energy;

Fuel Supply Contracts : all contracts entered into by JEP for the supply of Fuel to the Facility during the period of the PPA, including the CSTA;


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Generation Licence : the licence required to be obtained by JEP pursuant to Section 9 of the Electricity Supply Act to enable JEP to own and operate the Plant and/or the Facility and deliver and sell electrical energy and generating capacity to TNB;

Government : the Government of Malaysia;

Grid System : the bulk power network controlled or used by the grid system operator for the purpose of transmitting and distributing electricity to the end users, the TNB Works (as described in the PPA) and that portion of the Interconnection Facilities, the Transmission Lines and the IPP Works to be transferred to TNB;

Independent Environmental Consultant

: Pöyry Energy Sdn Bhd (Company No. 551240-M);

Initial Operation Date or IOD : with respect to each Unit, the date on which Net Electrical Output (as described in the PPA) is first generated and delivered from that Unit to the Grid System;

Independent Insurance Adviser

: Aon Insurance Brokers (Malaysia) Sdn Bhd (Company No. 7544-A);

Independent Technical Adviser

: Pöyry Energy Sdn Bhd (Company No. 551240-M);

Interconnection Facilities : the design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing, commissioning, labour, services, facilities, equipment, supplies and materials to be furnished, supplied or performed by JEP and any other permanent structures in relation to all of the facilities as further described in Appendix E of the PPA to enable TNB to receive electrical energy from the Facility and to maintain the stability of the Grid System (as described in the PPA);

IPP : Independent Power Producer;

IPP Works : the design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing, commissioning, labour, services, facilities, equipment, supplies and materials to be furnished, supplied or performed by JEP and any other permanent structures in relation to all of the facilities, including but not limited to the new 500kV Olak Lempit substation and the extension of the existing 275kV Olak Lempit substation, as further described in Appendix E of the PPA;

Jalur Jernih : Jalur Jernih Sdn Bhd (Company No. 572712-K);


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JEP or Issuer or Project Company

: Jimah East Power Sdn Bhd (Company No. 1053111-D);

Jetty Lands : the land measuring approximately 57 acres, required for the purposes of constructing the coal unloading jetty, the cooling water outfall culvert, the cooling water intake channel and the auxiliary jetty;

JLLA : Jetty Lands Lease Agreement, the lands lease agreement to be entered into between JEP and MBI in relation to the lease of the Jetty Lands from MBI to JEP (as may be amended or supplemented from time to time);

JEV : Jimah Energy Ventures Sdn Bhd (Company No. 630120-H);

Joint Shariah Advisers : collectively, CIMB Islamic Bank Berhad (Company No. 671380-H) and HSBC Amanah Malaysia Berhad (Company No. 807705-X);

Joint Bookrunners : collectively, CIMB Investment Bank Berhad (Company No. 18417-M), HSBC Amanah Malaysia Berhad (Company No. 807705-X) and Maybank Investment Bank Berhad (Company No. 15938-H);

Joint Lead Arrangers : collectively, CIMB Investment Bank Berhad (Company No. 18417-M) and HSBC Amanah Malaysia Berhad (Company No. 807705-X);

Joint Lead Managers : collectively, CIMB Investment Bank Berhad (Company No. 18417-M), HSBC Amanah Malaysia Berhad (Company No. 807705-X) and Maybank Investment Bank Berhad (Company No. 15938-H);

Joint Principal Advisers : collectively, CIMB Investment Bank Berhad (Company No. 18417-M) and HSBC Amanah Malaysia Berhad (Company No. 807705-X);

JPY : Japanese Yen, the lawful currency of Japan;

LNTP : the limited notices to proceed issued by JEP to EPC Contractors on 15 June 2014, 15 October 2014 and 15 July 2015 to undertake activities which include soil investigation, dredging works, reclamation works, sand bund construction works, sand fill works, preparation works, expansion of access road to site and engineering work;

LPD : the latest practicable date, being 31 July 2015;

MARC or Rating Agency : Malaysian Rating Corporation Berhad (Company No. 364803-V);

MBI : Menteri Besar Incorporated, Negeri Sembilan;

MIGHT : Malaysian Industry-Government Group for High Technology;


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Minister : the Minister of Energy, Green Technology and Water;

Mitsui : Mitsui & Co, Ltd;

MW : Megawatt;

MyClear : Malaysian Electronic Clearing Corporation Sdn Bhd (Company No. 836743-D);

Offset Agreement : the agreement dated 8 October 2014 between the Project Company and Toshiba Corporation in relation to provision of offset activities, benefits, packages and programmes in compliance with the Treasury Circular on Policy and Guidelines on Offset Programme in Government Procurement published on 19 June 2014 (as may be amended from time to time) (“Offset Policy”) including the provision and development of a power plant simulator associated with the Project (which includes any supplemental entered into from time to time);

OMSA : Offset Management Services Agreement, the agreement dated 30 September 2014 entered into between JEP and MIGHT in relation to performing the offset management services and setting up of the Offset Management Unit (“OMU”) for JEP in compliance with the Government’s Offset Policy. The OMU function is to manage and co-ordinate the offset programme activities implementation for JEP based on the Malaysian Offset Program Management Framework and becomes the integral point for all JEP offset project management activities (which includes any supplemental entered into from time to time);

O&M Agreement : The Operations and Maintenance Agreement to be entered into between JEP and TNBRemaco;

Plant : Unit 1, Unit 2, and other facilities to be constructed in accordance with the terms and conditions of the PPA and the EPC Contract;

PPA : Power Purchase Agreement dated 22 July 2014 entered into between JEP and TNB as supplemented by the Supplemental PPA (as may be amended or supplemented from time to time);

Project : the financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of the Facility, the Fuel Facilities (as described in the PPA), the Site, the Interconnection Facilities, the Transmission Lines and associated facilities, to be located at Kuala Lukut, Mukim Jimah, District of Port Dickson, Negeri Sembilan Darul Khusus, Malaysia;

Project Documents : as defined in Section 1.8 of this Information


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Memorandum;

Project Development Agreement

: the agreement to be entered into between JEP, TNB and Mitsui in relation to the Development Costs (as defined in the PTC), which shall include but not limited to services rendered and to be rendered to the Project Company required in developing the Project for the achievement of COD of Unit 1 and the other terms and conditions in respect of the payment of the Development Costs by the Project Company;

PTC : the Principal Terms and Conditions of the Sukuk Murabahah as set out in Section 6 of this Information Memorandum;

Redeemable Preference Shares

: all redeemable preference shares that are issued from time to time by the Project Company;

Ringgit or RM : Ringgit, the lawful currency of Malaysia;

SC : Securities Commission Malaysia;

Scheduled Commercial Operation Date

: in relation to Unit 1, 15 June 2019 and, in relation to Unit 2, 15 December 2019, in each case, as such date may be postponed under and in accordance with the PPA;

Security Agent : CIMB Investment Bank Berhad (Company No. 18417-M);

Shares : all ordinary shares (par value RM 1.00 per share) that are issued from time to time in the Project Company;

Shareholders : TNB and 3B Power;

Site : the sites in Mukim Jimah, Malaysia where the Plant is to be constructed, including the main and auxiliary sites for the Plant, as described in further detail in the EPC Contract, Transmission Line EPC Contract, and TWA, including the sites for the Interconnection Facilities;

SLA : Sub-Lease Agreement dated 13 June 2014 entered into between JEP, Jalur Jernih and JEV as supplemented by the Supplemental SLA (as may be amended or supplemented from time to time);

SPA : Sale and Purchase Agreement dated 13 June 2014 entered into between JEP and Jalur Jernih as supplemented by the First Supplemental SPA and the Second Supplemental SPA (as may be amended or supplemented from time to time);

Sponsors : TNB and Mitsui;


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Sukuk Murabahah : the sukuk of up to RM10 billion in nominal value based on the Shariah principle of Murabahah (via Tawarruq arrangement);

Sukukholders : the holders of the Sukuk Murabahah;

Sukuk Trustee : AmanahRaya Trustees Berhad (Company No. 766894-T);

Supplemental CSTA : supplemental agreement dated 9 July 2015 to the Coal Supply and Transportation Agreement dated 22 July 2014, entered into between JEP and TFS;

Supplemental EPC Contract : supplemental agreement dated 6 July 2015 to the EPC Contract dated at 29 August 2014, entered into between JEP and the EPC Contractors;

Supplemental PPA : supplemental agreement dated 26 August 2015 to the Power Purchase Agreement dated 22 July 2014, entered into between JEP and TNB;

Supplemental SLA : supplemental agreement dated 8 July 2015 to the SLA, entered into between JEP, Jalur Jernih and JEV;

TFS : TNB Fuel Services Sdn Bhd (Company No. 460430-K);

TL EPC Contractor : HG Power Transmission Sdn Bhd (Company No. 172006-V);

TNB : Tenaga Nasional Berhad (Company No. 200866-W);

TNB Remaco : TNB Repair and Maintenance Sdn Bhd (Company No. 360318-P);

Transmission Line : the design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing, commissioning, labour, services, facilities, equipment, supplies and materials to be furnished, supplied or performed by JEP and any other permanent structures in relation to the transmission lines as further described in Appendix E of the PPA;

Transmission Line EPC Contract

: the Transmission Line EPC Contract dated 10 July 2015 entered into between JEP and TL EPC Contractor (as may be amended or supplemented from time to time);

Transmission Works : means the design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing, energising, commissions, labour, services, facilities, equipment, supplies, materials and any other permanent structures in relation to a 500kV PMU Olak Lempit for the development of a 2x1000MW Coal Fired Power Plant in Jimah, Negeri Sembilan, Malaysia and such other works, materials and services as are specified in the Transmission Works EPC Contract;


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Transmission Works EPC Contract

: The Transmission Works EPC Contract dated 10 July 2015 entered into between JEP and the TW EPC Contractor (as may be amended or supplemented from time to time);

TWA : Transmission Works Agreement dated 9 July 2015 entered into between JEP and TNB (as may be amended or supplemented from time to time);

TW EPC Contractor : Transgrid Ventures Sdn Bhd (Company No. 491232-A);

Unit : each net 1,000 MW block consisting of a coal fired steam generator, steam turbine and generator with all auxiliary and ancillary equipment and interconnecting systems as more specifically described in Appendix A of the PPA and Annexure E of the Supplemental EPC Contract;

Unit 1 or First Unit : the first Unit to achieve its Commercial Operation Date;

Unit 2 or Second Unit : the second Unit to achieve its Commercial Operation Date;

USD : United Stated Dollar(s), being the lawful currency of the United States of America; and

WPCA : Water Pipeline Construction Agreement, the agreement to be entered into by the Project Company in connection with the procurement, supply, construction, installation, testing and commissioning of the water pipeline for purposes of the Project (as may be amended or supplemented from time to time).



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Section 1 Executive Summary

1.1 Introduction

The Issuer proposes to issue Sukuk Murabahah of up to Ringgit Ten Billion (RM10,000,000,000.00) in nominal value based on the Shariah principle of Murabahah (via a Tawarruq arrangement).

1.2 Issuer/Project Company The Issuer/Project Company was incorporated in Malaysia on 5 July 2013 under the Companies Act. Its registered address is at Pejabat Setiausaha Syarikat, Tingkat 2, Ibu Pejabat Tenaga Nasional Berhad, No. 129, Jalan Bangsar, 59200 Kuala Lumpur.

1.3 TNB TNB was incorporated in Malaysia on 12 July 1990 under the Companies Act. It is a public company limited by shares with its registered address at Pejabat Setiausaha Syarikat, Tingkat 2, Ibu Pejabat Tenaga Nasional Berhad, No. 129, Jalan Bangsar, 59200 Kuala Lumpur. As at the date of this Information Memorandum, TNB holds seventy percent (70%) of the Project Company’s shares.

1.4 3B Power 3B Power was incorporated in Malaysia on 28 January 2014 under the Companies Act. It is a private company limited by shares with its registered address at Unit No. 50-8-1, 8th Floor, Wisma UOA, Damansara, 50 Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur. As at the date of this Information Memorandum, 3B Power holds thirty percent (30%) of the Project Company’s shares.

1.5 Mitsui Mitsui was incorporated in Japan on 25 July 1947 under the laws of Japan. It is a public listed company with registered address at 1-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan. Mitsui has been in continuing discussion with Chugoku (a Japanese utility company that has vast experience in ultra-supercritical boiler) for the sale of fifty percent (50%) of its shares in 3B Power, which is expected to be completed after Financial Close subject to the receipt of (a) TNB’s, (b) the Commission’s and/or (c) the Government’s written approvals, if required. For details on Chugoku, please see Section 4.2 of this Information Memorandum entitled “Chugoku”.


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1.6 Project Overview The project site is located at Kuala Lukut, Mukim Jimah, District of Port Dickson, Negeri Sembilan Darul Khusus, Malaysia. The site is on reclaimed land and currently comprised of two (2) pieces of leasehold land.

The sale of the Plant’s entire dependable capacity and net electrical output to the off-taker is contracted under a 25-year PPA from the Commercial Operation Date for Unit 1. The Project Company will undertake the role of the IPP under the PPA.

The generated electrical power will be purchased by TNB as the off-taker, pursuant to the PPA. Coal will be supplied under the CSTA by TFS. The Issuer has entered into several fixed-price, date certain engineering procurement and construction contracts with the EPC Contractors, the TL EPC Contractor and the TW EPC Contractor. Total estimated cost of the Project is up to RM12.20 billion and will be financed using a mixture of debt and equity finance utilising a project financing structure with a maximum Finance to Equity Ratio (as defined in the PTC) of 80:20. The financing structure will be as follows: (i) the Sukuk Murabahah to be issued by the Issuer to the Sukukholders; and

(ii) the Capital Contribution to be made available by the Sponsors and/or

Shareholders to the Issuer.

1.7 Project Structure

The Project will be implemented via the structure which is set out in further detail in Section 5.4 of this Information Memorandum entitled “Project Structure”.

1.8 Key Project Documents A summary of the Project Documents (including supplemental/novation agreements thereto) are as follows:

No. Project Documents Contracting Parties Date of Document

1. PPA JEP and TNB 22 July 2014

2. Supplemental PPA JEP and TNB 26 August 2015

3. CSTA JEP and TFS 22 July 2014

4. Supplemental CSTA JEP and TFS 9 July 2015

5. EPC Contract JEP and the EPC Contractors

29 August 2014

6. Supplemental EPC Contract

JEP and the EPC Contractors

6 July 2015


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No. Project Documents Contracting Parties Date of Document

7. SPA JEP and Jalur Jernih 13 June 2014

8. First Supplemental SPA JEP and Jalur Jernih 11 September 2014

9. Second Supplemental SPA

JEP and Jalur Jernih 8 July 2015

10. SLA JEP, Jalur Jernih and JEV

13 June 2014

11. Supplemental SLA JEP, Jalur Jernih and JEV

8 July 2015

12. Offset Agreement JEP and Toshiba Corporation

8 October 2014

13. OMSA JEP and MIGHT 30 September 2014

14. Transmission Line EPC Contract

JEP and the TL EPC Contractor

10 July 2015

15. TWA JEP and TNB 9 July 2015

16. Transmission Works EPC Contract

JEP and the TW EPC Contractor

10 July 2015

17. O&M Agreement JEP and TNB Remaco To be entered into

18. BADA Please see Section 5.5.13 below

Please see Section 5.5.13 below

19. FADA Please see Section 5.5.14 below


20. WPCA Please see Section 5.5.15 below


21. JLLA Please see Section 5.5.16 below


22. Ashpond Land Sale and Purchase Agreement



For more details on the terms of the Project Documents, please refer to Section 5.5 of this Information Memorandum entitled “Summary of Key Project Documents”.



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1.9 Brief Summary of the Structure of the Sukuk Murabahah

Sukuk Murabahah The issuance of each tranche of the Sukuk Murabahah, shall be effected as follows: (1) The Sukuk Trustee (on behalf of the holders of the Sukuk Murabahah

(“Sukukholders”)) and JEP shall enter into an agency agreement (“Agency Agreement”), pursuant to which JEP (in such capacity, the “Agent”) is appointed as the agent of the Sukukholders for the purchase and sale of Commodities (as defined in the PTC). The Agent will then enter into a “Sub-Agency Agreement” to appoint the Facility Agent as the sub-agent (in such capacity, the “Sub-Agent”) for the purchase and sale of Commodities under the Sukuk Murabahah issuance.

(2) Pursuant to a commodities murabahah master agreement (“Commodities

Murabahah Master Agreement”), to be entered into between JEP (in such capacity, the “Purchaser”) and the Agent and the Sukuk Trustee (acting on behalf of the Sukukholders), the Purchaser issues a purchase order (the "Purchase Order") to the Agent and subsequently thereafter, the Agent issues the Purchase Order to the Sub-Agent. In the Purchase Order, JEP (acting as Purchaser for itself) will request the Agent, and subsequently, the Agent will request the Sub-Agent to purchase the Commodities on the terms specified therein. The Purchaser will irrevocably undertake to purchase the Commodities from the Sukukholders via the Sub-Agent at the Deferred Sale Price (as defined in the PTC).

(3) Pursuant to the Purchase Order, the Sub-Agent via the Commodity Trading

Participant (“CTP”) (pursuant to a CTP purchase agreement entered into between the Sub-Agent and the CTP) (“CTP Purchase Agreement”) will purchase on a spot basis the Commodities from commodity vendor(s) in the Bursa Suq Al-Sila' and/or such other independent commodity trading platforms as may be determined by the Joint Shariah Advisers (“Commodity Seller”) at a purchase price, which shall be an amount equivalent to the Sukuk Murabahah proceeds ("Purchase Price").

(4) JEP (acting as the Issuer) shall issue Sukuk Murabahah to the Sukukholders

whereby the proceeds received from such issuance shall be used to pay for the Purchase Price of the Commodities. The Sukuk Murabahah shall evidence, amongst others, the Sukukholders' ownership of the Commodities and subsequently, once the Commodities are sold to JEP (as the Purchaser for itself), the entitlement to receive the Deferred Sale Price.

(5) Thereafter, pursuant to the undertaking under the Purchase Order, the Sub-

Agent (acting on behalf of the Agent who in turn acts as agent of the Sukukholders) shall sell the Commodities to JEP (acting as Purchaser for itself) at the Deferred Sale Price under the commodities sale and purchase agreement (the “Sale and Purchase Agreement”).

(6) Subsequently thereafter, JEP (pursuant to the CTP sale agreement entered

into between JEP, as Purchaser for itself, and the CTP) (“CTP Sale Agreement”) shall appoint the CTP to sell the Commodities to Bursa Suq Al-Sila’ and/or such other commodity trading platforms acceptable to the Joint


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Shariah Advisers (“Commodity Buyer”) on a spot basis for an amount equal to the Purchase Price. The CTP Sale Agreement will provide for the CTP to directly sell the Commodities to the Commodity Buyer upon notice by JEP that the Sale and Purchase Agreement has been duly executed and upon receipt of the sale instruction by JEP.

During the tenure of the Sukuk Murabahah, JEP (in its capacity as the Purchaser), as part of its obligation to pay the Deferred Sale Price, shall make Periodic Profit Payments (as defined in the PTC) to the Sukukholders. On the Sukuk Murabahah maturity dates or upon the declaration of an Event of Default or Mandatory Redemption, JEP (in its capacity as the Purchaser) shall pay all amounts outstanding in respect of the Deferred Sale Price of the relevant Sukuk Murabahah (subject to Ibra’ as defined in the PTC), where applicable, upon which the relevant Sukuk Murabahah will be cancelled. A diagrammatical illustration for the Sukuk Murabahah transaction is set out in the Appendix of the PTC.

1.9.1 Rating

MARC has assigned a preliminary rating of AA-IS to the Sukuk Murabahah.

1.9.2 Issue Amount

Up to Ringgit Ten Billion (RM10,000,000,000.00) in nominal value. 1.9.3 Selling Restriction

Selling Restrictions at Issuance The Sukuk Murabahah may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 4(6) of the Companies Act; and Part I of Schedule 6 and Part I of Schedule 7 read together with Schedule 9 of the CMSA.

Selling Restrictions Thereafter The Sukuk Murabahah may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 4(6) of the Companies Act; and Part I of Schedule 6 read together with Schedule 9 of the CMSA. Tradability The Sukuk Murabahah are transferable (subject to the Selling Restrictions described above) and tradable under the Rules on Scripless Securities under the Real Time Electronic Transfer of Funds and Securities (“RENTAS”) System operated by MyClear.


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1.9.4 Utilisation of Proceeds The proceeds of the Sukuk Murabahah shall be utilised for the following Shariah-compliant purposes in connection with the Project:- (a) pay for Project Costs (as defined in the PTC);

(b) pay and/or reimburse to the Sponsors/Shareholders based on documentary

evidence all Project Costs incurred prior to the Sukuk Murabahah issuance as set out in the financial model;

(c) after the COD of Unit 1 has been achieved pay and/or reimburse to TNB and

Mitsui the Development Costs (as defined in the PTC) based on the Project Development Agreement;

(d) pay financing costs in relation to the Project (including fees and expenses

incurred for the issuance of the Sukuk Murabahah). For the avoidance of doubt, the use of the proceeds by the Project Company as set out above in item (a) shall be subject to the construction budget prepared by the Project Company and approved by the Security Agent acting on the advice of the Technical Adviser (as defined in the PTC). The payment and/or reimbursement to the Shareholders under items (b) and (c) above will include redemption of the RPS (as defined in the PTC) held by the Shareholders and shall not be subjected to the Distribution Covenant (as defined in the PTC).



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Section 2 Information on the Issuer

2.1 Incorporation

The Issuer was incorporated in Malaysia on 5 July 2013 under the Companies Act. Its registered address is at Pejabat Setiausaha Syarikat, Tingkat 2, Ibu Pejabat Tenaga Nasional Berhad, No. 129, Jalan Bangsar, 59200 Kuala Lumpur. The Issuer is undertaking the financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of the Plant and associated facilities, including the Transmission Line and Interconnection Facilities, to be located at Kuala Lukut, Port Dickson, Negeri Sembilan, Malaysia.

2.2 Principal Activities The principal activities of the Issuer are to design, supply, construct, commission, operate and maintain a 2,000 megawatts coal-fired power plant in Kuala Sg. Sepang, Mukim Jimah, Negeri Sembilan in Peninsular Malaysia and to carry on the business of generating, supplying, distribution and transmitting electrical power, making available and selling generating capacity, and to enter into any arrangement, contract or agreement in connection thereto. The Issuer was also set up to act as a funding vehicle pursuant to the financing structure in connection with the Project (as detailed in Section 1.6 of this Information Memorandum).

2.3 Share Capital As at the LPD, the authorised share capital and the issued and fully paid-up share capital of the Issuer are as follows:

Authorised Share Capital

RM10,000,000.00 comprising 5,000,000 ordinary shares of RM1.00 par value each and 5,000,000 preference shares of RM1.00 par value each.

Issued and Fully Paid-Up

Share Capital

RM5,000,370.00 comprising 5,000,000 ordinary shares of RM1.00 par value each and 370 redeemable preference shares (“RPS”) of RM1.00 par value each.

2.4 Shareholding Structure As at the LPD, the shareholders of the Issuer and their respective shareholdings are as follows:


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Name of Shareholder

No. of Ordinary Shares of RM1.00 each and Preference Shares held

No. (%)

TNB 3,500,000 (Ordinary Shares)

259

(RPS)

70

3B Power 1,500,000

(Ordinary Shares)

111

(RPS)

30

Total 5,000,370 100

2.5 Profile of Directors

The Board of Directors of the Issuer and their respective profiles as at the LPD are as follows:

Name of Directors Profile

Tan Sri Leo Moggie Aged 74, Malaysian Tan Sri Leo Moggie was appointed to the Board of the Company on 13 July 2015. He holds a Master of Arts in History from University of Otago, New Zealand and a Master of Business Administration from Pennsylvania State University, United States of America. He has had a remarkable career with the Government where he held several senior ministerial positions at both Federal and State level for more than 38 years since 1976. His positions included Minister of Energy, Communications and Multimedia (1998-2004), Minister of Works (1989-1995), Minister of Energy, Telecommunications and Posts (1978-1989 and 1995-1998), Minister of Local Government (1977-1978), Minister of Welfare Services (1976-1977) in the State Government of Sarawak. He was also elected as Member of Sarawak State Council (1974-1978) and a Member of Parliament (1974-2004). He was appointed to the Board of TNB on 12 April 2004. Tan Sri Leo Moggie’s other directorships in public companies are ACE Jerneh Insurance Berhad and TNB.


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He also sits on the Board of TNB Group of Companies and other several private limited companies.

Datuk Seri Ir. Azman Bin Mohd

Aged 58, Malaysian Dato’ Seri Ir. Azman was appointed to the Board of the Company on 8 July 2015. He holds a Bachelor of Engineering (Electrical Engineering) from University of Liverpool, United Kingdom and a Master of Business Administration from University of Malaya, Malaysia. He was appointed as the President/Chief Executive Officer of TNB on 1 July 2012. From 1979, he has served TNB in various technical and engineering capacities within the Distribution Division, one (1) of TNB’s core business division including as Assistant District Engineer, District Manager, Area Manager, Assistant General Manager, General Manager and Senior General Manager. Prior to his appointment as the Executive Director/Chief Operating Officer of TNB from 15 April 2010 until 30 June 2012, he was the Vice President, Distribution from 14 November 2008 until 14 April 2010. Datuk Seri Ir. Azman sits on the Board of TNB and its Group of Companies.

Fazlur-Rahman Bin Zainuddin

Aged 46, Malaysian Fazlur-Rahman was appointed to the Board of the Company on 8 July 2015. He pursued his accounting qualifications in Nottingham Trent University, United Kingdom and finished off his final professional papers at Emile Woolf College of Accountancy in London. He is a Fellow of the Association of Chartered Certified Accountants, United Kingdom and a Member of the Malaysian Institute of Accountants. He started his career in July 1990 in various public accounting practices including almost three (3) years in Price Waterhouse, Kuala Lumpur as a tax consultant before pursuing his career in corporate sector by joining Shell Malaysia. Subsequently, he joined Telekom Malaysia Berhad in several capacities since 2005, with his last position as Vice President - Business Development. Prior to joining TNB, he was a Chief Financial Officer of Naza Group of Companies. He was with TNB as a Chief Financial Officer/Vice President (Group Finance) since 1 July 2012.


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Fazlur-Rahman’s other directorships include Integrax Berhad and a number of subsidiary companies in TNB Group.

Nor Azman Bin Mufti @ Jaafar

Aged 55, Malaysian Nor Azman was appointed to the Board of the Company on 8 July 2015. He holds a Bachelor of Engineering (Mechanical) from Strathclyde University, United Kingdom and a Master of Engineering Management Program from Universiti Tenaga Nasional, Malaysia. He was appointed as the Vice President, Energy Ventures of TNB on 1 November 2014. From 1987, he has served TNB in various technical, engineering and maintenance capacities including as Assistant Generation Operation Engineer (Diesel), Generation Operation Engineer (Gas Turbine), Senior Mechanical Construction Engineer, Mechanical Maintenance Team Leader, Mechanical Maintenance Manager and Senior Manager (Engineering & Maintenance). Subsequently, he was with TNBRemaco, a wholly owned subsidiary of TNB as Head (Project Management), Head (Repair Centre), Chief Operating Officer and rose up the ranks as Managing Director, a position which he held since year 2010 prior to joining TNB. Nor Azman sits on several Board of TNB Group of Companies.

Kenichiro Kawamoto Aged 49, Japanese Kenichiro Kawamoto is currently the General Manager of Infrastructure Project Development Division at Mitsui & Co. (Asia Pacific) Pte. Ltd. He joined Mitsui & Co., Ltd. in 1989. He has more than twenty five (25) years of experience in infrastructure development by undertaking various responsibilities involving chemical plants projects, oil and gas projects, transportation projects and power plant projects during his stint in Mitsui & Co., Ltd. From 1992 to 1997, he was based in Mitsui Indonesia and he was entrusted to undertake international projects involving countries in South East Asia, North and South America, Middle East and North Africa.

Yosuke Matsumoto Aged 46, Japanese Yosuke Matsumoto is the General Manager of Second department of First Projects Development Division in Mitsui & Co., Ltd. He has twenty (20) years of experience


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in business development which consists of several sectors including power, oil and gas and chemical. For the past three (3) years, he has been actively involved in various power plant projects in Malaysia, including leading the bid preparation team for power plant projects such as the Prai power plant, Track 3A project and Track 3B project.

2.6 Directors’s Confirmation As at the LPD: (a) neither the Issuer nor it board members have been convicted or charged with

any offence under any securities laws, corporation laws or other laws involving fraud or dishonesty in a court of law, or if any action has been initiated against the Issuer or its board members for breaches of the same, since the Issuer’s incorporation; and

(b) the Issuer has not been subjected to any action by the stock exchange for any breach of the listing requirements or rules issued by the stock exchange, since its incorporation.

2.7 Contingent Liabilities

As at the LPD, the Issuer has no contingent liabilities. 2.8 Material Litigation

As at the LPD, there have been no legal claims, demands, lawsuits or litigation (including those pending or threatened) by or against the Issuer or any proceedings pending or threatened which might materially and adversely affect the position or business of the Issuer, and in particular, any injunctions, winding up orders, any orders relating to the enforcement of judgments or other remedies which may if granted by the court, effectively cause the Issuer to have to cease all or parts of the Issuer’s business.

2.9 Related Party Transactions

As at the LPD, save and except for the relevant Transaction Documents (as defined in the PTC in Section 6 of this Information Memorandum), the Issuer confirms that it is not involved in any related party transactions. To the best of the Issuer’s knowledge, the Issuer is not involved in any related party transactions that were not at arms’ length and for full value.


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Section 3 Information on TNB and 3B Power

3.1 TNB

3.1.1 Incorporation

TNB was incorporated in Malaysia on 12 July 1990 under the Companies Act. It was incorporated as a private company limited by shares with a registered address at Pejabat Setiausaha Syarikat, Tingkat 2, Ibu Pejabat Tenaga Nasional Berhad, No. 129, Jalan Bangsar, 59200 Kuala Lumpur. TNB is the largest electricity utility company in Malaysia. Listed on the Main Board of

Bursa Malaysia with approximately RM110.7 billion in assets as of 31 August 2014,

TNB’s more than 36,000 employees serve an estimated 8.6 million customers in

Peninsular Malaysia, Sabah and Labuan.

3.1.2 Principal Activities TNB’s core businesses are in the generation, transmission and distribution of

electricity. In Peninsular Malaysia, TNB supplies households and industry with

electricity generated from six (6) thermal stations and three (3) major hydroelectric

schemes. It also manages and operates the national grid which links TNB power

stations and IPPs to the distribution network. The grid is connected to Thailand’s

transmission system in the north and Singapore’s transmission system in the south.

In East Malaysia, TNB has eighty three (83%) equity in Sabah Electricity Sdn Bhd

(Company No. 462872-W), which manages the Sabah grid. Other than its core

business, TNB has diversified into the manufacture of transformers, high voltage

switchgears and cables; the provision of professional consultancy services; and

architectural, civil, electrical engineering works and services, repair and

maintenance. TNB also engages in research and development, property

development and management services. Tapping into opportunities available

overseas, TNB is making inroads into emerging markets, focusing on the Asia-

Pacific, Middle East and North Africa regions.

3.1.3 Share Capital As at the LPD, the authorised share capital and the issued and fully paid-up share capital of TNB are as follows:

Authorised Share Capital RM10,000,001,501.00 divided into 10,000,000,000 ordinary shares of RM1.00 each, 1,000 Class A Redeemable Preference Shares of RM1.00 each, 500 Class B Redeemable Preference Shares of RM1.00 each and 1 Special Rights Redeemable Preference Share of RM1.00.


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Issued and Fully Paid-Up Share Capital

RM5,643,611,172 divided into 5,643,611,171 ordinary shares of RM1.00 each and 1 Special Rights Redeemable Preference Share of RM1.00.

3.1.4 Shareholding Structure As at the LPD, the substantial shareholders of the TNB are as follows:

Name of Shareholder

No. of Ordinary Shares of RM1.00 each held

No. (%)

Khazanah Nasional Berhad 1,673,655,861 29.66

Employees Provident Fund Board 896,115,819 15.88

Skim Amanah Saham Bumiputera 511,534,200 9.06

As at the LPD, the five (5) largest shareholders of TNB are as follows:

No. Name of Shareholders No. of Shares %

1. Khazanah Nasional Berhad 1,673,655,861 29.66

2. Citigroup Nominees (Tempatan) Sdn Bhd

Employees Provident Fund Board

837,579,882 14.84

3. Amanahraya Trustees Berhad

Skim Amanah Saham Bumiputera

511,534,200 9.06

4. HSBC Nominees (Asing) Sdn Bhd

Exempt An For The Bank Of New York Mellon (Mellon Acct)

104,277,772 1.85

5. Amanahraya Trustees Berhad

Amanah Saham Wawasan 2020

102,581,225 1.82

Total 3,229,628,340 57.23

Please also refer to TNB’s website www.tnb.com.my for information on TNB.

3.1.5 Material Litigation As at the LPD, there have been no legal claims, demands, lawsuits or litigation

(including those pending or threatened) by or against TNB or any proceedings pending or threatened which might materially and adversely affect the position or business of TNB, and in particular, any injunctions, winding up orders, any orders relating to the enforcement of judgments or other remedies which may if granted by the court, effectively cause TNB to have to cease all or parts of TNB’s business.

http://www.tnb.com.my/


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3.2 3B Power 3.2.1 Incorporation

3B Power was incorporated in Malaysia on 28 January 2014 under the Companies Act. It was incorporated as a private company limited by shares with a registered address at Unit No. 50-8-1, 8th Floor, Wisma UOA, Damansara, 50 Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur.

3.2.2 Principal Activities The principal activities of 3B Power are to purchase, take on lease or exchange, acquire, invest in and to hold immovable property and any rights, interest or privilege in connection therewith and to act as and perform all the functions of a holding company. 3B Power is a wholly-owned subsidiary of Mitsui.

3.2.3 Share Capital As at the LPD, the authorised share capital and the issued and fully paid-up share capital of 3B Power are as follows:

Authorised Share Capital RM450,000,000.00 comprising 450,000,000 ordinary shares of RM1.00 par value each.

Issued and Fully Paid-Up

Share Capital

RM4,500,000.00 comprising 4,500,000 ordinary shares of RM1.00 par value each.

3.2.4 Shareholding Structure As at the LPD, the shareholder of 3B Power is as follows:

Name of Shareholder

No. of Ordinary Shares of RM1.00 each held

No. (%)

Mitsui 4,500,000 100

3.2.5 Material Litigation As at the LPD, there have been no legal claims, demands, lawsuits or litigation

(including those pending or threatened) by or against 3B Power or any proceedings pending or threatened which might materially and adversely affect the position or business of 3B Power, and in particular, any injunctions, winding up orders, any orders relating to the enforcement of judgments or other remedies which may if granted by the court, effectively cause 3B Power to have to cease all or parts of 3B Power’s business.


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SECTION 4 Information on Mitsui and Chugoku

4.1 Mitsui

4.1.1 Incorporation

Mitsui was incorporated in Japan on 25 July 1947 under the laws of Japan. It is a public listed company with a registered address at 1-3, Marunouchi 1-chome, Chiyoda-ku, Tokyo, Japan.

4.1.2 Principal Activities Mitsui is a general trading company engaged in a range of global business activities including worldwide trading of various commodities, arranging financing for customers and suppliers in connection with its trading activities, organizing and coordinating international industrial projects by using the global office network and its ability to gather information. Its business activities include the sale, import, export, offshore trading, production and a wide variety of comprehensive services such as retail, information and telecommunication, technology, logistics and finance in the areas of iron & steel, mineral & metal resources, machinery and infrastructure, chemicals, energy, lifestyle, innovation & corporate development. It also participates in the development of natural resources such as oil, gas, iron and steel raw materials. It has been proactively making strategic business investments in certain new industries such as information technology (“IT”), renewable energy and environmental solution businesses.

4.1.3 Share Capital As at LPD, the authorised share capital and the issued and fully paid-up share capital of Mitsui are as follows:

Authorised Share Capital 2,500,000,000 ordinary shares (no face value).


1,796,514,127 ordinary shares (no face value).



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4.1.4 Shareholding Structure As at 31 March 2015, the seven (7) largest shareholders of Mitsui are as follows:

Name of Shareholder No. of Ordinary Shares held

No. (‘000) (%)

The Master Trust Bank of Japan, Ltd. (trust account)

122,273 6.80%

Japan Trustee Services Bank, Ltd. (trust account)

86,283 4.80%

Sumitomo Mitsui Banking Corporation 38,500 2.14%

Nippon Life Insurance Company 35,070 1.95%

Barclays Securities Japan Limited 25,000 1.39%

Mitsui Sumitomo Insurance Company, Limited

24,726 1.37%

The Bank of New York Melon SA/NV 10 24,479 1.36%

Notes: 1. In addition to the shares listed above, Mitsui holds treasury stock of 3,745,706 shares. 2. The number of shares is rounded down to the nearest thousand. 3. Percentage of common stock issued is rounded down to two decimal places.

4.1.5 Business Overview of Mitsui

Mitsui is a general trading company engaged in a range of global business activities including worldwide trading of various commodities, arranging financing for customers and suppliers in connection with its trading activities, organizing and coordinating international industrial projects by using the global office network and its ability to gather information. Its business activities include the sale, import, export, offshore trading, production and a wide variety of comprehensive services such as retail, information and telecommunication, technology, logistics and finance in the areas of iron and steel, mineral and metal resources, machinery and infrastructure, chemicals, energy, lifestyle, innovative and corporate development. Mitsui also participates in the development of natural resources such as oil, gas, iron and steel raw materials. Mitsui has been proactively making strategic business investments in certain new industries such as IT, renewable energy and environmental solution businesses. The business units of Mitsui’s head office, which are organized based on “products and services”, plan overall and worldwide strategies for its products and services and conduct its worldwide operations. The business units also collaborate with overseas branches and overseas trading subsidiaries in planning and executing its strategies for products and regions. The overseas branches and overseas trading subsidiriaries are separate operating units, which are delegated responsibility for the business of its regions as the centers of each particular regional strategy and operate diversified businesses together with its subsidiaries and associated companies in collaboration with the business units. Therefore, Mitsui’s operating segments consist of product-


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focused operation segments comprised of overseas branches and overseas trading subsidiaries.

4.1.6 All information relating to Mitsui in this Information Memorandum that is referenced to

31 March 2015 is based on Mitsui’s Annual Report 2015 and Annual Securities Report for the fiscal year ended 31 March 2015. Please refer to Mitsui’s website www.mitsui.com for information on Mitsui.

4.1.7 Material Litigation

As at 31 March 2015, various claims and legal actions are pending against Mitsui in respect of contractual obligations and other matters arising out of the conduct of the company’s business, however, appropriate provision has been recorded for the estimated loss on claims and legal actions. As at the 31 March 2015, the directors of Mitsui, to the best of their knowledge, are not aware of any additional liabilities that would materially affect the financial position, results of operations or cash flow of the Mitsui.

4.2 Chugoku

Mitsui has been involved in continuing discussions with Chugoku (a Japanese utility company that has vast experience in ultra-supercritical boiler) for the sale of fifty percent (50%) of its shares in 3B Power, which is expected to be completed after Financial Close subject to the receipt of (a) TNB’s, (b) the Commission’s and/or (c) the Government’s written approvals. As at the date of this Information Memorandum, Chugoku is not a Sponsor.

4.2.1 Incorporation

Chugoku was incorporated in Japan on 1 May 1951 under the laws of Japan. It is a public listed company with a registered address at 4-33 Komachi, Naka-ku, Hiroshima, Japan.

4.2.2 Principal Activities Chugoku is an electric power company engaged in providing a stable supply of electricity under a comprehensive system of power generation, transmission and distribution in the Chugoku Region of Japan. Chugoku has diversified its business into fuel supply business and telecommunications business, through utilisation of know-how and infrastructure in the electricity business.

4.2.3 Share Capital As at LPD, the authorised share capital and the issued and fully paid-up share capital of Chugoku are as follows:

http://www.mitsui.com/


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Authorised Share Capital 1,000,000,000 ordinary shares (no face value).


371,055,259 ordinary shares (no face value).

4.2.4 Shareholding Structure As at LPD, the ten (10) largest shareholders of Chugoku are as follows:

Name of Shareholder No. of Ordinary Shares held

No. (‘000) (%)

Yamaguchi Prefecture 34,005 9.4

Nippon Life Insurance Company 18,518 5.1

The Master Trust Bank of Japan, Ltd.

(Trust account)

16,933 4.7

Japan Trustee Service Bank, Ltd.

(Trust account)

11,879 3.3

Mizuho Bank, Ltd. 8,235 2.3

Company stock investment 7,178 2.0

The Hiroshima Bank, Ltd. 5,842 1.6

The San-in Godo Bank, Ltd. 5,547 1.5

Kochi Shinkin Bank 5,101 1.4

Sumitomo Mitsui Trust Bank, Limited 4,986 1.4

Notes: 1. The number of shares is rounded down to the nearest thousand. 2. Percentage of common stock issued is rounded down to one decimal place.

4.2.5 Business Overview of Chugoku

Chugoku is engaged in the provision of total solutions for electricity business. Chugoku operates mainly in three business segments. The Electric Power business segment is engaged in the supply of electricity. The Comprehensive Energy Supply business segment is engaged in the sale of LNG and coal, as well as the supply of services utilizing electricity and heat energy. The Information and Telecommunications business segment is engaged in the telecommunication business, information processing and the design of information systems. Chugoku has some other small business segments which are involved in the provision of engineering services, the agent sale of real estate and environmental business.


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4.2.6 All information relating to Chugoku in this Information Memorandum that is set out as

at 31 March 2015 is based on Chugoku’s Annual Report 2015 for the fiscal year ended 31 March 2015 and other public information by Chugoku. Please refer to Chugoku’s website www.energia.co.jp/e/index.html for information on Chugoku.


http://www.energia.co.jp/e/index.html


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Section 5 Information on the Project

5.1 Technical Description 5.1.1 Site and Layout

The Project to be undertaken by JEP involves the financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of the Facility, the Fuel Facilities, the Site, the Interconnection Facilities, the Transmission Lines and associated facilities. The Site for the Facility will be located on part of Lot 10878 (PN 45938) and Lot 10879 (PN 45939), Mukim Jimah, Daerah Port Dickson, Negeri Sembilan Darul Khusus and situated at a beach front facing the Straits of Malacca. It is located off the Kuala Lukut shoreline which is approximately 20 km from the Port Dickson township in Negeri Sembilan and 14 km from the Sungai Pelek township in Selangor. The total land area involved for the development of the Facility is approximately 257.019 acres. The Site with its proximity to the sea will provide the Facility with a source of cooling water for the steam/water cycle and access for coal supply vessel to deliver coal to the Facility. It is expected to provide a total of 2,000 MW (net) to the Grid System. Unit 1 and Unit 2 are expected to achieve the COD under the PPA by 15 June 2019 and 15 December 2019, respectively. JEP will sell available capacity and net electrical output to TNB from the COD of Unit 1. In consideration of the provision of available capacity and net electrical output, TNB will be making payments to JEP in accordance with the provisions of the PPA. Please see Appendix 4 for an overview of the Site and Appendix 5 for the plan of the Site.

5.1.2 Plant Process and Technology

The Plant shall consist of two (2) coal fired Units, each having a net capacity of 1000 MW. Each Unit shall comprise one steam generator, one steam turbine with electric generator and all associated auxiliary equipment and facilities. The Plant will be based on once-through ultra-supercritical (“USC”) technology. USC technology used herein refers to steam temperatures reaching 600°C. USC technology has been in commercial operation in Japan since 1998. Presently, around one third of Japan’s coal-fired power generation capacity is based on USC technology. USC technology is increasingly being selected as the technology of choice for new utility scale projects in Europe, China and elsewhere. In Malaysia, TNB’s 1,010 MW ultra-supercritical coal-fired power plant dubbed Manjung 4 was the first coal-fired power plant in Malaysia using USC technology. It achieved commercial operation


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date on 14 April 2015. This trend will substantially increase the world’s installed base of generating units with USC steam conditions. The main advantage of progressing to USC steam conditions is that it raises the plant efficiency. The improved cycle efficiency results in lower fuel consumption and a subsequent decrease in flue gas generated and associated emissions (oxides of sulphur (“SOx”), oxides of nitrogen (“NOx”), mercury and dust for a given generating capacity). USC cycles also offer the only practical means to reduce emissions of carbon dioxide from fossil fuel fired power plants without incurring excessive cost and complication. The growing concern about the contribution of 'greenhouse gases' to global warming has increased pressure to select USC cycles for coal fired power plants. Coal Supply Coal will be transported to the Site by Panamax and Capesize ocean going vessels. Panamax represents the largest acceptable size for a vessel to transit the Panama Canal, which can be applied to both freighters and tankers. Such vessels mainly carry coal, grain and lesser extent, minor bulks, including steel products, forest products and fertilizers. Capesize vessels serve deepwater terminals handling raw materials, such as iron ore and coal. As they are too large to transit the Suez Canal or Panama Canal, Capesize vessels transit via Cape Horn (South America) or the Cape of Good Hope (South Africa). Such vessels serve deepwater terminals handling raw materials, such as iron ore and coal. A new coal jetty is required to be constructed at the Project site. The jetty will be located 1.4 km offshore in 25-metre deep water, providing the necessary safe water depth for Capesize vessels. A conveyor trestle will connect the jetty to the power plant. An outdoor coal storage area shall be provided at the Plant and will be able to hold approximately 1,100,000 tons of coal. The coal storage area shall be designed to have storage capacity to cater for at least forty five (45) days of continuous full load operation of the Plant using the worst quality coal. Light Fuel Oil Supply Light fuel oil will be used for boiler start up, emergency diesel generator operation, and diesel driven fire water pump operation. The light fuel oil will be delivered to the site by tanker trucks. Operating Water Supply Raw water supply for the Plant will be provided by Syarikat Air Negeri Sembilan. A new 20 km long raw water pipeline is required to be constructed between the power plant and the nominated connection point.


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Steam Generators At the heart of every coal fired power plant is the steam generator. The steam generator converts the energy stored in the coal into high quality steam needed to drive a steam turbine generator for efficient production of electricity. The low pressure steam leaving the steam turbine is condensed in a water cooled condenser and pumped back to the steam generator. The steam generator is essentially composed of a combustion chamber (or furnace) which is the main part of the steam generator and the heat exchangers which serve to vaporise the water and superheat the steam.

The steam generators for this Project will be supplied by IHI Corporation of Japan. The steam generator is an opposed wall fired, two-pass, once-through design with overall features and arrangement conforming to the state-of-the-art for supercritical plant proven in many power plants world-wide. USC steam conditions are employed with 603ºC and 612ºC main steam and reheat steam respectively at the steam generator outlet. Steam Turbine The steam turbine will consist of four (4) casings, all in line on the same shaft line. The superheated steam enters the single flow High Pressure stage (“HP”) where it expands through the small diameter rotor blades before exiting and being returned to the boiler. In the boiler the steam is superheated again and is directed to the double flow Intermediate Pressure stage (“IP”). Here it expands through larger diameter rotor blades exiting to the Low Pressure (“LP”) turbines. In the final stage there are two (2) identical sets of double flow LP turbines. The exiting steam from the IP turbine is divided equally between the two (2) turbines passing through quite large diameter rotors and blades. The steam expands through both of the LP turbines by being drawn into the vacuum condenser. The steam turbines will be supplied by Toshiba of Japan. The steam turbine will be of the tandem compound, full speed 3,000 rpm (50 Hz), single reheat, four (4) flow, regenerative, eight (8) stage ex-tractions for feed water heating, and condensing type. The turbine will operate with USC conditions with a main steam pressure of 270 barg, main steam temperature of 600°C, reheat pressure of 47.4 barg and reheat steam temperature of 610°C. Steam Turbine Generator The generators will be supplied by Toshiba of Japan. The generator is a completely enclosed, cylindrical, direct water-cooled stator, hydrogen-cooled rotor, two (2) pole, 50Hz, hydrogen pressure 600 kPag three (3) phase, synchronous type. The generator is rated at 1270MVA at 0.85 power factor. The rated voltage is 26kV and the rated current is 28202A. The output of the generator shall be transmitted via the step-up transformers. The step-up transformers shall also be manufactured by Toshiba and shall be of the three (3) phase type rated at 1200MVA.


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Emissions Control Equipment A seawater flue gas desulphurisation system shall be applied to meet the environmental requirements pertaining to the level of SOx in the flue gas emitted from the chimney. A particulate removal system (electrostatic precipitator) shall be applied to meet the environmental requirements regarding the level of particulate matter in the flue gas emitted from the chimney. Low-NOx burners shall be applied to meet the environmental requirements pertaining to the level of NOx in the flue gas emitted from the chimney. Flue Gas Exhaust Stack The power plant will have one (1) reinforced concrete chimney. The stack height will be 160 m above ground level and the internal liner diameter is 9,100mm. The stack will be equipped with aircraft warning lights. Ash Disposal There shall be an on-site storage of fly ash or bottom ash. For fly ash, the Project Company intends to enter into ash disposal agreements with multiple off-takers. This ash will mainly be used for cement production. For bottom ash, the Project Company intends to enter into an ash disposal agreement with a local brick manufacturer. The fly ash and bottom ash will be transported off site by lorry. Main Cooling Water System The Plant will be cooled via a direct once through cooling water system, utilising seawater from the Malacca Straits. The seawater will flow by gravity to an onshore cooling water pumping station via a dredged channel with rubble stone mounds on both sides. After passing through the power plant condensers, the warmed seawater will be returned to the Malacca Strait via a submerged outfall structure. The outfall structure will be located on the seabed approximately 2.0 km offshore. Submerged discharge culverts will connect the outfall structure to the power plant. Power Export Power generated by the Plant will be evacuated via a new outdoor 500kV Air Insulated Switchgear type switchyard located immediately adjacent to the power plant (“Jimah East 500kV Substation”). A new 46.65 km long 500kV double-circuit overhead transmission line is required to be constructed between the Jimah East 500kV Substation and the new Olak Lempit 500 kV Substation (as defined below). Some reconfiguration works will also be required to be carried out on the existing 500 kV double-circuit overhead


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transmission line which connects the existing JEV power plant to TNB’s 500/275kV Lenggeng substation.

A new outdoor 500kV Air Insulated Switchgear type switchyard is also required to be constructed at Olak Lempit (“Olak Lempit 500kV Substation”).

5.1.3 Project Construction Schedule

The Project Company has issued an LNTP to EPC Contractors on 15 June 2014 which the EPC Contractors are required to undertake engineering works, land reclamation works, expansion of access roads and construction of a road to the power plant. Prior to the suspension of works by the EPC Contractors on 10 January 2015, the following works had been carried out under LNTP and LNTP 2: (a) land reclamation planning and preparatory works; (b) start of installation of prefabricated vertical drains (PVD) in the existing coal

yard; and (c) submit method of test piling for off-shore works. The EPC Contractors have commenced the design engineering works related to the main plant and civil works and is currently preparing for land reclamation works on the Site. The following table highlights the latest key milestones for the project construction schedule:

Key Milestones Estimated Date of Completion

Scheduled commencement of construction works on the Site (via pouring of concrete for the foundation on which the power plant is to be based)

16 July 2016

Scheduled completion date for the Interconnection Facilities

14 April 2018

Scheduled completion date for the Transmission Lines

The earlier of the date which is 18 months from the Transmission Line area commencement date and 28 February 2018

Scheduled completion date for the Transmission Works

28 February 2018

COD for the First Unit 15 June 2019

COD for the Second Unit 15 December 2019


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5.2 Licensing Requirement

Under the Electricity Supply Act, a person who intends to operate a power plant is required to hold an electricity generation licence. Licences may be granted by the Commission with the approval of the Minister upon payment of such fees and upon such conditions as appear to be requisite or expedient having regard to the function and duties of the Commission, established under the Energy Commission Act 2001. The requirement to procure the Generation Licence is a condition precedent to commencement of generation of electricity under the PPA and constitutes a condition subsequent to the issuance of the Sukuk Murabahah. Accordingly, JEP is to provide a certified true copy of the Generation Licence issued to them by the Commission to TNB prior to the Initial Operation Date. The certified true copy of the Generation Licence shall also be provided to the Security Agent and Sukuk Trustee at the same time. The Electricity Supply Act further provides that a term of a generation licence shall not without the express approval of the Minister (for the time being charged with the responsibility for matters relating to the supply of electricity) be for a period exceeding twenty-five (25) years. As at the date of this Information Memorandum, JEP does not hold an electricity generation licence as application can only be made once necessary data on the Plant is available. This data is normally produced once the factory acceptance test (FAT) of the generator is completed.

5.3 Project Economics

5.3.1 Base Case Cashflow Projections

The information and assumptions contained in a detailed financial model (“Base Case Cashflow Projections”) are discussed in this section and represent the current and anticipated contractual terms between JEP and the relevant parties as well as other assumptions on the operating parameters of the Plant and financial parameters of the Project, made as of the date of this Information Memorandum. The Base Case Cashflow Projections and certain statements herein are forward-looking statements and illustrative only. The calculations are based on certain assumptions which may not be realized. In addition, the forward-looking statements involve a number of risks and uncertainties. Each recipient should carefully conduct an independent evaluation of the financial projections of the Project and associated due diligence to determine the viability of the under-mentioned assumptions. As the Project is still under development, these parameters are expected to change or be revised from time to time in the future. An extract of the Base Case Cashflow Projections is attached as Appendix 1 of this Information Memorandum. The parameters of the Project assumed in the Base Case Cashflow Projections are summarized in Appendix 3 of this Information Memorandum.


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5.3.2. Project Financing Structure The Project financing structure will comprise debt and equity. The timing in relation to uses of funds is derived from assumptions as to when payments under the Project Documents and other Project expenditures are expected to occur. The Project Company shall ensure that at all times from the Project Completion Date (as defined in the PTC), the Finance to Equity Ratio (as defined in the PTC) does not exceed 80:20. Each Shareholder shall, as and when required to meet Project Costs that cannot be funded from the proceeds of the issuance of the Sukuk Murabahah, pay to the Project Company an amount in proportion to its shareholding in the Project Company of such funding requirement in accordance with the Equity Contribution Agreement (as defined in the PTC). The Capital Contributions from the Shareholders are back-ended in nature.

Each of Mitsui or Chugoku (if applicable) will, inter alia, unconditionally and irrevocably guarantee to the Security Agent the performance when due of all payment obligations of 3B Power of its Capital Contribution pursuant to the Equity Contribution Agreement. In the event a Shareholder defaults in its obligation to make its Capital Contribution pursuant to the Equity Contribution Agreement, the other Shareholders may make additional Capital Contributions to the Project Company in lieu of the Capital Contribution from the defaulted Shareholder, but are not obliged to do so under the Equity Contribution Agreement. A summary of the sources and uses of funds for the Project are attached in Appendix 2 of this Information Memorandum.

5.3.3 Project Insurance

Owner’s Insurance

Pursuant to the issuance of Limited Notice to Proceed to EPC Contractors on 15 June 2014, JEP has procured the following insurance policies with MSIG Insurance (Malaysia) Bhd effective from 15 June 2014 to 15 February 2015 and extended until 15 July 2015. From 15 July 2015, the main construction insurances have been incepted with RHB Insurance Berhad:

(i) Contractors all risks insurance; and

(ii) Workmen’s Compensation insurance.

Prior to financial close, JEP will procure and maintain throughout the construction period, the following insurance policies: (i) construction and erection all risks insurance (with a defects liability

extension);

(ii) construction delay in start-up insurance;

(iii) marine cargo insurance;


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(iv) marine cargo delay in start-up insurance;

(v) third party liability insurance;

(vi) employer’s liability / local workermen’ compensation insurance; and

(vii) automobile liability insurance.

5.4 Project Structure

The Project will be implemented utilising a structure based on the key contractual relationships between the parties involved in the Project which are shown below:

The Issuer (as the Project Company) has entered or proposes to enter into the following Project Documents: (a) PPA; (b) CSTA; (c) EPC Contract; (d) SPA; (e) SLA; (f) Offset Agreement; (g) OMSA; (h) Transmission Line EPC Contract; (i) O&M Agreement; (j) Generation Licence; (k) TWA; (l) Transmission Works EPC Contract;


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(m) Bottom Ash Disposal Agreement; (n) Fly Ash Disposal Agreement; (o) WPCA; (p) JLLA; and (q) Ashpond Land Sale and Purchase Agreement (if any). The Issuer will provide a first ranking assignment over their rights, interests, titles and benefits under the Project Documents and the proceeds therefrom (but excluding the Generation Licence, the Offset Agreement and OMSA) in favour of the Security Agent for the benefit of the Sukukholders. The hedging counterpart(ies) (if any) of the hedging arrangements entered or to be entered into by the Project Company, the working capital facility provider(s) (if any) and the PPA Performance Bond (as described in the PTC) facility provider may share the security given or to be given to the Sukukholders on a pari passu basis.

5.5 Summary of Key Project Documents 5.5.1 Power Purchase Agreement

The following section incorporates the key terms and conditions that are contained in the PPA. In respect of defined terms in this Section 5.5.1 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the PPA.

Overview The Issuer and TNB have entered into the Power Purchase Agreement dated 22 July 2014 as supplemented by the Supplemental PPA dated 26 August 2015 (collectively, the PPA). The PPA sets out the terms and conditions governing the sale and delivery of electricity and generating capacity from the Facility by the Issuer to TNB and the purchase by TNB of such electricity and generating capacity from the Issuer. The Issuer shall design, construct, own, operate and maintain the Facility in accordance with the terms and conditions of the PPA. Term The PPA takes effect on the Effective Date and expires on the day before the twenty-fifth (25th) anniversary of the Commercial Operation Date (including such day) and may be extended in accordance with the PPA (the “Term”).

Extension of Term

Either party to the PPA may, at any time, but not later than thirty six (36) months prior to the expiry of the term of the PPA, make a written request to the other party to the PPA to extend the term of the PPA. The parties to the PPA shall meet and, in consultation with the Commission, enter into discussions to establish whether and on what terms the PPA may be extended.


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Conditions Precedent to Effectiveness of the Supplemental PPA The PPA shall be effective upon satisfaction of the following conditions, namely that: (a) all corporate authorisations which are required to have been obtained by the

parties in connection with the execution and delivery of the Supplemental PPA have been obtained and are in full force and effect and a statement in writing to that effect by the respective solicitors of the parties delivered to the other party;

(b) all corporate authorisations which are required to have been obtained by the Issuer and the TFS in connection with the execution and delivery of the Supplemental CSTA have been obtained and are in full force and effect and a statement in writing to that effect by the respective solicitors of the Issuer and the TFS delivered to TNB;

(c) the Issuer has submitted to TNB a copy of the addendum to the Letter of Award (Ref No.: ST(IP)/(S)/JPE 13/06/4 Jld.IV (83)) dated 29 June 2015 and one (1) certified copy of the Supplemental CSTA;

(d) the Supplemental PPA and the Supplemental CSTA have been executed and delivered by each of the relevant parties; and

(e) the Issuer has submitted to the Commission, one (1) certified copy of each of the Supplemental PPA and the Supplemental CSTA.

The date on which all conditions precedent listed above have been satisfied or waived is the Effective Date. The Issuer has six (6) months from the date of execution of the Supplemental PPA or such other date as may be agreed between the parties to the PPA to satisfy the conditions precedent, failing which either party may terminate the PPA by giving thirty (30) days’ notice. Conditions Precedent to the Commencement of Generation of Electricity The Initial Operation Date of each Unit and the right of the Issuer to commence generation of electrical energy at the Facility and to supply, deliver and sell electricity shall only occur upon satisfaction or waiver of the following conditions, namely that: (a) each of the Project Documents (i.e. the EPC Contract, the Fuel Supply

Contracts, the O&M Agreement and such other agreements designated by mutual agreement) other than the PPA is in full force and effect and all conditions precedent to their effectiveness (except for conditions relating to the PPA) are satisfied or waived;

(b) the Initial Financing Documents which have been entered into by the Issuer are in full force and effect and all conditions precedent to their effectiveness have been satisfied or waived;

(c) the Issuer has submitted to TNB, with a copy to the Commission, the conceptual design of the Facility accompanied by a certificate from the Independent Engineer;


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(d) the Issuer has submitted to TNB, with a copy to the Commission, one (1) certified copy of each of the Initial Financing Documents and the Project Documents (other than the PPA and the CSTA);

(e) the Issuer has submitted to TNB a certified copy of the Generation Licence not later than 15 July 2017;

(f) the Interconnection Facilities and the Transmission Lines have been designed, manufactured, supplied, constructed, installed, tested and commissioned in accordance with the requirements of the PPA and Prudent Utility Practices;

(g) the IPP Works have been designed, manufactured, supplied, constructed, installed, tested and commissioned in accordance with the requirements of the TWA and Prudent Utility Practices. The IPP Works are works to be performed in relation to the Olak Lempit 500kV Substation and 275kV substation by the Issuer on behalf of TNB pursuant to theTWA;

(h) the performance security as set out in the PPA has been delivered to TNB and is in full force and effect;

(i) the Issuer has submitted to TNB, with a copy to the Commission, a certified copy of the ElA Approval;

(j) the commissioning, start-up and testing programs set out in the PPA have been submitted by the Issuer to TNB, with a copy to the Commission and approved by TNB which approval shall not be unreasonably withheld or delayed.

Conditions Precedent to Commercial Operations The Commercial Operation Date of each Unit and the right of the Issuer to supply, deliver and sell Net Electrical Output and Daily Available Capacity and the obligation of TNB to accept and to purchase Net Electrical Output and Daily Available Capacity from that Unit or to make Energy Payments and Available Capacity Payments in respect of that Unit to the Issuer shall not occur until the satisfaction of the following: (i) the Issuer has submitted to TNB a copy of the "Commissioning Test Certificate"

or similar document, to the same effect as issued by the Commission as contemplated by the Generation Licence in respect of that Unit;

(ii) the Issuer has submitted to TNB, with a copy to the Commission, the final design of the Facility and a certificate from the Independent Engineer stating that the relevant Unit, the Interconnection Facilities and the Transmission Lines have been tested and commissioned in accordance with the tests contained in the PPA and the EPC Contract;

(iii) the Issuer has submitted to TNB a certificate from the Independent Engineer stating that the IPP Works have been tested and commissioned in accordance with the tests contained in the TWA;

(iv) the Issuer has established and declared the Contractual Available Capacity for such Unit in accordance with the terms of the PPA and the test results show that the Issuer can meet the declared Contractual Available Capacity for that Unit;


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(v) no default by the Issuer of (i) any material provision of the PPA or (ii) any

provision of the financing documents (being the loan agreements (including agreements for any subordinated debt), notes, bonds, indenture, guarantees, security agreements, hedging agreements and any other documents relating to the financing or refinancing and security arrangements for the Project which have been or are to be entered into by the Issuer, excluding any agreements relating to Sponsors' Gross Equity Contribution) (“Financing Documents”), the breach of which could reasonably be expected to have a material adverse effect on the Issuer’s ability to perform its obligations or availability of the rights of TNB under the PPA, shall have occurred and be continuing;

(vi) the representations and warranties by the Issuer in the PPA are true and correct in all material respects as if made on the Commercial Operation Date of that Unit; and

(vii) all the documentation, data, information and certified test results set out in the PPA have been submitted by the Issuer to TNB, with a copy to the Commission, and verified by TNB as being in conformance with the requirements of the PPA within the timeframes set out therein.

Critical Milestones Critical milestones in the PPA (as revised pursuant to the Supplemental PPA) are as below: (a) the Financial Closing Date must occur on or before 15 October 2015. The

“Financial Closing Date” means the date on which the Financing Documents relating to the financing or refinancing for the total construction costs of the Project have been entered into by the Issuer and the Financing Parties, and all of the conditions precedent for the initial drawdown by the Issuer under such Financing Documents satisfied by the Issuer or waived by the Financing Parties thereunder;

(b) the Commencement Date (being the date notified by the Issuer to TNB on which construction works at the Site has started) shall occur no later than 16 July 2016;

(c) the Project Documents (being the PPA, the EPC Contract, the CSTA, the O&M Agreement and such other agreements as mutually agreed) must be in full force and effect and all conditions precedent to their effectiveness shall be satisfied or waived no later than 1 August 2015;

(d) the Initial Operation Date of the First Unit shall occur on 7 December 2018; and

(e) the Initial Operation Date of the Second Unit shall occur on 11 June 2019. Notwithstanding the above, the failure to meet any of the critical milestones set out above does not in itself amount to an Event of Default by the Issuer under the PPA. Sale and Purchase Obligations


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From the Initial Operation Date of each Unit and continuing throughout the Term (however, from the Commercial Operation Date of each Unit, subject to system condition and GSO’s approval), TNB shall accept all Test Energy and pay the Issuer for such Test Energy in accordance with the PPA. From the Commercial Operation Date of each Unit and continuing throughout the Term: (a) the Issuer shall deliver and sell to TNB, and TNB shall accept and purchase the

Net Electrical Output and Daily Available Capacity; and

(b) TNB shall pay the Issuer for such Net Electrical Output of that Unit and Daily Available Capacity in accordance with the PPA.

TNB is not obliged to accept Net Electrical Output from a Unit (i) if the Net Electrical Output does not conform to the electrical characteristics set forth in the PPA; (ii) if an Emergency Condition occurs within the Grid System as a result of which the Grid System is unable to accept Net Electrical Output from that Unit; or (iii) if TNB intentionally interrupts the acceptance of electrical energy from any Unit to conduct necessary maintenance of the Interconnection Facilities, the Transmission Lines, the TNB Metering Equipment or the Grid System. Notwithstanding the occurrence of event (i) or (iii) above but subject to the terms of the PPA including provisions on Force Majeure, TNB shall continue to make Available Capacity Payment unless the occurrence of such events is the result of a breach or default by the Issuer under the PPA. Purchase Price and Other Charges TNB agrees to pay to the Issuer the following charges: (a) Test Energy Payment (“TEP”) – starting from the Initial Operation Date of each

Unit, for Test Energy generated from that Unit during such month; The TEP is calculated in accordance with Appendix G of the PPA, as follows: TEP = FP Where: FP - Fuel Payment (in RM) for the NEO delivered from the Unit in

respect of the Test Energy

(b) Energy Payments (“EP”) – starting from the Commercial Operation Date of each Unit and pursuant to a Despatch Instruction (which shall be at the Grid System Operator’s discretion but in accordance with Prudent Utility Practices, the Design Limits, the Grid Code) or Monitoring Test on any Unit; The EP calculated in accordance with Appendix G of the PPA, as follows: EP = FP + (VOR x NEO) Where:


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FP - Fuel Payment (in RM) for the NEO delivered from the Unit for such Billing Period, excluding fuel payments for TEP. The computation to derive to the Fuel Payment for each day of a Billing Period is as follows:

FP = ∑(𝐸𝑖 ×𝐻𝑅𝑖 ×𝑁𝐸𝑂𝑖)

48

𝑖=1

1,000,000

VOR - Variable Operating Rate NEO - Net Electrical Output (in kWh) delivered from the Unit. This

represents electrical energy delivered to the interconnection point

(c) Available Capacity Payments (“ACP”) – starting from the Commercial Operation Date of each Unit; The ACP is calculated in accordance with Appendix G of the PPA, as follows: ACP = [(CRF + FOR)] x 12 / N x TAAC x 1,000 x number of operating days in the period Where: CRF - Capacity Rate Financial FOR - Fixed Operating Rate TAAC - Tested Annual Available Capacity for that Contract Year (in

MW) N - The actual number of days in the prevailing Contract Year

(d) Start-up Payments (“SUP”) – starting from the Commercial Operation Date of each Unit.

The SUP is calculated in accordance with Appendix G of the PPA, as follows: SUP = CDP x FQ Where: SUP - Start-up Payment for each Requested Start (in RM) in respect

of a Unit CDP - The weighted average of the price of Fuel actually paid by IPP

to fuel supplier(s) (in RM/GJ)


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FQ - The quantity of Fuel consumed by IPP for each Requested Start

All payments shall be in Ringgit and amounts are calculated in accordance with Appendix G of the PPA. Billing and Payment A Billing Statement is to be issued monthly starting from the Initial Operation Date of the First Unit. TNB shall within thirty (30) days of receipt of the Billing Statement pay in full to the Issuer Available Capacity Payment, Energy Payment, Test Energy Payment and Start-up Payment invoiced in such Billing Statement (but less any amount due to TNB from the Issuer and less any amount in the Billing Statement disputed by TNB in good faith which is to be settled under the PPA). Late payment will be subject to a Default Rate being one percent (1%) above the base lending rate then in effect at the principal office of Malayan Banking Berhad (or its successor-in-title). No Set-Off

Except as otherwise provided in the PPA, all payments by either party to the other party under the PPA shall be made free of any restriction or condition and without deduction on account of any amount claimed from the other party which is disputed in good faith by that party. Liquidated Damages Except in the event of any delay or default by TNB or the occurrence of a Force Majeure Event, the Issuer agrees to pay TNB by way of pre-ascertained and agreed liquidated damages the following: (a) if, due to the default of the Issuer or its contractors or agents under the PPA or

the TWA, the Commercial Operation Date of the First Unit does not occur on or before the Scheduled Commercial Operation Date of the First Unit, the Issuer shall pay to TNB liquidated damages in an amount equal to RM600,000 per day for each day following the Scheduled Commercial Operation Date of the First Unit until the earlier of (i) the Commercial Operation Date of the First Unit; (ii) the date on which the PPA is terminated by TNB in accordance with the provisions of the PPA; and (iii) one hundred and eight (180) days after the Scheduled Commercial Operation Date of the First Unit;

(b) if, due to the default of the Issuer or its contractors or agents under the PPA or the TWA, the Commercial Operation Date of the Second Unit does not occur on or before the Scheduled Commercial Operation Date of the Second Unit, the Issuer shall pay to TNB liquidated damages in an amount equal to RM600,000 per day for each day following the Scheduled Commercial Operation Date of the Second Unit until the earlier of (i) the Commercial Operation Date of the Second Unit; (ii) the date on which the PPA is terminated by TNB in accordance with the provisions of the PPA; and (iii) one hundred and eighty (180) days after the Scheduled Commercial Operation Date of the Second Unit;

(c) if the Issuer Abandons the Project or the IPP Works after the Effective Date, the Issuer shall forthwith pay to TNB liquidated damages in an amount equal to


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RM216 million. Abandonment during the construction period occurs if the Issuer fails to perform any material part of the construction works and the Independent Engineer is unable to confirm that there is a reasonable prospect of the Issuer achieving the Commercial Operation Date of the First unit by 12 December 2019. Abandonment occurs after the Commercial Operation Date of the First Unit if the Issuer fails to operate a Unit for a continuous period of six (6) months unless specifically excused;

(d) if the Contractual Available Capacity of any Unit is less than the Nominal Capacity, then the Issuer shall forthwith pay to TNB performance liquidated damages in an amount equal to RM5,000 per kW (or part thereof) multiplied by the difference (expressed in kW) between the Nominal Capacity and the Contractual Available Capacity of such Unit;

(e) if a Unit fails to comply with a Despatch Instruction or if a Unit fails a Monitoring Test, the Issuer shall pay TNB liquidated damages amounting to RM250,000 for each such failure;

(f) if the Issuer fails to comply with or operate in conformity with any of the operating standards or characteristics set out in Appendix B of the PPA, the Issuer shall pay TNB liquidated damages amounting to RM100,000 for each such failure.

For the avoidance of doubt, the aggregate of liquidated damages described in paragraphs (a), (b) and (c) that are payable by the Issuer shall not exceed RM108,000,000 for each Unit. In addition, TNB shall be entitled to set-off any outstanding amount due to it under item (d), (e) and (f) above against any sums due and payable to the Issuer under the PPA. Set-off is not allowed for item (a), (b) and (c) above. Performance Security The Issuer shall secure payment of the liquidated damages described in paragraphs (a), (b) and (c) above by providing to TNB, and no later than the earlier of (i) seven (7) days from the Financial Closing Date; and (ii) two hundred and ten (210) days after the date of the Supplemental PPA, an irrevocable bank guarantee issued by a commercial bank reasonably acceptable to TNB in an amount equal to RM216 million. The bank guarantee shall permit drawings by TNB to satisfy the performance obligations of the Issuer for the liquidated damages described in paragraphs (a), (b) and (c) above. The bank guarantee is to remain valid until expiration of six (6) months after the Scheduled Commercial Operation Date for the Second Unit. If the Issuer fails to provide the bank guarantee to TNB within this time frame (or such other date as may be agreed between the parties) and valid for the duration set forth in the PPA, TNB may terminate the PPA by giving notice to the Issuer.


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Maintenance Reserve The Issuer is required to establish a reserve account or accounts (the “Maintenance Reserve”) in the sum of not less than RM24 million to be built up in increments of RM8 million annually over a three (3)-year period commencing on the Commercial Operation Date of the First Unit to fund the maintenance expenses of the Facility. Any similar reserve or form of security required to be maintained under the terms of the Financing Documents can be utilised by the Issuer to discharge its obligations to establish and maintain the Maintenance Reserve. Unless the parties otherwise agree, the Issuer shall continue to maintain the Maintenance Reserve, whether or not the Financing Documents are in full force and effect or have been terminated or have expired. The Maintenance Reserve shall be used exclusively to pay for maintenance expenses for the Facility, including any repair or replacement that is necessary or appropriate to ensure that the Facility will continue to be operated in accordance with Prudent Utility Practices, the Design Limits and the terms and conditions of the PPA. If funds are withdrawn from the Maintenance Reserve during any month to pay for maintenance costs, the Maintenance Reserve shall be replenished in subsequent months until the required funding level of the reserve has been reached within the next three (3) months, unless TNB agrees to any request by the Issuer for an extension of such period. Generating Facility, Interconnection Facilities and the Transmission Lines Construction and Start-up The Issuer shall design, engineer, procure, construct, install, energise, test and commission the Facility, the Interconnection Facilities and the Transmission Lines in accordance with Prudent Utility Practices and the terms and conditions of the PPA. The Issuer shall provide TNB with fifteen (15) days’ prior notice of the proposed Commencement Date and written confirmation that the Commencement Date has occurred within five (5) days after it occurs. Conceptual Design Report of Facility, Interconnection Facilities and the Transmission Lines Not less than ninety (90) days prior to the Commencement Date, the Issuer shall submit to TNB the conceptual design report of the Facility, the Interconnection Facilities and the Transmission Lines together with the Independent Engineer’s certificate stating that (i) the Facility, the Interconnection Facilities and the Transmission Lines when constructed in accordance with such design drawings will conform to the description set forth in the PPA in all material respects and have the capacity to meet the operational characteristics set out in the PPA, (ii) it is technically feasible for the Commercial Operation Date of each Unit to occur on or before the Scheduled Commercial Operation Date of such Unit and (iii) the Facility, the Interconnection Facilities and the Transmission Lines should have a useful life no shorter than the Term. Interconnection Facilities and the Transmission Lines Relay Setting The Issuer shall provide TNB and the Grid System Operator with the protection schemes and relay settings in relation to the Interconnection Facilities and the


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Transmission Lines not less than four hundred and eighty (480) days before the Initial Operation Date of the First Unit. Within sixty (60) days upon receipt of the same, TNB shall give the Issuer written notification of whether such protection schemes and relay settings are acceptable to TNB. The Issuer shall provide TNB with copies of any periodic reports provided to the Financing Parties describing the progress of construction of the Facility, the Interconnection Facilities and the Transmission Lines. In addition to providing TNB with copies of periodic reports provided to the Financing Parties, the Issuer shall also simultaneously furnish TNB with a work programme relating to the Interconnection Facilities and the Transmission Lines specifying the sequence in which the Issuer proposes to construct, install, test and commission the Interconnection Facilities and the Transmission Lines. Back Energisation Starting from the date on which the Interconnection Facilities, the Transmission Lines and the IPP Works are completed and taken over by TNB pursuant to Clause 14.1 of the PPA, but beginning on 15 April 2018 and until the Commercial Operation Date of the First Unit, TNB shall, upon the request of the Issuer and subject to the Interconnection Facilities, the Transmission Lines and the IPP Works having been successfully tested in accordance with Clause 9.7 of the PPA, provide the Facility with back energisation of electricity in such manner as may be determined by TNB at a tariff on a sen/kWh basis to be reasonably determined by TNB pursuant to the Electricity Supply Act. Commencement of Initial Operation Date No generation of electrical energy from a Unit in an interconnected mode with the System, whether for testing purposes or otherwise, may take place and the Initial Operation Date of that Unit may not occur until (i) all the interconnection protective devices in relation to that Unit have been installed by the Issuer and been inspected and approved by TNB (which approval shall not be unreasonably withheld or delayed), (ii) all the relay types and relay settings in relation to that Unit have been installed by the Issuer and been approved by TNB (which approval shall not be unreasonably withheld or delayed), and (iii) the Grid System Operator has confirmed in writing, within a reasonable period, that the operation of such Unit with the Grid System may commence. Consequences of Delay by TNB If the Commercial Operation Date of a Unit is delayed by: (i) the failure by TNB to inspect or approve without reasonable cause the

interconnection protective devices referred to in the PPA within fourteen (14) days of receipt by TNB of the certificate by the Independent Engineer issued in accordance with the PPA;

(ii) the failure by TNB to complete the relevant portion of the TNB Lenggeng Works to enable 500kV back energisation by 15 April 2018; or


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(iii) the failure by TNB to energise the Interconnection Facilities, the Transmission Lines and the IPP Works or accept the required generation to enable the testing of such Unit,

then the Scheduled Commercial Operation Date of such Unit shall be extended by one day for each day the Commercial Operation Date of a Unit is delayed. The Issuer will be entitled to declare the Commercial Operation Date of that Unit on the Scheduled Commercial Operation Date of such Unit if it is able to meet the requirements of the PPA to make that declaration notwithstanding such delay caused by TNB. If, due to the failure by TNB to inspect or approve without reasonable cause the interconnection protective devices referred to in the PPA within fourteen (14) days of receipt by TNB of the certificate by the Independent Engineer issued in accordance with the PPA, the Commercial Operation Date of a Unit fails to occur within thirty (30) days of the Scheduled Commercial Operation Date of that Unit, TNB shall pay the Issuer the actual interest incurred by the Issuer during the construction of that Unit under the Financing Documents as a result of the delay of the Commercial Operation Date of that Unit, for the period from the date after the expiry of fourteen (14) days from receipt by TNB of the certificate by the Independent Engineer until the date TNB inspects or rejects with reasonable cause or approves the interconnection protective devices, as the case may be, provided always that TNB shall not be liable to pay the interest as aforesaid if the Issuer fails to provide TNB with the details of such interest with the relevant supporting documents. If TNB fails to complete the relevant portion of the TNB Lenggeng Works to enable 500kV back energisation by 15 April 2018 (not by reason of a Force Majeure Event or a default on the Issuer’s part) and the Commercial Operation Date of the First Unit does not occur by its Scheduled Commercial Operation Date as a result of the Issuer not being able to meet certain conditions precedent to commercial operation, then the Issuer shall be deemed to have achieved the Commercial Operation Date of the First Unit on its Scheduled Commercial Operation Date in which event TNB shall make Available Capacity Payments to the Issuer subject to the conditions set out in the PPA. Grid System Operator’s Right to Delay Initial Operation Date The Grid System Operator may exercise its right to delay the Initial Operation Date of each Unit. If the Grid System Operator delays the Initial Operation Date of that Unit by not more than fifteen (15) days, the Issuer remains obliged to meet the Scheduled Commercial Operation Date of that Unit. However, if the Grid System Operator delays the Initial Operation Date of a Unit for more than fifteen (15) days otherwise than due to any fault or omission on the part of the Issuer under the PPA, the Scheduled Commercial Operation Date of such Unit shall be extended by one day for each day beyond the initial fifteen (15) days delay provided always that the Issuer shall be entitled to declare the Commercial Operation Date of that Unit on the Scheduled Commercial Operation Date of such Unit if it is able to meet the requirements of the PPA to make that declaration notwithstanding the delay by the Grid System Operator of the proposed Initial Operation Date of such Unit. If the Grid System Operator delays the Initial Operation Date of a Unit by more than fifteen (15) days and the Commercial Operation Date of that Unit fails to occur within thirty (30) days of the Scheduled Commercial Operation Date of that Unit, the Issuer


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shall be deemed to have achieved the Commercial Operation Date of that Unit and TNB shall make Available Capacity Payments to the Issuer. Commercial Operation Date The Issuer shall provide TNB with thirty (30) days’ prior notice of the proposed Commercial Operation Date of each Unit. If the Commercial Operation Date of a Unit does not occur on the proposed Commercial Operation Date of that Unit, the Issuer shall notify TNB of the new proposed Commercial Operation Date of that Unit. The Issuer shall also notify TNB before the Commercial Operation Date of that Unit actually occurs and until such notice is given, the Issuer shall be deemed not to have achieved the Commercial Operation Date of that Unit. The Issuer shall furnish TNB with the proposed Annual Scheduled Available Capacity for each Unit for the Contract Year in which the Commercial Operation Date of that Unit occurs (the “Initial Contract Year”) at least sixty (60) days prior to the proposed Commercial Operation Date of that Unit. The Issuer shall submit to TNB any desired change to the Annual Scheduled Available Capacity for each Unit for the Initial Contract Year to take into account any difference between the date of the proposed Commercial Operation Date of such Unit and the date on which the Commercial Operation Date of such Unit actually occurs. In addition to furnishing the proposed Annual Scheduled Available Capacity for each Unit for the Initial Contract Year, if the Commercial Operation Date of any Unit occurs in any of the months of October, November and December, the Issuer shall also simultaneously furnish TNB with the proposed Annual Scheduled Available Capacity for each Unit for the Contract Year immediately following the Initial Contract Year. Not later than (i) thirty (30) days after submission by the Issuer of the proposed Annual Scheduled Available Capacity for each Unit for the Initial Contract Year and, if applicable, for the following Contract Year and (ii) fifteen (15) days after submission by the Issuer of its desired changes if any to the proposed Annual Scheduled Available Capacity for each Unit for the Initial Contract Year, TNB shall review any such proposed Annual Scheduled Available Capacity. If TNB does not agree on any proposed Annual Scheduled Available Capacity submitted to it by the Issuer, the matter shall be referred to the Grid System Operator whose decision on any matter relating to the Annual Scheduled Available Capacity shall be final and conclusive. If the Issuer notifies TNB that the Commercial Operation Date of a Unit can be achieved earlier than the Scheduled Commercial Operation Date of that Unit, TNB may agree to an earlier Commercial Operation Date of that Unit from which Available Capacity Payments, Energy Payments and Start-up Payments (if any) shall be payable in accordance with the PPA. Despatching The Despatching of any Unit shall be at the Grid System Operator’s discretion but in accordance with Prudent Utility Practices, the Design Limits, the Grid Code and within the generation characteristics as set forth in the PPA and not exceeding the Declared Daily Available Capacity for that Unit prevailing at the time of the Despatch Instruction. The Issuer shall comply with each Despatch Instruction. The Issuer shall be deemed to have failed to comply with such Despatch Instruction if: (i) it generates at a level of


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generation that exceeds the level of generation specified in any Despatch Instruction by more than one percent (1%) measured over any one hour period, and if the Issuer does so otherwise than due to an Excused Event, (ii) any Unit fails to achieve a level of generation of at least ninety nine percent (99%) of the level of generation specified in any Despatch Instruction in accordance with the ramp rates set out in the PPA and if such failure does not arise as a result of an Excused Event, or (iii) it fails to act in accordance with a direction to operate any Unit on Automatic Generation Control mode. In each case, the Issuer will be liable to pay TNB liquidated damages of RM250,000 for each such failure. If the Net Electrical Output generated by a Unit over any half hour period exceeds the Net Electrical Output that the Unit ought to have generated at the level of generation specified in the relevant Despatch Instruction by more than one percent (1%) (the “Excess Net Electrical Output”), then the Issuer shall not be entitled to Energy Payments for such Excess Net Electrical Output. Interconnection Facilities The Issuer shall design, construct, install, test, energise and commission the Interconnection Facilities and the Transmission Lines at its expense in accordance with Prudent Utility Practices and the specifications set out in the PPA. The Issuer shall complete the construction, installation and testing of the Interconnection Facilities not later than ninety (90) days before the Initial Operation Date of the First Unit. The Issuer shall, in the name of TNB but at the Issuer’s cost and expense, procure all necessary ownership rights, title and interest including the Access Rights to the parcels of land on which the Transmission Lines shall be constructed and located pursuant to the PPA. The Issuer shall, at its cost and expense, procure all necessary ownership rights, title and interest including the Access Rights to the parcels of land on which the Transmission Lines shall be constructed and located pursuant to the PPA. The Issuer shall transfer to TNB and take all actions necessary to effect the transfer of all rights, title and interest to the completed Interconnection Facilities and the Transmission Lines and the land titles relating to the Interconnection Facilities (including the Access Rights) free from encumbrances, on or before the Initial Operation Date of the First Unit so that TNB shall become the owner thereof. All costs relating to, incidental or consequent upon such transfer shall be borne by the Issuer. Upon such transfer, all property and title in such completed and transferred Interconnection Facilities shall pass to TNB. The Issuer warrants that the Interconnection Facilities and the Transmission Lines will be free from defects. The obligation to correct any defects continues for twenty four (24) months from the date of transfer of the Interconnection Facilities and the Transmission Lines to TNB. The period may be extended by an additional twenty four (24) months in respect of any repaired or replaced work. The Issuer also provides a warranty against latent defects in the Interconnection Facilities and the Transmission Lines for a period of sixty (60) months from the date of transfer. If, as a result of any defect in the Interconnection Facilities, the Grid System is unable to accept Net Electrical Output from any Unit, the Issuer shall not be entitled to any Available Capacity Payment during such period.


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Fuel The Issuer shall submit to TNB the proposed coal supply plan for each Contract Year not less than thirty (30) days before the commencement of each Contract Year. Except as set out in the CSTA, the Issuer shall procure all coal for use by the Facility from TFS. Appendix J of the PPA sets out a mechanism whereby TNB, in consultation with TFS, sets the Applicable Coal Price. That Applicable Coal Price is a key component of the energy payment paid to the Issuer. If the Issuer obtains coal from an alternative supplier, as permitted under the CSTA, the Fuel Committee must approve the coal price payable. If the Fuel Committee disapproves the price, the fair market price of coal will be compensated through the energy payment calculation.

If the CSTA is terminated pursuant to TNB ceasing to control TFS in the manner contemplated thereby, then the Scheduled Commercial Operation Date shall be extended by a further six months, unless the Issuer demonstrates to the reasonable satisfaction of TNB that the Issuer demonstrates to the reasonable satisfaction of TNB that the Issuer has secured the safe, continuous, adequate and reliable supply of coal as fuel to the Facility in which event the Issuer may request for (a) no extension to the Scheduled Commercial Operation Date of the affected Unit; or (b) a shorter extension of the Scheduled Commercial Operation Date of the affected Unit. No change, variation, modification or amendment to the CSTA which could reasonably be expected to have a material adverse effect on TNB under the PPA shall be permitted under the PPA without TNB’s prior written consent which shall not be unreasonably withheld or delayed. The Issuer is obliged to maintain a 720,000 tonne stockpile of coal at the Facility. Insurance The Issuer shall maintain or procure to be maintained in effect the following insurance policies and coverage with respect to the Facility and where applicable, the Interconnection Facilities, the Transmission Lines and the IPP Works: (a) from Commencement Date until the Commercial Operation Date of each Unit,

“Construction Erection All Risks” insurance and physical loss insurance against damage to the Facility and the Interconnection Facilities and the Transmission Lines in amounts not less than the erection cost of such facilities and on a replacement cost basis subject to deductibles of no more than RM9,000,000);

(b) throughout the Term, “Industrial All Risk” insurance covering all fixed assets against all risk of physical loss or damage where the sum insured shall be on a full replacement value basis subject to deductibles of not more than RM4,500,000 for each and every loss;

(c) throughout the Term, “Machinery Breakdown” insurance covering all machinery, plant, steam generator and ancillary equipment forming part of the Facility against sudden and physical loss or damage where the sum insured shall be on a full replacement value basis subject to deductibles of not more than RM7,500,000 for each and every loss;


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(d) throughout the Term, “Public Liability” insurance with combined single limits for bodily injury and property damage of at least RM25,000,000 per occurrence and in aggregate, including coverage for pollution due to sudden and accidental causes;

(e) throughout the Term, “Comprehensive Automobile Liability” or "Motor Vehicle Liability" insurance in accordance to the laws of Malaysia or similar insurance with combined single limit for third party property damage of at least RM3,000,000 per occurrence and in aggregate, where applicable, covering vehicles owned, hired and non-owned and unlimited liability for bodily injury; and

(f) throughout the Term, “Workmen's Compensation” and/or "Employer's Liability"

insurance in accordance with the laws of Malaysia.

All amounts referred to in the above sub-clauses shall be reviewed on an annual basis and may be revised subject to mutual agreement by the parties. If any of the insurances referred to above are not available on reasonable commercial terms, the Issuer shall provide to TNB detailed information as to the maximum amount of available coverage that it is able to purchase and shall be required to obtain TNB’s consent (which consent shall not be unreasonably withheld or delayed) as to the adequacy of such coverage under the circumstances prevailing at the time. The Issuer shall apply the proceeds of any such insurance policies received following a claim by the Issuer for loss or damage to the Facility in accordance with the requirements of the Financing Documents (so long as they are in effect) and otherwise to repair and/or reinstate the Facility. Force Majeure

For the purposes of the PPA, a Force Majeure Event shall mean an event, condition, or circumstance or its effect which: (a) is beyond the reasonable control of and occurs without fault or negligence on

the part of the party claiming it as a Force Majeure Event; and (b) causes a delay or disruption in the performance of any obligation under the

PPA despite all reasonable efforts of the party claiming it as a Force Majeure Event to prevent it or mitigate its effects.

Subject to satisfying the foregoing criteria, Force Majeure Events include without limitation, the following: (i) strikes or lockouts and/or other work stoppages or industrial action (other than

those solely affecting the party claiming the same as a Force Majeure Event); (ii) acts of public enemies or terrorists or acts of war, whether or not war is

declared, acts of force by a foreign nation or embargo; (iii) public disorders, insurrection, rebellion, sabotage, riots or violent

demonstrations;


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(iv) explosions, fire, earthquakes, landslides, subsidence, sabotage, and/or other

natural calamities and acts of God; (v) unusually severe weather conditions; (vi) expropriation or compulsory acquisition by any Government Entity; (vii) failure to obtain or renew any Government Authorisations; (viii) an Emergency Condition; (ix) any Force Majeure Event affecting the performance of TNB relating to the

construction of the TNB Works; (x) any Force Majeure Event affecting the performance of any person that is a

party to the EPC Contract or other contract between the Issuer and such person relating to the construction, operation or maintenance of the Facility or the construction and/or installation of the Interconnection Facilities, the Transmission Lines, the IPP Works and the TNB Metering Equipment;

(xi) in circumstances where the Issuer is expressly permitted by the provisions of

Appendix J to purchase coal from an identified supplier of coal other than TFS, any interruption in the supply of coal to the Facility by such identified supplier of coal due to a force majeure event affecting the performance of such identified supplier of coal; and

(xii) any interruption in the supply of coal to the Facility due to the default or

negligence of TFS under the CSTA or due to a force majeure event thereunder. Effect of Force Majeure Event and Consequences Subject to the limitations set out in the PPA, if either party is rendered unable by reason of a Force Majeure Event to perform any obligation under the PPA, then upon that party giving notice of Force Majeure, those obligations of that party shall be suspended or excused to the extent their performance is affected by the Force Majeure Event.

The Scheduled Commercial Operation Date of a Unit shall be extended by one (1) day for each day the Commercial Operation Date of that Unit is delayed by a Force Majeure Event. The Issuer shall not be liable to pay liquidated damages under the PPA. The Term and the relevant Tier Period shall be extended by one (1) day for each day (i) a Unit is unavailable after its Commercial Operation Date due to any Force Majeure Event affecting that Unit; and (ii) the Issuer is not entitled under its insurance to receive insurance proceeds which replace any Available Capacity Payments not received by the Issuer for such period. If a Force Majeure Event affecting TNB occurs before the Commercial Operation Date of the First Unit and delays the occurrence of the Commercial Operation Date of a Unit past its Scheduled Commercial Operation Date, TNB shall pay the Issuer the costs of servicing debt after the date such Force Majeure occurred and any


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unavoidable costs that the Issuer may necessarily and reasonably incurred during such duration to the extent the Issuer is not entitled under its insurances to receive insurance proceeds which reimburse it for such costs incurred.

If a Force Majeure Event affecting the Issuer occurs or continues after the Commercial Operation Date of a Unit, such Force Majeure Event does not relieve TNB of its obligation to make Available Capacity Payments to the Issuer to the extent that the relevant Unit is actually available to deliver electrical energy to TNB unless a Force Majeure Event affecting TNB occurs in which case the consequences described below will apply. If a Force Majeure Event affecting TNB occurs after the Commercial Operation Date of the First Unit and for the duration such Force Majeure Event persists, TNB shall continue to pay Available Capacity Payment only to the extent that the relevant Unit is available to deliver electrical energy to TNB. For the duration such Force Majeure Event persists, TNB shall also pay the Issuer the difference (if a positive value) between: (a) the costs of servicing debt (drawn down and expended by the Issuer in

accordance with the terms of the Financing Documents) after the date such Force Majeure Event occurred (but not including the Sponsors’ Gross Equity Contributions, the Sponsors’ Equity Repayment or any cost relating thereto) and any unavoidable costs the Issuer necessarily and reasonably incurs during such duration; and

(b) the total Available Capacity Payments due to the Issuer for the period such

Force Majeure Event persists and any insurance proceeds which reimburse it for the costs set out above.

TNB’s obligation to pay unavoidable costs is capped at a sum equal to the Fixed Operating Rate portion of the Fixed Availability Payment. Right to terminate under Force Majeure Either party may terminate the PPA if a Force Majeure Event prevents either party from substantially performing any material obligation under the PPA for a period which exceeds one hundred and eighty (180) days. While there is a right of termination as a result of a Force Majeure Event provided under the PPA, the right is only exercisable upon giving thirty (30) days’ written notice if a Force Majeure Event is preventing either party from substantially performing any material obligation under the PPA for a period exceeding one hundred and eighty (180) days, subject to the following: (a) if an Force Majeure Event cannot be remedied within one hundred and eighty

(180) days with the use of reasonable diligence then the one hundred and eighty (180)-day period shall be extended by a further period of one hundred and eighty (180) days; and

(b) if the party affected is unable to remedy the Force Majeure Event by the end of

the further period of one hundred and eighty (180) days, then the parties shall consult as to what steps shall be taken with a view to mitigating or remedying the consequences of a Force Majeure Event.


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If the parties agree to extend the second period, then the above provisions apply with regards to the remedy and mitigation of the Force Majeure Event. If the parties are unable to agree to extend the further period of one hundred and eighty (180) days, then either party may terminate the PPA by giving thirty (30) days’ written notice of termination. Events of Default, Walk Away Events and Termination Each of the following events shall constitute an Event of Default by the Issuer, unless excused under another provision of the PPA: (a) the Issuer fails to make a payment of any amount of a substantial nature which

is due and payable under the PPA within sixty (60) days after receipt of notice of non-payment from TNB;

(b) the Issuer fails to comply with or operate in conformity with any obligation of the

PPA (other than a payment obligation) and such failure, if capable of remedy, continues uncured for a period of ninety (90) days, after receipt of notice of such failure from TNB;

(c) the Issuer is dissolved or liquidated, other than for the purpose of a voluntary

dissolution or liquidation as part of a reorganisation or reincorporation; (d) the Issuer applies for or consents to a receiver, manager, custodian, trustee or

liquidator being appointed over or taking possession of all or a substantial part of its assets;

(e) the Issuer admits in writing its inability to pay its debts as they fall due; (f) the Issuer makes a general assignment or an arrangement or composition with

or for the benefit of its creditors; (g) the Issuer commences a voluntary case or files a petition seeking to take

advantage of any law relating to bankruptcy, insolvency, reorganisation of its debts, winding-up or composition or readjustment of its debts;

(h) the Issuer fails to dispute in a timely manner, or acquiesces in writing to, any

petition filed against it in an involuntary case under any bankruptcy or similar law;

(i) the Issuer takes any action for the purpose of effecting any of the events

described in paragraphs (c) through (g) above; (j) the Commercial Operation Date of a Unit fails to occur within six months of the

Scheduled Commercial Operation Date of such Unit (unless otherwise excused or extended under the PPA);

(k) the Issuer Abandons the Project after the Effective Date and fails to resume

activities within a period of time agreeable to TNB; (l) the Generation Licence is suspended or revoked or terminated or expired due

to the Issuer's default, and the Issuer has not caused the Generation Licence to


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be reinstated or renewed either (i) within the shorter of three hundred and sixty five (365) days and the legally permissible period for such reinstatement or renewal or (ii) after having exhausted all available administrative or legal appeals and applications for such reinstatement or renewal;

(m) the CSTA is terminated by TFS as a result of default by the Issuer thereunder;

or (n) any of the following events occur prior to the fifth anniversary of the Commercial

Operation Date of the First Unit, without the prior written approval of the Energy Commission on behalf of the Federal Government of Malaysia: (i) the Issuer sells, conveys, transfers or otherwise disposes of the Project

or any material part or any interest in it to any other Person or enters into an agreement to do so; or

(ii) any Shareholder sells, transfers or otherwise disposes of any share in

the Issuer or 3B Power (including for this purpose the assignment of the beneficial interest therein the creation of any charge or other security interest over, such share or the renunciation or assignment of any right to receive or to subscribe for such share) or any interest in such share or enters into an agreement to do so; or

(iii) there is a change in control of the Issuer.

If an Event of Default described above (other than that described in paragraph (b) above that cannot be cured with the exercise of reasonable diligence within the period of ninety (90) days therein) occurs, the non-defaulting party may terminate the PPA by giving fourteen (14) days’ written notice to the other party. If the Event of Default described in paragraph (b) above occurs and cannot be cured with the exercise of reasonable diligence within the period of ninety (90) days specified therein, the cure period shall be extended by a further one hundred and eighty (180) days and if the default continues uncured at the end of such further period, the non-defaulting party may terminate the PPA immediately by giving written notice to the defaulting party. TNB’s Events of Default consist of: (i) non-payment of any amount of a substantial nature within sixty (60) days of receipt of notice from the Issuer, (ii) breach of an obligation under the PPA which remains unremedied after ninety (90) days of receipt of notice from the Issuer, or (iii) insolvency. In the event a Walk Away Event (as described below) is not satisfied by the Issuer by the relevant Walk Away Date, for whatever reason (including a Force Majeure Event), TNB shall, notwithstanding any provision to the contrary in the PPA, be entitled, at any time, to terminate the PPA by delivering to the Issuer fourteen (14) days’ notice in writing. In the event of such termination, neither party shall have any obligation or liability (save for antecedent breach) to the other whether at law, under the PPA or otherwise and the rights of the parties under the PPA shall terminate and be of no force or effect. The Walk Away Events and the revised Walk Away Dates pursuant to the Supplemental PPA are as follows: Occurrence of Financial Closing Date –15 April 2016 Execution of the TWA –15 April 2016


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Issuance of Notice to Proceed under the EPC Contract –15 April 2016 Submission of proof of completion of the acquisition of land/wayleave to build the Transmission Lines –31 July 2018 Consequences of Termination Event of Default by the Issuer If TNB terminates the PPA as a result of an Event of Default by the Issuer, TNB shall have the option but not the obligation, exercisable by prior notice in writing within sixty (60) days of the termination of the PPA, to purchase the Project in the manner and for the purchase price determined in accordance with the provisions of the PPA. Such purchase price is essentially an amount equal to: (i) the outstanding financial indebtedness owed by the Issuer to all Financing

Parties (excluding shareholders of the Issuer and their respective affiliates) no greater than the lesser of the amount incurred under the Initial Financing Documents or any subsequent Financing Documents as of the termination date (“Outstanding Indebtedness”), if the total capital contributed by shareholders of the Issuer and their affiliates (“Sponsors Gross Equity Contribution”) amounts to twenty percent (20%) or more of the aggregate amount of the expenditure incurred and paid by the Issuer in connection with the Project up to the first anniversary of the Commercial Operation date of Unit 2 (“Total Project Costs”) and ninety five percent (95%) of the Outstanding Indebtedness if the Sponsors Gross Equity Contribution is less than twenty percent (20%) of the Total Project Costs; plus

(ii) the “A” Purchase Price, which is RM10; plus (iii) all reasonable costs and expenses of the Issuer incurred or suffered as a result

of the purchase of the Project by TNB, including any reasonable and customary termination payments or novation fees on contracts in connection with the Project, all Taxes, any reasonable breakage costs and other reasonable and necessary termination costs, but excluding the Outstanding Indebtedness (“Transfer Costs”); less

(iv) the aggregate of all cash balances at bank and in hand and liquid securities

held by the Issuer and to be retained by the Issuer after the date of termination of the PPA (“Retained Sum”).

Event of default by TNB

If the Issuer terminates the PPA as a result of an Event of Default by TNB, the Issuer shall have the option but not the obligation, (exercisable by prior notice in writing within sixty (60) days of the termination of the PPA), to sell the Project to TNB, in the manner and for the purchase price determined in accordance with the PPA. In the event this option is exercised by the Issuer, TNB shall be required to purchase the Project from the Issuer. Such purchase price is essentially an amount equal to: If termination occurs pre-Commercial Operation Date of the Second Unit (a) the Outstanding Indebtedness; plus


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(b) the Sponsors Gross Equity Contribution; plus

(c) the aggregate amount determined by applying the Default Rate (which is one percent (1%) above the base lending rate then in effect at the principal office of Malayan Banking Berhad) to each amount comprising the Sponsors’ Gross Equity Contribution from the date of injection of such amount to the date of termination of the PPA (“Interest on the Sponsors’ Gross Equity Contribution”); plus

(d) the Transfer Costs; less

(e) the Retained Sum.

If termination occurs post-Commercial Operation Date of the Second Unit

(a) the Outstanding Indebtedness; plus

(b) the “B” Purchase Price, which is determined in accordance with Attachment A of Appendix K of the PPA and consists of equity contributions, plus a return on equity, less any dividends / equity repayments; plus

(c) the Transfer Costs; less

(d) the Retained Sum. Once payment in full has been made by TNB of the amount set out above, all the Issuer’s rights, title and interest in the Project and the Site (including the Access Rights) shall simultaneously be transferred by the Issuer to TNB (or its nominees) free from any encumbrance whatsoever. Where the Outstanding Indebtedness is payable by TNB above, it shall be paid by TNB directly to the Financing Parties (other than the shareholders of the Issuer and their respective Affiliates) whose receipt shall be a good discharge for TNB and the Outstanding Indebtedness shall thereby be deemed to have been paid to the Issuer. Payment of the Outstanding Indebtedness shall, where required by TNB, be in exchange for a transfer or assignment to TNB (or its nominees) of all rights, title and interests in the Initial Financing Documents (other than those in respect of the Sponsors’ Gross Equity Contribution), documented and evidenced to the satisfaction of TNB. Where required by TNB, the Issuer shall procure that the Financing Parties discharge all securities and other encumbrances given on or over the Project and the Site (including the Access Rights) in exchange for the payment of the Outstanding Indebtedness. For this purpose, the Issuer shall procure that the Financing Parties sign all re-assignments, discharge of charge, agreements, and other documents in a form required by TNB so as to transfer all rights, title and interest in the Project and the Site (including the Access Rights) to TNB (or its nominees) free of encumbrances and the Issuer shall procure that the Financing Parties shall take all steps and actions considered by TNB to be necessary or desirable to procure that all rights, title and interest in the Project and the Site (including the Access Rights) are transferred to TNB (or its nominees) free of encumbrances.


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Walk Away Events

In the event of termination of the PPA by TNB following the failure of the Issuer to achieve a Walk Away Event by the relevant Walk Away Date, neither Party shall have any obligation or liability (save in respect of any antecedent breach) to the other whether at law, hereunder or otherwise and the rights of the Parties hereunder shall terminate and be of no force or effect. Step-In Rights TNB TNB shall have the right, but under no circumstances the obligation to assume partial or complete (as TNB may decide) operational responsibility for the Facility (in the capacity of an operator only) in the place and instead of the Issuer in order to continue operation of the Facility or complete any necessary repairs so as to assure uninterrupted availability of electrical energy from the Facility. Such step-in rights shall arise upon the occurrence and continuance of an Event of Default under the PPA with respect to the Project which could reasonably be expected to materially adversely affect the Issuer’s ability to operate and maintain the Facility in accordance with the PPA. TNB shall not exercise such step-in rights until any applicable cure period has expired, unless at any earlier time the Financing Parties (being the persons, in accordance with the Financing Documents, providing financing, hedging or other form of banking or bond facilities (including any refinancing in respect thereof) for the Project and includes any agent(s) or trustee under such banking or bond facilities) request TNB to step-in under any right that has arisen under the Financing Documents. For so long as the Financing Documents remain in effect, TNB shall not exercise step-in rights hereunder if the operation of the Facility has been assumed by any Financing Party or any approved assignee or designee within the applicable cure period. The Issuer shall ensure that the Financing Parties specifically acknowledge and are bound by such step-in rights of TNB. TNB shall have the right at any time, but not exceeding six months from the time TNB exercises its step-in rights, to return the operational responsibility for the Facility to the Issuer, provided that TNB shall return the Facility to the Issuer in a condition no worse than that immediately prior to the assumption of the operational responsibility for the Facility by TNB, ordinary wear and tear excepted. The Commission So long as consistent with the terms of the Financing Documents or the rights of the Financing Parties thereunder, if the Commission exercises its statutory right to operate the Facility, TNB shall continue to make Energy Payments for Net Electrical Output despatched by the Grid System Operator and Available Capacity Payments to the Issuer in accordance with the PPA to the extent that a Unit is Available and to the extent such payments to the Issuer are permitted by Law. Any payment made by TNB to the Commission or at the Commission’s direction pursuant to any applicable Law shall for the purposes of the PPA be deemed to be a payment made to the


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Issuer in accordance with the terms of the PPA and to that extent in full discharge of TNB’s obligation to the Issuer thereunder. Indemnification and Liability Each party (the liable party) is liable to the other party (the injured party) for property damage or personal injury suffered by the injured party as a consequence of breach of the PPA, negligence or misconduct by the liable party. Each party indemnifies the other party for personal injury or property damage suffered by third parties caused by an act or omission of the indemnifying party. The Issuer shall defend, indemnify and hold TNB, and its officers, directors, agents, employees, contractors and subcontractors, harmless from and against any and all claims, judgments, liabilities, losses, costs, expenses (including reasonable lawyers' fees) and damages under all applicable environmental laws or regulations arising out of the condition of the Site, the Issuer's ownership or operation of the Facility or the Issuer’s construction of the Interconnection Facilities, the Transmission Lines and the IPP Works, except to the extent such damages are attributable to the negligence or misconduct of, or breach of the PPA by TNB, its officers, directors, agents, employees, contractors or subcontractors. Likewise, TNB indemnifies the Issuer against all such claims under all applicable environmental laws or regulations arising out of TNB’s ownership or operation of the Interconnection Facilities, the Transmission Lines and the IPP Works. Neither party is liable to the other for consequential loss. Change in Law Adjustment If there is a Change-in-Law which requires the Issuer to make any material capital improvement or other material modification to the Facility and/or the Interconnection Facilities and/or the Transmission Lines the cost of which is in excess of the capital improvement threshold of RM10 million in any calendar year, which material capital improvement or other material modification is required for the purpose of enabling the Issuer to fulfil its obligations under the PPA in compliance with such Change-in-Law, TNB and the Issuer shall determine, in good faith, any extension of the Term or any adjustment to the CRF (as described in section 7.3.2(b) of this Information Memorandum) to reflect such cost in excess of the capital improvement threshold as may be reasonably incurred by the Issuer in making such material capital improvement or other material modification and the date from which such adjustment is to be effective. In such circumstances, the Issuer and TNB shall use their respective best efforts to limit the remedy available to an extension of the Term and only in the event it is not commercially feasible to do so, resort to an adjustment to the Capacity Rate Financial. After receipt by TNB of the Commission's written approval of: (i) the costs of the material capital improvement or material modification to the

Facility and/or the Interconnection Facilities and/or the Transmission Lines, as the case may be;

(ii) such extension of the Term or adjustment to the Capacity Rate Financial; and


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(iii) the inclusion of any adjustments to the Capacity Rate Financial as part of TNB's

tariff rates to its customers in a manner consistent with such adjustments,

the Term or the Capacity Rate Financial, as the case may be, shall be adjusted in a manner approved by the Commission provided always that any adjustments to the Capacity Rate Financial shall only be effective from the date TNB's tariff rates to its customers as stated in (iii) are effective. Transfers and Assignment Except as required by the Financing Parties under the Financing Documents, the Issuer shall not sell, convey, transfer or otherwise dispose of the Project or any material part or any interest in it to any other Person without the prior written consent of TNB and the Commission, which consent shall not be unreasonably withheld or delayed. If the Financing Documents so require, TNB shall: (i) provide its consent to assignments and acknowledgement of rights of the

Financing Parties (including cure rights and the rights of the Financing Parties under the Financing Documents to be substituted for the Issuer upon the occurrence of any default provided that the Financing Parties shall notify TNB in writing before exercising such rights) as shall be necessary or reasonably appropriate in order to obtain financing for the Project in a timely manner provided that such rights shall be subject to the terms of the PPA and not inconsistent with TNB’s rights hereunder;

(ii) make payments to the Issuer directly into a collateral security account

established under the Financing Documents (subject to any claims or rights TNB may have against the Issuer under the PPA);

(iii) in the event of a default and provided that a prior written notice has been given

to TNB, accept as a substitute for the Issuer under the PPA, the agent for the Financing Parties, any designee or transferee of such agent or any purchaser of the Issuer or the Project upon a foreclosure sale conducted on behalf of the Financing Parties of the Issuer’s interest in the Project or of the issued share capital of the Issuer; and

(iv) subject to a prior written notice already been given to TNB, afford the Financing

Parties an opportunity to remedy any Event of Default by the Issuer within the relevant cure period hereunder before terminating the PPA.

The Issuer acknowledges: (i) that any assignment or transfer to a secured party pursuant to the Financing

Documents shall not relieve the Issuer of its obligations to TNB under the PPA; and

(ii) no such assignee or transferee shall be liable for the performance of the

Issuer’s obligations under the PPA; and


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(iii) any exercise by any such assignee or transferee shall be subject to the terms of the PPA.

Governing Law and Dispute Resolution The PPA is to be governed by, and shall be construed in accordance with the laws of Malaysia. If any dispute in relation to the PPA cannot be resolved between the parties by mutual agreement in the manner provided thereunder, then such dispute shall be settled exclusively and finally by arbitration conducted in accordance with the Rules for Arbitration of the Regional Centre for Arbitration at Kuala Lumpur. Subject to the arbitration provisions in the PPA, the parties submit to the exclusive jurisdiction of courts located in Kuala Lumpur, Wilayah Persekutuan. Goods and Services Tax All amounts stated in the PPA are exclusive of the goods and services tax, unless otherwise clearly stated that they are intended to be goods and services tax inclusive. The parties acknowledge and agree that if the goods and services tax is imposed on any supplies made by any party under the PPA, such party shall have the right to increase the consideration payable on the supply by an amount equal to the goods and services tax imposed. Such party shall be entitled to recover the increased amount from the other party as if the same were part of the consideration of the supply.

5.5.2 Coal Supply and Transportation Agreement

The following section incorporates the key terms and conditions that are contained in the CSTA. In respect of defined terms in this Section 5.5.2 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the CSTA.

Overview The Issuer and TFS have entered into the CSTA whereby TFS agrees to make available, supply, sell and deliver to the Issuer, and the Issuer agrees to purchase and receive from TFS, Coal (which is defined as any of the coal procured and supplied or to be procured and supplied by TFS to the Issuer pursuant to the CSTA) in accordance with the terms and conditions of the CSTA. Term The CSTA is effective upon signing and terminates along with the PPA unless the CSTA is terminated earlier in accordance with its terms. The Issuer may not serve the Commencement Notice (which sets out the First Delivery Date, being the date of the first delivery of Coal under the CSTA) until the EPC Contract, which has definitive specifications and rejection limits for coal that the Facility has been designed to use, has become unconditional and the Financing Date (being the date on which the Issuer has received a certificate from its lenders confirming that all conditions


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precedent to the initial drawdown of funds for financing the development, construction, equipping, installation, testing and commissioning of the Facility have been satisfied or waived by such lenders) has occurred. The First Delivery Date shall be a date no earlier than three (3) months and no later than six (6) months after the date of TFS’s receipt of the Commencement Notice, unless the Grid System Operator, TNB or force majeure causes specified delays under the PPA. Prior to the First Delivery Date, the Issuer shall order and TFS shall deliver all Coal that is required for testing, commissioning and generation of electricity prior to Commercial Operation Date on not less than six (6) months’ written notice. Also, the Issuer may purchase coal reasonably required for construction of stockpile base layers and the initial stockpile from any person including TFS but if purchased from TFS the price, specification, rejection limits and other terms for such coal shall be mutually agreed. As with the Commencement Notice, the EPC Contract has to become unconditional and the Financing Date has to occur before any Coal can be ordered for either purpose. Base Price

The Base Price payable for the Coal shall be derived by multiplying the prevailing Applicable Coal Price (as defined in the PPA) by 23.0274, being the factor to convert RM per Gigajoule to RM per Tonne of Coal, using an assumed GAR equal to the Reference GAR. In this regard, Appendix J of the PPA sets out the method of determining the Applicable Coal Price. The price of coal delivered to the Issuer shall be adjusted and determined taking into account gross calorific value, moisture, ash content, sulphur content, volatile matter, Hardgrove Grindability Index (“HGI”) and size and further adjustments based on the results of analysis by an inspection company. The CSTA contains numerous adjustments to the Base Price based on the quality of the Coal and provides for further adjustments in the event of delivery of inferior-quality Coal. Supply of Coal TFS shall identify the supplier from whom TFS may (but shall not be obliged to) purchase Coal for onward supply to the Issuer in the Coal Supply Plan including, where applicable, the Mines thereof. TFS is not bound to supply Coal from only these suppliers and/or Mines and TFS is entitled to supply Coal wholly or partially from other suppliers and/or other sources as long as the Coal meets the coal quality specifications applicable to the Coal as set forth in Appendix I to the CSTA. TFS shall from time to time enter into coal purchase contracts (“Coal Purchase Contracts”) with Suppliers for the supply of Coal. TFS shall from time to time enter into transportation contracts for the transportation of Coal to the Discharge Port, which is the port at which the jetty and associated facilities of the Facility is located at Kuala Lukut. With the exception of specific identified events within the CSTA (such as the occurrence of a TFS event of default), TFS is the sole and exclusive supplier of coal to the Issuer, who has undertaken not to purchase coal from or through any other person during the term of the CSTA.


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TFS is required to provide the plan for the procurement and supply of Coal to the Facility (“Coal Supply Plan”) from time to time to the Issuer and such plan shall be submitted to the Fuel Committee for approval pursuant to Appendix J of the PPA. The Coal Supply Plan approved by the Fuel Committee is for planning purposes only and TFS is not bound by the terms of the Coal Supply Plan. Monthly Nominations The Issuer shall not later than the first day of each calendar month (“Programming Month”) provide to TFS a notice (the “Monthly Nomination”) specifying the quantity of coal nominated by the Issuer for delivery in each month during the Programmed Period (which, in relation to a Programming Month, is the period of three calendar months comprising the Delivery Month and the two (2) calendar months immediately thereafter). Except as provided in the case of a reduced need, the quantity of coal nominated by the Issuer in a Monthly Nomination for delivery in the corresponding Delivery Month shall be firm and binding on the Issuer. As part of the Monthly Nomination, the Issuer may request for different quantities of Medium CV Coal and Low CV Coal to be delivered in each month during the Programmed Period provided that the Issuer shall not request more Medium CV Coal than Low CV Coal to be delivered in any Delivery Year (being each calendar year (or lesser period in any year) from the First Delivery Date until the expiry or earlier termination of the CSTA. TFS may (but is not obliged to) fulfil the Issuer's request for the certain quantities of Low CV Coal and Medium CV Coal in any Programmed Period provided that the ratio of quantities of Low CV Coal and Medium CV Coal to be delivered in any Delivery Year shall comply with the Blending Ratio (which is 50:50 or any other ratio as may be specified by TFS from time to time where the total quantity of Low CV Coal does not exceed the total quantity of Medium CV Coal supplied or planned to be supplied to the Issuer in any Delivery Year). If the Issuer does not provide a valid Monthly Nomination in respect of a Delivery Month within the specified time limit (or such later date as the Issuer and TFS may agree) the quantity of coal deemed to be nominated by the Issuer for delivery in that Delivery Month shall be equal to sixty percent (60%) of the average of the aggregate quantity of coal nominated for delivery in the two (2) calendar months immediately preceding that Delivery Month. Reduced need In the event that TNB or the Grid System Operator despatches the Facility at a level lower than TNB's prior estimates of despatch levels for a Delivery Month or upon occurrence of Forced Outage (which is the occurrence for any period of time of any loss of, interruption or reduction in the availability of the Facility’s generating capacity and electrical energy that is not otherwise specifically excluded by the PPA) resulting in stockpiles of coal at the Facility being at maximum, the Issuer may by written notice cancel or reduce the Monthly Nomination for such Delivery Month provided that:

(i) such notice of cancellation is given to TFS not later than sixty (60) days prior to

the commencement of the Delivery Month for such cargo of Coal loaded or to be loaded onto a vessel earmarked to sail to the Discharge Port (“Shipment”); and

(ii) only if and to the extent that TFS has not yet transmitted a corresponding

confirmation or order to a Supplier that cannot be cancelled or withdrawn (without TFS incurring cancellation or withdrawal charges which are not


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compensated by the Issuer) or used for another purpose by TFS (without TFS incurring loss or additional cost which are not compensated by the Issuer) or TFS has not yet irrevocably committed to transport arrangements for the Shipment of such Coal to the Discharge Port.

In the event that due to the following reasons, the Issuer determines that it is unable to accept delivery of a Shipment nominated or substituted for delivery in a Delivery Month and which cannot be cancelled in the manner provided for in (i) and (ii) above:

(a) TNB or the Grid System Operator despatches the Facility at a level lower than

TNB's prior estimates of despatch levels resulting in stockpiles of Coal at the Facility being at maximum and TFS has already transmitted a corresponding confirmation or order to a Supplier or has already irrevocably committed to transport arrangements for the Shipment of such Coal to the Discharge Port; or

(b) Forced Outage has resulted in stockpiles of Coal at the Facility being at

maximum despite the Issuer's best efforts to consume the Coal at the Facility; the Issuer may request TFS:

(i) not to load a Shipment if loading has not yet occurred, (ii) to divert a Shipment to an alternative discharge port for delivery to a party as

the Issuer may designate or (iii) to sell and deliver a Shipment to another party.

Any costs reasonably incurred by TFS in responding to such request or requests shall be paid by the Issuer to TFS within thirty (30) days of invoice. If sub-paragraph (iii) above applies, the Issuer shall also pay the Base Price for the Shipment adjusted for quality in conformity with the CSTA for that Shipment less the proceeds of sale by TFS of the Shipment involved to another party. Withdrawal of Shipment and Remedial Plan TFS has the right, prior to delivery of a notice of readiness at the Discharge Port, to withdraw any Shipment. If such withdrawal occurs and causes the Coal stockpile at the Facility to become less than the Minimum Stockpile Level, then TFS shall prepare a Remedial Plan. If a Shipment does not arrive at the Discharge Port within seven (7) days of that half of the Delivery Month, TFS shall provide the Issuer with a plan for remedial action within three business days which shall set forth TFS’s plan for Shipments to be delivered to the Issuer to deal with the circumstances giving rise thereto in a manner reasonably acceptable to a prudent power plant operator in like circumstances. TFS is not obliged to provide a remedial plan if the delivery failure occurred because of the inability of the Issuer to take delivery of the Shipment due to an Event of Force Majeure precluding the Issuer from discharging the vessel, an Event of Force Majeure has resulted in coal stockpiles at the Facility exceeding maximum levels, unexpected congestion at the Loading Port or where TFS is excused by an Event of Force Majeure. The Issuer is to consider the plan and notify TFS of the acceptability thereof. Upon receipt of such notice of acceptance, TFS is to implement such plan immediately.


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If TFS fails to provide a Remedial Plan within the prescribed timeframe or fails to implement an agreed Remedial Plan or the Issuer reasonably rejects such plan, the Issuer may purchase coal from any other party and TFS is obliged to assist the Issuer in finding and acquiring replacement coal. In addition, TFS shall reimburse the Issuer for any reasonable additional net costs incurred by the Issuer in obtaining such coal from any source. If this event happens thrice in a Delivery Year, then the Issuer is entitled to terminate the CSTA and purchase coal from any other party and TFS shall be liable for the net incremental acquisition and transportation costs with respect to any such coal (over and above the then current Base Price, adjusted for gross calorific value on an as received basis, measured in kcal/kg). Coal quality and rejection of Shipment All Shipments of Coal delivered shall be coal meeting the Coal Quality Specifications and be free from all impurities. The CSTA provides for the sampling and analysis of Coal, as well as the Coal Quality Specifications, the Coal Quality Rejection Limits, Discharging Terms and Conditions, Weighing Standards, Standards and Tolerances.

If any Shipment of Coal is indicated in a Certificate of Rejection Limit Analysis as failing to meet any Coal Quality Rejection Limits, the Issuer may reject delivery of such Shipment. Such right of rejection may be exercised by the Issuer delivering to TFS a notice of rejection within twenty four (24) hours of receipt by the Issuer of the Certificate of Rejection Limit Analysis. Such right of rejection shall be lost upon expiry of the said twenty four (24) hours or (if earlier) upon commencement of discharge of the Shipment. The Issuer has sixty (60) days after the date of the Bill of Lading in which to request that the Umpire Sample is analysed. However, the Issuer may not reject a Shipment if the Certificate of Umpire’s Analysis indicates that the Shipment exceeds any Coal Quality Rejection Limit. In such a case, the Issuer is only entitled to an adjustment of the price payable for the Shipment. If during the first six (6) hours of discharging of a Shipment at the Discharge Port, the Issuer, having reasonable grounds, determines that the Shipment would if discharged or if discharge were to continue pose a risk of causing material damage to the Discharge Port or the Facility due to spontaneous combustion attributable to the Coal, the Issuer may reject delivery of the Shipment or the balance of such Shipment not yet discharged, as the case may be. Such right of rejection may be exercised by the Issuer delivering to TFS a notice of rejection within six (6) hours of commencement of discharge of Shipment at the Discharge Port. The Issuer shall also be entitled (but not obliged) to reject a Shipment of Coal with proven Impurities (being extraneous materials atypical of coal) if and to the extent that such Impurities will damage the unloading facilities at the Discharge Port or the Facility and rejection is the best way to mitigate such damage or loss. Such right of rejection may be exercised by the Issuer delivering to TFS a notice of rejection within six (6) hours of commencement of discharge of Shipment at the Discharge Port. Save as specifically allowed above, the Issuer shall not be entitled to reject any Shipment of Coal and the Issuer must receive and discharge the Shipment of Coal at the Discharge Port.


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Payment The Issuer shall remit to TFS by wire transfer to TFS's bank account as notified to the Issuer the amount of such Initial Invoice not in dispute for each Shipment of Coal delivered by TFS under the CSTA not later than the seventh (7th) day of the month following receipt of an Initial Invoice and other documents. The Issuer shall not delay remittance of payment to TFS even if TNB has not made payment to the Issuer when due pursuant to the PPA. Interest shall be payable by the Issuer at the rate of the Base Lending Rate plus one percent (1%) per annum from the date when payment was due until the date when payment is made. Any dispute regarding any amount of any Initial Invoice shall not excuse a delay in the payment of the portion not in dispute, however, that if it is later agreed or determined, by arbitration, an expert or otherwise, that the amount of any payment represents an underpayment or overpayment, the party owing the amount in question, shall promptly pay the other party such amount plus interest at a rate of the Base Lending Rate plus one percent (1%) per annum calculated from the due date of payment of such amount. Non-payment of an invoice will give rise to TFS’s right to terminate the CSTA, whereby TFS can terminate the CSTA sixty (60) days after the due date of the applicable Invoice Amount by giving notice of immediate termination to the Issuer provided that such Invoice Amount (including any late payment interest thereon) or any part thereof remain unpaid upon expiry of the sixty (60) days period. Force Majeure For the purpose of the CSTA, an Event of Force Majeure shall mean an event, condition or circumstance and the effects thereof beyond the reasonable control and without the fault or negligence of the party (the “Affected Party”) claiming an Event of Force Majeure, which, despite all reasonable continuing efforts of the Affected Party to prevent it or mitigate its effects, causes a delay or disruption in the performance of any obligations imposed hereunder. Subject to the foregoing, an Event of Force Majeure shall include, without limitation, and to the extent an Affected Party's inability to perform its obligations arises therefrom:

(a) unusually severe weather conditions; (b) epidemic or plague; (c) acts of war (whether war has been declared or is undeclared), acts of force by a

foreign nation, embargo, blockade, rationing, allocation or the imposition of trade or economic sanctions;

(d) strike, work stoppage, work to rule or other industrial action, riots or acts or

terrorists; for the avoidance of doubt, a strike, work stoppage, work to rule or other industrial action shall be deemed to be beyond the reasonable control of, and without the fault or negligence of, the Affected Party;

(e) failure (other than a failure due to an act or omission of the Affected Party) to

obtain or renew any required Government Authorisation (as defined in the PPA)


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relating to the performance of obligations under the CSTA (including, for the avoidance of doubt, any required export or import permit or approval from the relevant Governmental Instrumentality in respect of the export or import of the Coal);

(f) accident, earthquake, flooding, sabotage or fire; (g) damage to, or breakdown of, any of the wharf or loading gear at the Loading

Port or the wharf or unloading gear at the Discharge Port; (h) unavailability or break down of vessels, machinery or equipment used to

produce or transport Coal other than due to negligence or wilful misconduct on the part of the Affected Party;

(i) unavailability, obstruction or blockage of any Loading Port or the Discharge Port; (j) unusually severe congestion or unusually long queue of vessels at any Loading

Port, other than where those conditions were reasonably foreseeable and avoidable;

(k) any event of force majeure duly declared under the PPA; (l) any event of force majeure duly declared by any Supplier or TFS under related

Coal Purchase Contracts PROVIDED THAT the failure to engage sufficient workforce or adequate sub-contractors, or to have or acquire adequate machinery, or procure adequate supplies or raw materials, in connection with the operation and maintenance of the relevant Mines or (where the Supplier owns and operates the Loading Port) of the relevant Loading Ports shall not constitute an event of force majeure thereunder;

(m) any event of force majeure duly declared by any transporter or TFS under

related transportation contracts entered into between them in relation to the supply of Coal under the CSTA; and

(n) unavailability or break down of machinery or equipment at the Facility that has

been duly declared by the Issuer as a force majeure event under the PPA; PROVIDED THAT the failure to engage sufficient workforce or adequate sub-contractors, or to have or acquire adequate machinery, or procure adequate supplies or raw materials, in connection with the operation and maintenance of the Facility does not constitute an Event of Force Majeure.

Where an Event of Force Majeure continues for a period exceeding two hundred and seventy (270) days, the parties shall meet with a view to agreeing how arrangements under the CSTA may continue. If the parties fail to agree within sixty (60) days, either party may terminate the CSTA by giving thirty (30) days’ notice.

General Limitations The Affected Party shall not be entitled to suspend performance under the CSTA for any greater scope or longer duration than is required by the Event of Force Majeure or the delay occasioned thereby. The Affected Party shall not be obliged to settle any strike or other industrial action on terms that are not reasonably acceptable to the


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Affected Party. Neither party shall be relieved of its obligations under the CSTA nor shall any obligations of a party be suspended solely because there may be increased costs or other adverse economic consequences incurred through the performance of such obligations although neither party shall be obliged to incur unreasonable cost to overcome an Event of Force Majeure affecting that party. Obligations of the parties that were required to be completely performed prior to the occurrence of an Event of Force Majeure shall not be excused as a result of such occurrence. The failure or inability of either party to satisfy a payment obligation that has arisen under the CSTA shall not be excused by an Event of Force Majeure. Suspension Subject to the limitations set out in the CSTA, if either party is rendered unable by reason of an Event of Force Majeure to perform any obligation under the CSTA, then upon the Affected Party giving notice of Force Majeure, such obligations of the Affected Party shall be suspended or excused to the extent of such Event of Force Majeure. Mitigation & Resumption of Obligations The Affected Party must use all reasonable endeavours to remove the effect of each Event of Force Majeure affecting its performance under the CSTA. An Affected Party shall immediately after cessation of an Event of Force Majeure resume performance of any obligation suspended as a result of such event. Good Faith Allocation Should TFS be simultaneously affected by an Event of Force Majeure under the CSTA and under other similar contracts for the supply of coal by TFS to power plants in Malaysia, TFS shall, as far as reasonably practicable, allocate the available coal in good faith. Purchase of Coal from Others Where TFS is prevented by an Event of Force Majeure from supplying and delivering Coal hereunder, the Issuer may enter into binding contracts for the purchase of coal from any person, including Suppliers, to the extent reasonable and necessary in the circumstances. Termination If the Financing Date does not occur by 15 October 2015, either party may terminate the CSTA by giving not less than thirty (30) days’ notice, unless the Financing Date occurs prior to the date of termination specified in such notice. In addition, if TNB ceases to control TFS, either party may terminate the CSTA by giving not less than one hundred and twenty (120) days’ notice, unless such control re-vests in TNB prior to expiry of the notice period. Upon the occurrence of certain events, TFS may terminate the CSTA due to an IPP Event of Default by providing thirty (30) days’ written notice (sixty (60) days for payment default) to the Issuer, specifying the IPP Event of Default giving rise to such notice of termination and the date of such termination.


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IPP Events of Default consist of: (i) non-payment, (ii) illegality, (iii) breach of the representations and warranties, (iv) the Issuer fails to perform any of its material obligations with a thirty (30) days cure period (which may be extended by an additional thirty (30) days in specified circumstances), (v) the Issuer fails to comply with an award of an expert or the arbitrator within five business days, (vi) insolvency.

The Issuer has three options upon the occurrence of a TFS Event of Default (i) acquire coal from another source, (ii) terminate the CSTA by giving thirty (30) days’ written notice, or (iii) issue a notice of intent to terminate, requiring TFS to prepare and submit to the Issuer for its review and approval, a programme (“Default Remedial Plan”) to remedy such TFS Event of Default and its effect. Any Default Remedial Plan shall provide for the remedy of the relevant TFS Event of Default and its effects within a period of sixty (60) days after the date of receipt of the notice of intent to terminate. TFS Events of Default consist of: (i) non-payment, (ii) illegality, (iii) breach of the representations and warranties, (iv) the Issuer fails to perform any of its material obligations with a thirty (30) days cure period (which may be extended by an additional thirty (30) days in specified circumstances), (v) the Issuer fails to comply with an award of an expert or the arbitrator within five (5) business days, (vi) insolvency, (vii) three (3) delivery related failures occur within a Delivery Year. If the Issuer fails to achieve Commercial Operation Date of the First Unit on or before the Scheduled Commercial Operation Date (as defined in the PPA) of the First Unit, it shall compensate TFS for unavoidable costs and expenses incurred by TFS as a result of such delay. No consequential damages Neither TFS nor the Issuer is liable to the other for any incidental, indirect, consequential damages, including but not limited to loss of production, loss of revenues, loss of profits, loss of an expectation of profit or revenue or loss of Capacity Payments and Energy Payments (as defined in the PPA), loss of contract, loss of goodwill, liability under other agreements, liability to third parties, as a result of the performance or non-performance or such party’s obligations under the CSTA. Assignment If required by the Financing Documents, TFS will provide its consent for the Issuer to assign its benefits and rights under the CSTA to secure any financing for the Project. The consent will also provide cure rights to the Financing Parties so that they may step into the position of the Issuer upon the occurrence of any default. Change in Law If TFS is restricted in supplying Coal (meeting the Coal Quality Specifications) to the Issuer or the Issuer is restricted in using Coal (meeting the Coal Quality Specifications) in the Facility by reason of the effect or likely effect of changes or proposed changes in the laws or regulations of Malaysia, the parties shall as promptly as possible, taking into consideration the proposed date on which such changes in Legal Requirements shall take effect, discuss and agree on any amendments to the CSTA that might reasonably be required to address any resulting need to restrict or discontinue the use of some or all of the Coal at the Facility and


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the purchase of some or all of the Coal by the Issuer hereunder. The Issuer shall in all events use best endeavours to ensure that the Issuer continues to use Coal (meeting the Coal Quality Specifications) at the Facility. Goods and services tax All amounts stated in the CSTA are exclusive of the goods and services tax, unless otherwise clearly stated that they are intended to be goods and services tax inclusive. The parties acknowledge and agree that if the goods and services tax is imposed on any supplies made by any party under the CSTA, such party shall have the right to increase the consideration payable on the supply by an amount equal to the goods and services tax imposed. Such party shall be entitled to recover the increased amount from the other party as if the same were part of the consideration of the supply. Governing law and dispute resolution

The CSTA is governed by Malaysian law. The CSTA contains a multi-tiered dispute resolution mechanism, which commences with mutual discussion between the parties. Disputes may then be referred to an expert or arbitration for determination. Arbitration is conducted in accordance with the Rules for Arbitration of the Kuala Lumpur Centre for Arbitration in Kuala Lumpur.

5.5.3 EPC Contract

The following section incorporates the key terms and conditions that are contained in the EPC Contract. In respect of defined terms in this Section 5.5.3 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the EPC Contract.

Background

The EPC Contract dated 29 August 2014 was entered into between the Issuer and the EPC Contractors as supplemented by the Supplemental EPC Contract dated 6 July 2015 (collectively, the EPC Contract), for setting up the power plant facility (which includes engineering, procurement, manufacturing, construction, testing, commissioning and warranting works) and its interconnection facilities, fuel facilities, metering equipment, transmission lines (provided that the Issuer exercises the option under the EPC Contract for the EPC Contractors to construct transmission lines before the date of issue of Notice to Proceed) and associated works as set out in the EPC Contract. The Issuer shall be entitled in its sole discretion to assign, charge or encumber any right, title, benefit or interest it has in or under the EPC Contract to any financing parties or TNB subject to prior notice of the EPC Contractors.

Contract Price The Issuer shall pay the EPC Contractors a lump-sum price of RM3,251,964,000 and USD737,053,000 and JPY55,926,005,000 comprising onshore and offshore


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payments. Payments under the EPC Contract are based on specified milestone achievements. The Issuer is responsible for payment of all goods and services tax and Malaysian customs duties. The EPC Contractors are responsible for all other taxes. In addition to the above, additional payments are also to be made by the Issuer to the EPC Contractors under the Supplemental EPC Contract (as discussed below). Contractor's obligations The EPC Contractors under the EPC Contract are under a general obligation to, among others:

(i) carry out the works and perform their obligations in the manner, on such

terms and within such time to enable the Issuer to fulfil its obligations under the PPA;

(ii) carry out the works under the EPC Contract in accordance with international good engineering practices and in compliance with applicable laws and regulations and the EPC Contract terms;

(iii) design, engineer, procure, supply, erect, construct, install, energise, test and commission the power plant facility in strict compliance with the requirements under the EPC Contract;

(iv) the EPC Contractors shall design, construct, test and commission permanent works that conform to requirements to achieve the guaranteed net power capacity and not exceeding the guaranteed net heat rate;

(v) the EPC Contractors shall not subcontract any parts of the works under the EPC Contract to any persons not on the approved subcontractors’ list without the Issuer's consent, subject to certain limitations under the EPC Contract. The EPC Contractors shall not be entitled to assign their rights under the EPC Contract to any party without the consent of the Issuer; and

(vi) complete the works so that they are fit for the purpose specified in the EPC Contract.

The parties comprising the EPC Contractors undertake their obligations under the

EPC Contract on a joint and several basis. In addition to the obligations under the EPC Contract, the EPC Contractors also agree that they will provide all reasonable assistance to the Issuer to enable the Issuer to comply with its obligations under the PPA. Variation

The Issuer may, at any time prior to the risk of any part of the power plant facility transferring from the EPC Contractors to the Issuer, direct a variation provided that such variation is related to or within the general scope of the works for the power plant facility or, if it is unrelated work, such variation does not adversely affect the integrity of the works and is technically practicable. The EPC Contractors shall not vary or alter any of the works, except in accordance with a variation directed by the Issuer.


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Ash Pond Works and Temporary Electricity Supply Under the Supplemental EPC Contract, the parties therein have agreed to provide for the possibility of carrying out potential works such as the construction of the Ash Pond Works (as defined below) and the provision of Temporary Electricity Supply, in accordance with the terms of the Supplemental EPC Contract. Option for Ash Pond Works The Project Company may exercise by notice to the EPC Contractors its option (“Ash Pond Option”) to have the EPC Contractors construct the ash pond in the manner as set out in the Supplemental EPC Contract (“Ash Pond Works”). If the Project Company exercises the Ash Pond Option within seven (7) months from the commencement of the Third LNTP Works (as defined below) (hereinafter “Scenario 1”):- (i) the EPC Contractors shall carry out the Ash Pond Works in accordance with

the specifications in the Supplemental EPC Contract as if it had at all times formed part of the works under the EPC Contract and all provisions of the EPC Contract that relate to the works shall be equally applicable to the Ash Pond Works;

(ii) the total costs for the Ash Pond Works will be RM32.80 million and USD496,750.00 (hereinafter “Scenario 1 Ash Pond Works Price”); and

(iii) the EPC Contractors shall ensure that the Ash Pond Works are completed in

accordance with the EPC Contract and in any case no later than the Scheduled Commercial Operation Date of the First Unit.

If the Project Company exercises the Ash Pond Option later than seven (7) months after the commencement of the Third LNTP Works (as defined below), but on or before thirty six (36) months prior to the Scheduled Commercial Operation Date of the First Unit (hereinafter “Scenario 2”):- (i) the EPC Contractors shall carry out the Ash Pond Works in accordance with

the specifications in the Supplemental EPC Contract as if it had at all times formed part of the works under the EPC Contract and all provisions of the EPC Contract that relate to the works shall be equally applicable to the Ash Pond Works;

(ii) the total costs for the Ash Pond Works will be an amount consisting of the Scenario 1 Ash Pond Works Price plus any additional costs that may be reasonably incurred which are to be agreed by the parties to the EPC Contract (hereafter referred to as “Scenario 2 Ash Pond Works Price”). The parties to the EPC Contract will further agree to a payment schedule for the Scenario 2 Ash Pond Works Price; and

(iii) the EPC Contractors shall ensure that the Ash Pond Works are completed in

accordance with the EPC Contract and in any case no later than the Scheduled Commercial Operation Date of the First Unit,


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If the Project Company exercises the Ash Pond Option less than thirty six (36) months before the Scheduled Commercial Operation Date of the First Unit but on or before twenty four (24) months prior to the Scheduled Commercial Operation Date of the First Unit (hereinafter “Scenario 3”).

(i) the EPC Contractors shall carry out the Ash Pond Works in accordance with

the specifications in the Supplemental EPC Contract as if it had at all times formed part of the works under the EPC Contract and all provisions of the EPC Contract that relate to the works shall be equally applicable to the Ash Pond Works except that the Ash Pond Works need not be completed by the Scheduled Commercial Operation Date of the First Unit;

(ii) the total costs for the Ash Pond Works will be an amount consisting of the Scenario 1 Ash Pond Works Price plus any additional costs that may be reasonably incurred which are to be agreed by the parties to the EPC Contract (hereinafter referred to as “Scenario 3 Ash Pond Works Price”). The parties to the EPC Contract will further agree to a payment schedule for the Scenario 3 Ash Pond Works Price; and

(iii) the parties to the EPC Contract will further agree to a date for the completion

of the Ash Pond Works. Notwithstanding the above, the Project Company is not limited or restricted from soliciting bids or prices from or awarding any contract to a third party for or in connection with the Ash Pond Works. In the event the Ash Pond Works are awarded to a third party or if the Ash Pond Option is not exercised before the expiry of twenty four (24) months prior to the Scheduled Commercial Operation Date of the First Unit then the EPC Contractors shall not be obliged to carry out the Ash Pond Works. Commencement and milestones The EPC Contractors agree that they will not: (i) commence the limited notice to proceed works until they have received the

limited notice to proceed;

(ii) commence the second limited notice to proceed works until they have received the second limited notice to proceed; and

(iii) commence any other works until they have received the relevant notice to proceed.

The Issuer gave the EPC Contractors, the limited notice to proceed which specifies the limited notice to proceed works on 13 June 2014 and the second limited notice to proceed which specifies the second limited notice to proceed works on 15 October 2014. The works under the limited notice to proceed and second limited notice to proceed form part of the works under the EPC Contract and any payment made under the limited notice to proceed or second limited notice to proceed are included in the Contract Price.


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Pursuant to the Supplemental EPC Contract, the parties therein have agreed that the EPC Contractors will recommence and complete the balance of the works under the EPC Contract, which includes the third limited notice to proceed works and the outstanding works under the limited notice to proceed works and the second limited notice to proceed works (collectively, the “Third LNTP Works”), in accordance with the EPC Contract. On 15 July 2015, the Issuer gave the EPC Contractors, the third limited notice to proceed which specifies the Third LNTP Works and the Third LNTP Works have commenced on 15 July 2015. The Issuer may give the EPC Contractors a notice to proceed for the balance of the works under the EPC Contract if, amongst others, the financial closing date has been achieved, being entry into the financing documents and the Issuer fulfilling the conditions precedent for initial drawdown (or waiver of the same by the financing parties).

The EPC Contractors must commence the works on the date specified in the notice to proceed. In the event that the notice to proceed is not issued on or before 15 October 2015, the Issuer may: (i) postpone the issuance of the notice to proceed; or (ii) issue an extended third limited notice to proceed as agreed by the parties. If the notice to proceed is not issued on or before 15 October 2015 and the Issuer does not issue an extended third limited notice to proceed, the EPC Contractors shall give notice to the Issuer and, to the extent that the postponement or failure to issue the notice to proceed was not caused or contributed by the EPC Contractors and subject to the procedures set out in the EPC Contract, the EPC Contractors are entitled to payment of costs incurred as a result of such delay and an extension of time to complete the works. The EPC Contractors shall be required to achieve the following milestones: (i) the Scheduled Commercial Operation Date of the First Unit by 15 June 2019; and (ii) the scheduled project commercial operation date by 15 December 2019 (“Substantial Completion of the power plant facility”). Extension of time The EPC Contractors are entitled, subject to the provisions of the EPC Contract, to an extension of the Scheduled Commercial Operation Date for a Unit if the achievement of the commercial operation date of the First Unit or the project commercial operation date (whichever is applicable) is or will be delayed by any of the following causes: (i) a delay event under the PPA which includes, but is not limited to, the

following: (a) an instruction by the Grid System Operator to delay the initial

operation date of a Unit beyond fifteen (15) days and such instruction was not pursuant to the default of the EPC Contractors or its subcontractors; and


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(b) the failure of TNB to energise the interconnection facilities; and

(ii) a delay event which is excused under the EPC Contract which includes, but is not limited to, the following: (a) a variation to the works by the Issuer; (b) a force majeure event; (c) a default by the Issuer under the EPC Contract; and (d) the failure by the Issuer to issue the notice to proceed on or before 15

October 2015, being the notice to proceed date. The EPC Contract contains an equivalent project relief concept whereby the parties acknowledge that where the EPC Contractors have a claim under the EPC Contract and the Issuer has an equivalent claim under the PPA, subject to specified conditions, the EPC Contractors’ claim will be limited to the relief granted to the Issuer under the PPA. Site risk and design risk The EPC Contractors acknowledge that they shall be liable for any risks associated with the site and that they shall not be entitled to any variation, extension of time or adjustment of the Contract Price for any unforeseen site conditions. The EPC Contractors acknowledge that the Issuer shall not be responsible for any error, inaccuracy or omission of any kind in the EPC Contract and any information received from the Issuer or otherwise shall not relieve the EPC Contractors from any design responsibility. Defects liability period

Certain defects liabilities or warranties are provided by the EPC Contractors in relation to the works for the power plant facility which include, but are not limited to, the following: (i) in respect of the power plant facility:

(a) the warranty period for each Unit of the power plant facility (including

the fuel facilities) shall be twenty four (24) months commencing from the Commercial Operation Date of the relevant Unit (“Initial Warranty Period for each Unit”);

(b) an extension of twenty four (24) months from the completion date of any repair and/or replacement works carried out where any parts of the power plant facility are being repaired and/or replaced during the Initial Warranty Period for each Unit (“Extended Warranty Period for the power plant facility”). Notwithstanding the foregoing, the aggregate length of the Initial Warranty Period for each Unit and the Extended Warranty Period for the power plant facility shall not exceed


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48 months from the date of the commercial operation date or power plant facility (as the case may be); and

(c) the EPC Contractors also have the responsibility to make good (at their own cost) and shall be responsible for any latent defects (as defined in the EPC contract) in each Unit or such Unit's ancillary equipment (but excluding the interconnection facilities; the transmission lines and the metering equipment) for a period of five years from the relevant Commercial Operation Date, the following equipment: (i) the steam turbine and generator;

(ii) the high-stress components of the boiler, including super

heater tubes, economizer and reheater; and

(iii) the generator transformer;

(ii) in respect of the interconnection facilities: (a) the warranty period for the interconnection facilities shall be twenty

four (24) months commencing on the completion date of the interconnection facilities (“Interconnection Facilities Defect Period”); and

(b) an extension of twenty four (24) months from the completion date of any repair and/or replacement works carried out where any parts of the interconnection facilities are being repaired and/or replaced during the Interconnection Facilities Defect Period. Notwithstanding the foregoing, the Interconnection Facilities Defect Period will not extend beyond a period of forty eight (48) months from the completion date of the interconnection facilities; and

(iii) in respect of the metering equipment:

(a) the warranty period for the metering equipment shall be twenty four

(24) months commencing on the completion date of the metering equipment (“Metering Equipment Defect Period”);

(b) an extension of twenty four (24) months from the completion date of any repair/replacement works carried out where any parts of the metering equipment are being repaired and/or replaced during the Interconnection Facilities Defect Period. Notwithstanding the foregoing, the Metering Equipment Defect Period will not extend beyond a period of thirty six (36) months from the completion date of the metering equipment; and

(c) the EPC Contractors are also responsible to make good and shall be responsible for any latent defects in the metering equipment for a period of sixty (60) months.


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Failure to pass tests on completion If the works fail to pass the performance tests (as may be repeated in accordance with the EPC Contract), the Issuer shall, without prejudice to any other right or remedy it may have under the EPC Contract or at law, at its sole discretion be entitled to the following: (i) direct that such performance tests be performed again;

(ii) if the minimum performance criteria have not been established, reject the

works (with applicable remedies thereon); or

(iii) issue a completion certificate and where applicable impose performance liquidated damages in accordance with the EPC Contract.

Liquidated damages Delay If the EPC Contractors fail to achieve the actual Commercial Operation Date of each Unit by the Scheduled Commercial Operation Date of such Unit, they shall pay the Issuer liquidated damages for each day of delay from the relevant Scheduled Commercial Operation Date of such Unit up to the occurrence of the actual Commercial Operation Date of that Unit. The EPC Contractors shall be liable to pay liquidated damages to the Issuer at the rate of RM2,300,000 per day for each day of delay from the Scheduled Commercial Operation Date of the relevant Unit until the earliest of: (i) the occurrence of the actual Commercial Operation Date of that Unit;

(ii) ninety (90) days after such Scheduled Commercial Operation Date;

(iii) the date on which the EPC Contract is terminated by the Issuer; and

(iv) the EPC Contractors' maximum liability for delay liquidated damages has

been reached. The EPC Contractors shall be liable to pay liquidated damages to the Issuer at the rate of RM2,500,000 per day for each day of delay from the date which is ninety one (91) days after the Scheduled Commercial Operation Date of the relevant Unit until the earliest of: (i) the occurrence of the actual Commercial Operation Date of that Unit;

(ii) one hundred and eighty (180) days after such Scheduled Commercial

Operation Date;

(iii) the date on which the EPC Contract is terminated by the Issuer; and

(iv) the EPC Contractors' maximum liability for delay liquidated damages has been reached.


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If the EPC Contractors fail to pay such delay liquidated damages when due, the Issuer shall be entitled to payment by setting off the relevant unpaid amount against any payments due to EPC Contractors and/or making a demand under the performance bond. The aggregate liability of the EPC Contractors to the Issuer under the EPC Contract in respect of delay liquidated damages shall not exceed fifteen percent (15%) of the Contract Price. The aggregate liability for delay and performance liquidated damages (referred to below) does not exceed twenty five percent (25%) of the Contract Price. Performance If the EPC Contractors have achieved the minimum performance criteria but have not achieved the guaranteed net power capacity and guaranteed heat rate, the EPC Contractors shall pay the Issuer liquidated damages:

(i) at the rate of RM12,000,000 per MW of shortfall and pro-rata per part thereof where the net power capacity is less than the applicable guaranteed net power capacity; and

(ii) at the rate of RM1,200,000 per kJ/kWh of shortfall and pro-rata per part thereof where the net heat rate is greater than the applicable guaranteed net heat rate.

The aggregate liability of the EPC Contractors to the Issuer under the EPC Contract in respect of performance liquidated damages shall not exceed fifteen percent (15%) of the Contract Price. The aggregate liability for delay and performance liquidated damages (referred to below) does not exceed twenty five percent (25%) of the Contract Price. Bonds Second and third limited notice to proceed bond The EPC Contractors are required to obtain an unconditional bond which is repayable on-demand to guarantee the works of the EPC Contractors under each of the second and third limited notice to proceed respectively. The second and third limited notice to proceed bonds must be issued to the Issuer within fifteen (15) days from the issue of the second and third limited notice to proceed of the construction works respectively. The amount of each of the second and third limited notice to proceed bond is for an amount equal to twenty percent (20%) of the second and third limited notice to proceed works payment respectively. The amount of the second and third limited notice to proceed bonds shall reduce completely upon receipt of the performance bond (discussed below). Performance bond The EPC Contractors are required to obtain an unconditional bond which is repayable on-demand to guarantee the performance of the EPC Contractors. The performance bond must be issued to the Issuer within fifteen (15) days from the issue of the notice to proceed of the construction works. The amount of the performance bond is for an amount equal to twenty percent (20%) of the Contract Price. The amount of the performance bond shall reduce:


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(i) to ten percent (10%) of the Contract Price upon the provision of the warranty bond by the EPC Contractors in accordance with the EPC Contract; and

(ii) completely upon fifteen (15) days after the Substantial Completion of the power plant facility.

Warranty bond and extended warranty bond The EPC Contractors are required to obtain an unconditional bond which is repayable on-demand to guarantee any defects liability of the EPC Contractors. The warranty bond must be issued to the Issuer within fifteen (15) days after the actual Commercial Operation Date of the First Unit. The amount of the warranty bond is for an amount equal to five percent (5%) of the Contract Price. The warranty bond shall be valid from the actual Commercial Operation of the First Unit until twenty four (24) months from the actual project completion date (“Warranty Bond Expiry Date”). The amount of the warranty period shall reduce to the sum of: (i) two point five percent (2.5%) of the Contract Price; and (ii) an amount which is equal to the value of the works which remain subject to

any extended defects liability period in respect of the First Unit provided that this would not apply where such value is less than USD3,000,000.

Additionally, the EPC Contractors shall obtain and deliver to the Issuer an unconditional bond which is repayable on-demand for any extended defects liability. The extended warranty bond must be issued within fifteen (15) days after the date which is twenty four (24) months after the actual Commercial Operation Date of the Second Unit and in an amount equal to the value of any works which remain subject to any extended defects liability period. Final completion bond The EPC Contractors must obtain and deliver to the Issuer an unconditional bond which is repayable on-demand as a final completion bond. The final completion bond must be issued to the Issuer within twenty eight (28) days from each of the actual Commercial Operation Date of the First Unit and the project commercial operation date. The amount of the final completion bond is for an amount equal to one hundred and fifty percent (150%) of an estimate agreed between the parties of the cost to rectify the matters listed in the initial defects list. The final completion bond is valid from the actual Commercial Operation Date of the First Unit or the project commercial operation date (as the case may be) until the date whereby the EPC Contractors have: (i) rectified all the initial defects list items; and (ii) provided five (5) hard copies and ten (10) CD-ROM versions of the complete and final copies of the operation and maintenance manuals.

Indemnities

The EPC Contractors shall indemnify the Issuer against and from any and all losses incurred, suffered, sustained or required to be paid, directly or indirectly, by, or claims made against the Issuer in connection with, among others: (i) any loss of or damage to physical property or death or injury to third parties

resulting from any act or omission of the EPC Contractors that arises out of or


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is in any manner connected with the performance of the EPC Contract caused by any act or omission, breach of contract or breach of statutory duty by the EPC Contractors;

(ii) any loss of or damage to the works, or any part thereof, after the relevant date that the risk of the works passes to the Issuer, which is caused by any act or omission or breach of the EPC Contract or breach of statutory duty by the EPC Contractors;

(iii) death or injury in respect of the EPC Contractors' officers, directors, agents, employees, contractors or subcontractors; and

(iv) any applicable environmental law or regulation arising out of the condition of the site,

except to the extent the same is attributable to the negligence or misconduct of, or breach of the EPC Contract by, the Issuer. The Issuer also provides a reciprocal indemnity to the EPC Contractors for death or injury in respect of the Issuer’s officers, directors, agents, employees, contractors or subcontractors and death or injury or property damage suffered by third parties. The EPC Contractors also indemnify the Issuer against: (i) any penalties and liability of every kind for the EPC Contractors’ breach of any

laws arising in connection with the EPC Contractor's performance of the EPC Contract;

(ii) any costs or liabilities the Issuer incurs as a result of any failure by the EPC Contractors to comply with its obligations in respect of access to the site;

(iii) all losses suffered or incurred by or brought against the Issuer arising out of any breach by the EPC Contractors;

(iv) any liability (including for clean-up costs) associated with the EPC Contractors bringing onto the site or otherwise using hazardous materials or from any environmental damage otherwise caused by the EPC Contractors’ act, omission or performance of the works;

(v) any loss arising out of or in connection with any disruption to any existing utilities or services;

(vi) any claim, liability, fine or penalty in relation to the EPC Contractors’ income tax and the EPC Contractors’ failure to pay or withhold such tax;

(vii) all claims or losses arising as a result of any breach of the Contractors’ obligation to provide and maintain the works free of any liens;

(viii) all claims of infringement of any patent, registered design, unregistered design rights, copyright, trade mark, trade name or other intellectual property right; and


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(ix) any losses which the Issuer may incur in the event that the EPC Contractors or a subcontractor fails to obtain and maintain the insurance policies required under the EPC Contract, breaches any of the provisions contained in the insurance policies and deductibles the EPC Contractors must pay.

Force majeure

If a force majeure event occurs, the affected party's obligations under the EPC Contract shall be suspended or excused to the extent their performance is affected by the force majeure event, subject to the terms of the EPC Contract. Under the EPC Contract, a force majeure event means an event, condition or circumstance or its effect which, is beyond the reasonable control and without fault or negligence of a party, and which causes a delay or disruption in the performance of any obligation under the EPC Contract despite all reasonable efforts of the party claiming a force majeure event to prevent it or mitigate its effects. Force majeure events include, among others, the following:

(i) strikes or lockouts and/or other work stoppages or industrial action;

(ii) acts of public enemies or terrorists or acts of war;

(iii) public disorders, insurrection, rebellion, sabotage, riots or violent

demonstrations;

(iv) explosions, fire, earthquakes, landslides, subsidence, sabotage and/or other natural calamities and acts of God;

(v) unusually severe weather conditions;

(vi) expropriation or compulsory acquisition by any government entity;

(vii) failure to obtain or renew any government authorisations;

(viii) any emergency conditions;

(ix) any force majeure event affecting the performance of TNB relating to construction of the TNB works;

(x) any force majeure event affecting the performance of any of the Issuer’s other construction contractors in respect of the transmission lines or Olak Lempit substation works;

(xi) In circumstances where the Issuer is permitted to purchase fuel from

someone other than TFS, any force majeure affecting that fuel supplier; and

(xii) any interruption in the supply of nominated fuel to the power plant facility due to the default or negligence of the nominated fuel supplier under the CSTA or due to a force majeure event thereunder.

The Issuer is obliged to reimburse the EPC Contractors’ costs during specified events of force majeure. The Issuer’s obligation to reimburse the EPC Contractors


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for costs relating to an event affecting the performance of TNB shall not exceed a sum of RM100,000 for each day that the EPC Contractors' obligation is suspended due to a force majeure event. The Issuer may terminate the EPC Contract with not less than thirty (30) days' notice if a force majeure event prevents either party from substantially performing any material obligations under the EPC Contract for a continuous period of one hundred and eighty (180) days. The EPC Contractors also have rights to terminate the EPC Contract where force majeure continues for more than three hundred and sixty (360) days and the Issuer and the EPC Contractors fail to agree on the costs to be paid to the EPC Contractors to continue to idle while waiting for the force majeure event to cease. Change in law The EPC Contractors may be entitled to the costs associated with a change in law in specified circumstances being: (i) where the change in law is consistent with the change in law (and threshold) permitted for compensation under the PPA; and (ii) one other change in law requiring a material capital improvement or modification, as determined by the EPC Contractors, regardless of value. Insurance The Issuer is responsible for obtaining and maintaining construction and erection all risks insurance with delay in start-up, marine cargo insurance with delay in start-up as well as the typical liability insurance policies. The EPC Contractors are responsible for obtaining insurance amongst others in respect of the goods and materials before despatch from their premises, the EPC Contractor’s equipment on the site as well as the typical liability insurance policies. Events of default and termination

The Issuer may terminate the EPC Contract on the occurrence of any one of the following events, among others: (i) the EPC Contractors fail to achieve the actual Commercial Operation Date of

the First Unit on or before one hundred and eighty (180) days following the Scheduled Commercial Operation Date of the First Unit;

(ii) the EPC Contractors fail to achieve the actual project commercial operation date on or before one hundred and eighty (180) days following the scheduled project commercial operation date;

(iii) the EPC Contractors fail to proceed with the works with due expedition and such failure, if capable of remedy, remains uncured for a period of sixty (60) days after receipt of notice from the Issuer requesting it be remedied;


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(iv) a right of termination arising against the Issuer under the PPA or CSTA as a result of negligence or misconduct of the EPC Contractors or as a result of a breach of the EPC Contract;

(v) the EPC Contractors give or offer to give any person any bribe, gift, gratuity, commission or other thing of value as an inducement or reward or do or omit to do any action, or show or do not show favour or disfavour to any person, in relation to the EPC Contract;

(vi) the EPC Contractors fail to provide the performance bond, advance payment bond or warranty bond in accordance with the EPC Contract;

(vii) the EPC Contractors abandon the works;

(viii) the EPC Contractors subcontract the whole of the works or assign, charge or encumber the EPC Contract in breach of the EPC Contract;

(ix) any of the limitations on the liability of the EPC Contractors in respect of liquidated damages or total aggregate liability of the EPC Contractors to the Issuer under the EPC Contract has been reached;

(x) an insolvency event occurs;

(xi) failure of the EPC Contractors to pay undisputed liquidated damages or other undisputed amounts payable to the Issuer within the time periods specified in the EPC Contract; and

(xii) failure by the EPC Contractors to comply with any obligation of the EPC Contract and such failure, if capable of remedy, is not cured for a period of sixty (60) days after receipt of notice from the Issuer requesting it be remedied.

On termination by the Issuer due to any events listed above, the Issuer may elect to: (i) procure that another contractor completes the works, (ii) take over the works and receive a reduction in the Contract Price which is fair and reasonable in the circumstances; (iii) take over the works with a view to sell them to TNB under the terms of the PPA at such value as determined and recover from the EPC Contractors as part of a general damages claim the difference between the value received under the PPA and the Contract Price paid to the EPC Contractors prior to termination; or (iv) reject the works and the EPC Contractors shall refund instalments paid on the Contract Price which relate to the works which have been rejected and to dismantle and remove the portion of rejected works. The Issuer may also terminate the EPC Contract in writing with immediate effect, if:

(i) the PPA is terminated for any reason;

(ii) the Issuer determines, through no reason attributable to the EPC Contractors,

that it is unable to issue the notice to proceed; and

(iii) for any other reason, at its convenience.


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In the event of termination unrelated to the EPC Contractors’ default, the Issuer shall pay the EPC Contractors reasonable demobilisation costs, costs to date and profit on those costs as described in the EPC Contract. EPC Contractors may terminate the EPC Contract on the occurrence of any one of the following events, among others: (i) failure by the Issuer to pay in accordance with the EPC Contract any

undisputed amounts stated in a notice issued by EPC Contractors;

(ii) the occurrence of an insolvency event involving the Issuer;

(iii) the Issuer does not issue the second limited notice to proceed on or before the second limited notice to proceed date or issue the notice to proceed on (the Issuer has given the EPC Contractors the second limited notice on 15 October 2014) or before the final notice to proceed date (i.e. 15 April 2016); and

(iv) the entire works are suspended other than for the reasons prescribed under the EPC Contract for a period of more than one hundred and eighty (180) days.

Limitation of liability Under the EPC Contract, the aggregate liability of the EPC Contractors to the Issuer: (i) shall not exceed one hundred percent (100%) of the Contract Price (with

specified carve outs from the limit on liability);

(ii) in respect of the delay liquidated damages, shall not exceed fifteen percent (15%) of the Contract Price;

(iii) in respect of the performance liquidated damages, shall not exceed fifteen percent (15%) of the Contract Price; and

(iv) in respect of aggregate liability for delay and performance liquidated damages, shall not exceed twenty five percent (25%) of the Contract Price.

Financing parties

The EPC Contractors will consent or procure consent to the assignment by way of security of the Issuer’s rights under various agreements, including the EPC Contract, the bonds to be provided by the EPC Contractors thereunder and the EPC Contractors will enter into a direct agreement which will include cure, step-in and novation rights and any other provisions reasonably required by any financing party in relation to a project of this type.

The EPC Contractors shall cooperate promptly with the Issuer and the financing parties to meet all the reasonable requirements of the financing parties. The EPC Contractors will reasonably cooperate in the establishment and implementation of procedures dictated by the financing documents for the disbursement of funds thereunder.


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The Issuer and EPC Contractors recognise that the financing parties may from time to time require alterations or additions to the terms of the EPC Contract as a condition of their financing and agree to cooperate in making appropriate alterations and additions to the EPC Contract required by the financing parties. The EPC Contractors shall, if required by the Issuer, liaise and co-operate with any financing party, (and its representatives and advisers) and provide it with copies of all notices, reports and other documents if provides to the Issuer under the EPC Contract, together with all information in connection with the works which it may reasonably require. The EPC Contractors shall notify the Issuer of any matter in relation to the works which may materially affect the respective interests of any financing party. The EPC Contractors will ensure that each insurance policy described under the EPC Contract (except foreign workmen’s compensation insurance, motor vehicle insurance and aircraft and watercraft liability) names, amongst others, TNB and the financing parties as additional insureds, and includes a waiver of subrogation rights against, amongst others, TNB and the financing parties. The EPC Contractors acknowledge and agree that they are aware of the terms and conditions of the financing documents, and the EPC Contractors will carry out their obligations under the EPC Contract and comply with the Issuer’s obligations under the financing documents so as to ensure the Issuer does not breach any of its obligations under the financing documents.

Dispute resolution The EPC Contract is governed by the laws of Malaysia. In the event of any dispute, a party may serve on the other a notice of dispute and the parties shall meet any attempt to resolve the dispute in good faith on or before the date that is 30 days after such notice of dispute was received by the other party. Any dispute, controversy or claim arising out of or relating to the EPC Contract that cannot be resolved amicably shall be settled either by expert determination in respect of technical issues or by arbitration in accordance with the Rules of Arbitration of the Kuala Lumpur Regional Centre for Arbitration and the seat of arbitration shall be Kuala Lumpur, Malaysia. If the dispute is related to an issue or dispute under the PPA, the parties shall endeavour to appoint the same arbitrator(s) appointed under the PPA.

5.5.4 Sale and Purchase Agreement The following section incorporates the key terms and conditions that are contained in

the SPA. In respect of defined terms in this Section 5.5.4 only, where the same is not defined

elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the SPA.


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Overview Jalur Jernih (hereinafter known as the “Vendor”) is the registered proprietor of the two (2) pieces of leasehold land held under: (i) Pajakan Negeri Hakmilik No. 45938, Lot No. 10878 (“Land-1”); and (ii) Pajakan Negeri Hakmilik No. 45939, Lot No. 10879 (“Land-2”), both in Mukim Jimah, Daerah Port Dickson, Negeri Sembilan measuring approximately 1,214,000 square metres and 869,000 square metres in area respectively (collectively, “Land”). The Vendor and JEP (hereinafter known as the “Purchaser”) have entered into the Sale and Purchase Agreement dated 13 June 2014 as supplemented by the First Supplemental SPA dated 11 September 2014 and the Second Supplemental SPA dated 8 July 2015 (collectively, the SPA) for the sale and purchase of a part of the Land measuring approximately 257.019 acres in aggregate (the “Property”) in accordance with the terms of the SPA.

Encumbrances As at the date of the SPA, Land-1 is free from encumbrances save for the following: (i) a lease over Land-1 by the Vendor in favour of JEV registered on 28 April

2005 vide Presentation No. 10066/2005 (“Existing Land-1 Lease”) pursuant to a lease agreement dated 14 October 2004 and a supplementary agreement to the lease agreement dated 12 April 2005 entered between the Vendor and JEV (collectively, “Lease Agreement”);

(ii) a charge over the Existing Land-1 Lease by JEV in favour of AmMerchant

Bank Berhad (Company No. 23742-V) registered on 3 August 2005 vide Presentation No. 18466/2005 (“Existing Charge over Land-1 Lease”); and

(iii) a power of attorney granted by Vendor in favour of JEV vide a Power of

Attorney dated 14 October 2004 registered at Kuala Lumpur High Court vide Registration No. 83979/04 (“Existing Land-1 PA”).

As at the date of the SPA, Land-2 is free from encumbrances save for the following:

(i) a lease over Land-2 by the Vendor in favour of JEV registered on vide

Presentation No. 10066/2005 (“Existing Land-2 Lease”) pursuant to the Lease Agreement;

(ii) a charge over the Existing Land-2 Lease by JEV in favour of AmMerchant

Bank Berhad (Company No. 23742-V) registered on 3 August 2005 vide Presentation No. 18466/2005 (“Existing Charge over Land-2 Lease”); and

(iii) a power of attorney granted by Vendor in favour of JEV vide a Power of

Attorney dated 14 October 2004 registered at Kuala Lumpur High Court vide Registration No. 83979/04 (“Existing Land-2 PA”).


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Vacant Possession of Property Unless otherwise requested earlier by the Purchaser, vacant possession of the

Property shall be delivered by the Vendor to the Purchaser on the Unconditional Date.

The Vendor agrees and confirms that in the event the Purchaser requests for vacant

possession of the Property to be delivered by the Vendor to the Purchaser at any time prior to the Unconditional Date to enable the Purchaser to commence all such works as may be necessary for the construction of the Facility, the Vendor shall deliver vacant possession of the Property to the Purchaser on the date requested by the Purchaser and the Purchaser undertakes to pay the Balance Deposit to the Vendor’s Solicitors as stakeholders in accordance with Clause 4.1.3 of the SPA.

Conditions Precedent The sale, purchase and transfer of the Property under the SPA are conditional upon the following conditions precedent being fulfilled or obtained:

(i) the PPA having been executed by the Purchaser and TNB; (ii) the CSTA having been executed by TFS and the Purchaser; and (iii) the Vendor receiving approval from all of JEV’s Financiers for the disposal of

the Property in accordance with the terms contained in the SPA,

on or before the expiry of three (3) months from the date of SPA; and

the following being fulfilled or obtained:

(i) the receipt by the Vendor of the approval of the State Authority for the subdivision of the Land (“Subdivision Approval”) so as to obtain the issuance of the individual documents of title in respect of the Property (collectively, “Sub-divided Title”) and the satisfaction of all conditions imposed by the State Authority relating to the Subdivision Approval which includes but is not limited to the payment of any premiums payable;

(ii) the receipt by JEV of the approval of the Minister for the creation of any

charge, lien or securities on the Property pursuant to the terms herein, if required;

(iii) the receipt by the Purchaser of the approval from the Economic Planning Unit

for the purchase of the Property, if required; (iv) the receipt by the Vendor of the approval from the State Authority for the

transfer of the Property in favour of the Purchaser pursuant to the restriction in interest for the transfer of the Property, if any (“Transfer Approval”);

(v) the receipt by the Purchaser of the approval from the State Authority for the

creation of the charge over the Property in favour of the Purchaser’s Financier pursuant to the restriction in interest for the charge of the Property, if any (“Charge Approval”); and


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(vi) the Financial Closing having been achieved by the Purchaser pursuant to the

PPA, within a period of twelve (12) months from the date of the SPA or such further extended period as may be agreed in writing between the parties of the SPA. The sale and purchase of the Property under the SPA shall become unconditional on the date the last of the conditions precedent have been fulfilled or, as the case may be, waived mutually by the parties to the SPA to the extent as permitted by law (in which event the condition precedent that is so waived shall be deemed fulfilled) (“Unconditional Date”).

Remaining Conditions Precedent As at the date of the Second Supplemental SPA, the following Conditions Precedent remain unfulfilled:

(i) the receipt by the Purchaser of the approval from the Economic Planning Unit

for the purchase of the Property, if required; (ii) the Transfer Approval; (iii) the Charge Approval; and (iv) the Financial Closing date having been achieved by the Purchaser pursuant

to the PPA,

(collectively “Remaining Unfulfilled Conditions Precedent”).

Pursuant to the Second Supplemental SPA, the parties agree that on the signing of the Second Supplemental SPA, the Remaining Condition Precedent in item (iv) have been waived as a Condition Precedent and cease to be a Condition Precedent. Further to the foregoing, under the Second Supplemental SPA, the parties therein agree that the Remaining Unfulfilled Conditions Precedent in items (i), (ii) and (iii) shall cease to be a Condition Precedent. Under the Second Supplemental SPA, the Purchaser has agreed that it shall be responsible for obtaining all required approvals in respect of the Remaining Unfulfilled Conditions Precedent. Notwithstanding the same, the parties therein agree that in the event any of the Remaining Unfulfilled Conditions Precedent in items (i) and (ii) above are not fulfilled or obtained after the Balance Purchase Price has been paid, the Vendor has expressly acknowledged therein that on and from the Completion Date, the Purchaser is the beneficial owner of the Property and that the Vendor shall hold the legal title to the Property on trust as bare trustee for and on behalf of the Purchaser absolutely until the expiry of the leasehold period of the Property or the disposal of the Property by the Purchaser to a third party, whichever is earlier.

Discharge Documents and Lease Surrender Documents

The Vendor shall deliver or cause to be delivered to the Purchaser’s Solicitors or the Purchaser’s Financier’s solicitors at least ten (10) Business Days prior to the


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Scheduled Financial Closing Date, a letter of undertaking from JEV’s Financiers addressed to the Purchaser or the Purchaser’s Financier (“JEV’s Financiers’ Undertaking”) containing, inter alia:

(i) JEV’s Financiers’ undertaking to cause or procure the Vendor to comply with

the terms of the SPA for the sale of the Property to the Purchaser in the event JEV’s Financiers take any steps to enforce the Existing Charge over Land Lease.

(ii) JEV’s Financiers undertaking to deliver or cause to be delivered to the

Purchaser or the Purchaser’s Financier the following, within ten (10) Business Days upon the issuance of the Sub-divided Title and the receipt by the JEV’s Financiers of the same, provided that an amount equal to the full Purchase Price shall have been paid by the Purchaser pursuant to terms of the SPA:

(a) the original Sub-divided Title; (b) all documents required to obtain a full and complete discharge of the

Existing Charge over Land Lease in respect of the Property and such other encumbrances as may be created by JEV’s Financiers over the Property.

(collectively, “Discharge Documents”).

Within ten (10) Business Days from the date of the issuance of the Sub-divided Title and the receipt of the same by JEV’s Financiers, the Vendor shall deliver or procure the delivery of the following to the Purchaser’s Solicitors or the Purchaser’s Financier’s solicitors, as the case may be:

(i) the Discharge Documents; (ii) all documents as may be required to surrender the Existing Land

Lease over the Property (“Lease Surrender Documents”); and (iii) the relevant registration fees and penalty (if any) for the registration of

the Discharge Documents and the Lease Surrender Documents with the relevant land registry, and the Purchaser’s Solicitors or the Purchaser’s Financier’s solicitors shall be authorized to present the same for registration at the relevant land registry,

and the Purchaser’s Solicitors or the Purchaser’s Financier’s solicitors shall be authorized to present the same for registration at the relevant land registry.

5.5.5 Sub-Lease Agreement

The following section incorporates the key terms and conditions that are contained in

the SLA. In respect of defined terms in this Section 5.5.5 only, where the same is not defined

elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the SLA.


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Overview

Pursuant to the SPA, Jalur Jernih as the Vendor shall subdivide the Land (as defined in Section 5.4 above) and transfer the Sub-divided Title (as defined in Section 5.4 above) to the Property (as defined in Section 5.4 above) in favour of JEP as the Purchaser upon the terms and conditions contained therein. Pending the completion of the sale, purchase and transfer of the Property, Jalur Jernih as the registered proprietor of the Land, JEV as the Sub-Lessor and JEP as the Sub-Lessee have entered into the Sub-Lease Agreement on 13 June 2014 as supplemented by the Supplemental SLA dated 8 July 2015 (collectively, the SLA) for the sub-lease over the Property by the Sub-Lessor to the Sub-Lessee in accordance with the terms of the SLA.

Lease Term The sub-lease of the Property shall be for a term commencing from the Sub-Lease Unconditional Date (as defined in Section 5.5.5.6 below) and expiring on 31 August 2044.

Permitted Use The Sub-Lessee shall use the Property for the purposes of the Project and any related use only.

Rent Free Subject to the Consideration payable for the purchase of the Property under the SPA, no rental is required to be payable by the Sub-Lessee to the Sub-Lessor in respect of the Sub-Lease. Vacant Possession The parties to the SLA acknowledge that the delivery of the vacant possession under the SPA to the Sub-Lessee shall be deemed as sufficient delivery of the vacant possession under the Sub-Lease. Jalur Jernih and the Sub-Lessor further acknowledge that in the event the Sub-Lessee requests under the SPA for vacant possession of the Property to be delivered to the Sub-Lessee at any time prior to the Unconditional Date to commence all work as may be necessary for the construction of the Facility, the vacant possession of the Property shall be delivered to the Sub-Lessee.

Conditions Precedent

The SLA is conditional upon the following conditions precedent being fulfilled or

obtained:

(i) the PPA having been executed by the Sub-Lessee and TNB; (ii) the CSTA having been executed by TFS and the Sub-Lessee; (iii) the receipt by the Sub-Lessor of the approval of the Minister for the creation

of any charge, lien or securities on the Property pursuant to the terms of the SLA, if required;


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(iv) the receipt by the Sub-Lessor of the approval of Sub-Lessor’s Financiers in

respect of the Sub-Lease and the charge of the Sub-Lease by the Sub-Lessee in favour of the Sub-Lessee’s Financiers;

(v) the receipt by the Sub-Lessor of the State Authority’s consent in respect of

the Sub-Lease pursuant to the restriction in interest endorsed on the Title (“Consent To Sub-Lease”); and

(vi) the receipt by the Sub-Lessee of the State Authority’s consent in respect of

the charge of the Sub-Lease by the Sub-Lessee in favour of the Sub-Lessee’s Financier (“Consent To Charge”),

within a period of three months from the date of the SLA.

The SLA has become unconditional on 7 August 2015 as the Balance Purchase Price was paid on this date. Remaining Conditions Precedent As at the date of the Supplemental SLA, the Condition Precedent in item (vi) above (Consent To Charge) remains unfulfilled (“Sub-Lease Remaining Unfulfilled Condition Precedent”). Pursuant to the Supplemental SLA, the Remaining Unfulfilled Condition Precedent is to be fulfilled on or before 13 September 2015 or such further extended period as may be agreed in writing between the parties to the SLA. The SLA has become unconditional on 7 August 2015 as the Balance Purchase Price was paid on this date. Notwithstanding the above, upon payment of the Balance Purchase Price, the Sub-Lease Remaining Unfulfilled Condition Precedent is deemed waived by the parties to the SLA and the Sub-Lease Unconditional Date is deemed to have occurred on the date the Balance Purchase Price is paid by the Sub-Lessee.

No Termination

The Sub-Lessor is not entitled to terminate the SLA unless the Sub-Lessee fails to pay the Consideration in which event the SLA shall be terminated upon notice being given by the Sub-Lessor.

Assignment No party to the SLA may assign its rights title and/or interest under the SLA without the prior written consent of the other party to the SLA, save that the Sub-Lessee shall be entitled to assign all its rights title and/or interest under the SLA to the Sub-Lessee’s Financier without the prior written consent of the Sub-Lessor.

5.5.6 Offset Agreement

As part of the requirement from the Commission under the request for proposal issued in April 2014 inviting the bid for the Project, the Issuer is required to facilitate and promote transfer of technology, skills and know-how development and to provide the tools for future human capital development. To fulfil this requirement, the Issuer


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has entered or proposes to enter into the Offset Agreement and Offset Management Services Agreement. The Offset Agreement is the agreement between the Issuer and Toshiba Corporation in relation to provision of offset activities, benefits, packages and programmes in compliance with the Treasury Circular on Policy and Guidelines on Offset Programme in Government Procurement published on 19 June 2014 (as may be amended from time to time) (“Offset Policy”) including the provision and development of a power plant simulator associated with the Project.

5.5.7 OMSA

Offset Management Services Agreement is the agreement between the Issuer and MIGHT in relation to performing the offset management services and setting up of the Offset Management Unit (“OMU”) for the Issuer in compliance with the Government’s Offset Policy. The OMU function is to manage and co-ordinate the offset programme activities implementation for JEP based on the Malaysian Offset Program Management Framework and becomes the integral point for all the Issuer’s offset project management activities.

5.5.8 Tranmission Line EPC Contract

Overview The Issuer and HG Power Transmission Sdn Bhd (Company No. 172006-V) as the sub-contractor (also known as the TL EPC Contractor) have entered into the Transmission Line EPC Contract on 10 July 2015, whereby the Issuer has appointed the sub-contractor to design and execute the works and associated works in connection with the Transmission Line, in accordance with the Transmission Line EPC Contract.

Contract Price The contract price is the lump sum amount of RM152,000,000.00 specified in Appendix

B (Milestone Payment and Contract Price Schedule) of the Transmission Line EPC Contract as may be adjusted in accordance with the Transmission Line EPC Contract.

Commencement The TL EPC Contractor will commence the works under the Transmission Line EPC Contract upon receipt of the notice to proceed (as detailed in the Transmission Line EPC Contract).

Contractor's General Obligations The TL EPC Contractor under the Transmission Line EPC Contract is under a general obligation to design and execute the works: (a) and perform its obligations under the Transmission Line EPC Contract in such a

manner, on such terms and within such times as will enable the Project Company to fulfil its obligations with respect to the Project and so that no breach


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by the TL EPC Contractor in relation thereto shall constitute, cause or contribute to any breach by the Project Company of any of its obligations or warranties or constitute, cause or contribute to any liability of the ProjectCompany. Notwithstanding the foregoing, the TL EPC Contractor shall not be responsible for any negligence or wilful act by the Project Company which is not caused or contributed to by any act or omission of the TL EPC Contractor;

(b) in strict compliance with the requirements of the Transmission Line EPC

Contract, including Appendix A (Functional Technical Specifications) and Appendix A1 (PPA Requirements) of the Transmission Line EPC Contract, prudent utility practices and the Transmission Line EPC Contract and so as to be compatible with the related works and the grid system. The TL EPC Contractor shall not be entitled to rely on information or documentation supplied by the Project Company and will bear all design risk;

(c) so as to achieve the substantial completion on or before the substantial

completion date under the Transmission Line EPC Contract.

Performance Bond The TL EPC Contractor shall within 15 days of the notice to proceed, and as a precondition to any payment due to the TL EPC Contractor from the Project Company on or after the issue of the notice to proceed, obtain and deliver to the Project Company an unconditional on-demand performance bond in favour of the Project Company (i) from an institution with a credit rating equivalent to at least Standard & Poor's rating of A- or approved in writing by the Project Company; and (ii) in an amount equal to ten percent (10%) of the contract price. The Project Company may make a demand under and have recourse to the performance bond if: (i) the performance bond is due to expire prior to the substantial completion date

28 February 2018 and the TL EPC Contractor has not provided a replacement by a date no later than thirty (30) days prior to its expiry having been given reasonable advance written notice by the Project Company;

(ii) any institution which has provided a performance bond ceases to have a credit

rating with Standard and Poor's equivalent to the credit rating held by that institution upon the issue of the performance bond and the TL EPC Contractor has not provided a replacement by a date no later than fifteen (15) business days (or, in circumstances where there is a financial market disruption, such longer period granted by the Project Company acting reasonably) following notice from the Project Company of its intention to call upon any performance bond;

(iii) the TL EPC Contractor fails to pay any amount due to the Project Company

including by way of liquidated damages or to honour any undertaking which relates to the design and execution of the works within the time specified in the Transmission Line EPC Contract having been given reasonable advance written notice or in the case of a failure to pay liquidated damages within fifteen (15) days of the TL EPC Contractor's receipt of the notice from the Project Company in accordance with the Transmission Line EPC Contract;


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(iv) TNB calls upon the performance bond which the Project Company is required to provide pursuant to the PPA for reasons attributable to a contractor event of default under the Transmission Line EPC Contract; or

(v) a contractor event of default under the Transmission Line EPC Contract occurs

in relation to the works under the Transmission Line EPC Contract which has been notified to the TL EPC Contractor.

In the event that the Project Company calls upon the performance bond for any of the reasons set out in items (i) and (ii) above, the Project Company shall pay back the amount received under the call on the performance bond, within fifteen (15) days of the TL EPC Contractor providing a replacement performance bond which complies with the requirements of the Transmission Line EPC Contract. If, in accordance with the Transmission Line EPC Contract, the contract price is increased by more than five percent (5%) of the contract price applicable at the effective date of the Transmission Line EPC Contract, then the TL EPC Contractor shall deliver to the Project Company duly executed additional performance bond for the amount of ten percent (10%) of the amount so increased, and otherwise satisfying the requirements of as set out in the Transmission Line EPC Contract. Liquidated damages In the event that the Project Company suffers actual damages as a result of the TL EPC Contractor’s failure to achieve the relevant key events i.e. Key Event 1 and Key Event 2 as set out under the Transmission Line EPC Contract, the TL EPC Contractor is obligated to pay the Project Company liquidated damages as follows:

Key Date Liquidated Damages Payable Per Day

Maximum Liquidated Damages under Each Key Date

Key Date 1 RM227,400 RM22.74 million

Key Date 2 RM1,000 RM60,000

Provided that the total liquidated damages payable by the TL EPC Contractor under the Transmission Line EPC to the Project Company shall not exceed fifteen percent (15%) of the contract price.

5.5.9 Transmission Works Agreement Overview

The Issuer and TNB have entered into the Transmission Works Agreement on 9 July 2015 (TWA) for the design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing and commissioning of the IPP works (as defined in the TWA). Pursuant to the TWA, the Issuer shall be the contractor to TNB to undertake the IPP Works and the payment from TNB to the Issuer shall mirror the payment milestones set out therein.


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Contract Sum TNB shall pay the Issuer the contract sum in accordance with the TWA which is an all-inclusive fixed lump sum price of RM144,050,000.00, inclusive of all works necessary for the execution and completion of the whole IPP Works (as defined in the TWA) which as a whole and each and every part thereof will be adequate, sufficient, fit for purpose and will meet in all respects the requirements of the TWA.

Retention Money TNB shall at all times be entitled to deduct and retain from each of the amounts invoiced in accordance with the TWA, an amount equal to ten percent (10%) of such amounts invoiced until the amount retained shall reach the limit of ten percent (10%) of the contract sum as retention money.

Commencement Date The commencement date is the date notified by the Issuer to TNB on which

construction work at the Site has started.

Project Company’s General Obligations

The Issuer shall, with due care and diligence, design, manufacture, deliver to Site, erect, test and commission the Plant and carry out and complete the IPP Works (as defined in the TWA) (including all ancillary works) in accordance with the TWA and prudent utility practices and, in compliance therewith provide all necessary IPP's Equipment (as defined in the TWA) and facilities, materials, goods, supervision, labour and standards of workmanship of the quality and standard specified in the TWA in every respect.

5.5.10 Transmission Works EPC Contract

Overview The Issuer and Transgrid Ventures Sdn Bhd (Company No. 491232-A) as the sub-contractor (also known as the TW EPC Contractor) have entered into the Transmission Works EPC Contract on 10 July 2015, whereby the Issuer has appointed the sub-contractor to design and execute the works and associated works in connection with the IPP Works (as defined in the TWA), in accordance with the Transmission Works EPC Contract.

Contract Price The contract price is the lump sum amount RM133,000,000.00 specified in Appendix B

(Milestone Payment and Contract Price Schedule) of the Transmission Works EPC Contract as may be adjusted in accordance with the Transmission Works EPC Contract.

Commencement The TW EPC Contractor will commence the works under the Transmission Works EPC Contract upon receipt of the notice to proceed (as detailed in the Transmission Works EPC Contract).


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Contractor's General Obligations The TW EPC Contractor under the Transmission Works EPC Contract is under a general obligation to design and execute the works: (a) and perform its obligations under the Transmission Works EPC Contract in such

a manner, on such terms and within such times as will enable the Project Company to fulfil its obligations with respect to the Project and so that no breach by the TW EPC Contractor in relation thereto shall constitute, cause or contribute to any breach by the Issuer of any of its obligations or warranties or constitute, cause or contribute to any liability of the Issuer. Notwithstanding the foregoing, the TW EPC Contractor shall not be responsible for any negligence or wilful act by the Issuer which is not caused or contributed to by any act or omission of the TW EPC Contractor;

(b) in strict compliance with the requirements of the Transmission Works EPC

Contract, including Appendix A (Functional Technical Specifications) and Appendix A1 (TWA Requirements) of the Transmission Works EPC Contract, prudent utility practices and the Transmission Works EPC Contract and so as to be compatible with the related works and the grid system. The TW EPC Contractor shall not be entitled to rely on information or documentation supplied by the Issuer and will bear all design risk;

(c) so as to achieve the substantial completion on or before the substantial

completion date as set out under the Transmission Works EPC Contract.

Performance Bond The TW EPC Contractor shall within twenty eight (28) days of the notice to proceed, and as a precondition to any payment due to the TW EPC Contractor from the Issuer on or after the issue of the notice to proceed, obtain and deliver to the Issuer an unconditional on-demand performance bond in favour of the Issuer (i) from an institution with a credit rating equivalent to at least Standard & Poor's rating of A- or approved in writing by the Issuer; and (ii) in an amount equal to five percent (5%) of the contract price. The Issuer may make a demand under and have recourse to the performance bond and/or the retention sum under the Transmission Works EPC Contract if: (i) the performance bond is due to expire prior to the substantial completion date

28 February 2018 and the TW EPC Contractor has not provided a replacement by a date no later than thirty (30) days prior to its expiry having been given reasonable advance written notice by the Issuer;

(ii) any institution which has provided a performance bond ceases to have a credit

rating with Standard and Poor's equivalent to the credit rating held by that institution upon the issue of the performance bond and the TW EPC Contractor has not provided a replacement by a date no later than fifteen (15) business days (or, in circumstances where there is a financial market disruption, such longer period granted by the Issuer acting reasonably) following notice from the Issuer of its intention to call upon any performance bond;


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(iii) the TW EPC Contractor fails to pay any amount due to the Issuer or to honour any undertaking which relates to the design and execution of the works within the time specified in the Transmission Works EPC Contract having been given reasonable advance written notice;

(iv) the TW EPC Contractor fails to pay any liquidated damages (as set out in the

Transmission Works EPC Contract) within the time specified in the Transmission Works EPC Contract;

(v) TNB makes a demand under or has recourse to any security or retention monies provided by the Issuer under the TWA for any reason not directly caused by the Issuer;

(vi) a contractor event of default under the Transmission Works EPC Contract occurs in relation to the works under the Transmission Works EPC Contract which has been notified to the TW EPC Contractor.

In the event that the Issuer calls upon the performance bond for any of the reasons set out in items (i) and (ii) above, the Issuer shall pay back the amount received under the call on the performance bond, within fifteen (15) days of the TW EPC Contractor providing a replacement performance bond which complies with the requirements of the Transmission Works EPC Contract. If, in accordance with the Transmission Works EPC Contract, the contract price is increased by more than five percent (5%) of the contract price applicable at the effective date of the Transmission Works EPC Contract then the TW EPC Contractor shall deliver to the Issuer duly executed additional performance bond for the amount of five percent (5%) of the amount so increased, and otherwise satisfying the requirements of as set out in the Transmission Works EPC Contract.

Liquidated damages In the event that the Issuer suffers actual damages as a result of the TW EPC Contractor’s failure to achieve the substantial completion on or before the substantial completion date 28 February 2015 under the Transmission Works EPC Contract, the TW EPC Contractor is obligated to pay the Issuer liquidated damages of zero point thirty three percent (0.33%) of the contract price for every day or part of a day which shall elapse between the substantial completion date and the date stated in the completion certificate as the date upon which the works under the Transmission Works EPC Contract achieved the substantial completion.

5.5.11 Operations and Maintenance Agreement

Overview The Issuer and TNB Remaco as the operator (the “Operator”) will enter into the O&M Agreement, whereby the Issuer has appointed the Operator to execute the works under the O&M Agreement; namely, the services and procurement of parts including operation and maintenance and repair and supply of parts and coal management, in accordance with the O&M Agreement.


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Term The term of the O&M Agreement shall commence on the date of the O&M Agreement and shall continue for a period being the later of: (a) twenty five (25) years from the Commercial Operation Date of the first

generating Unit; and (b) the expiry of the PPA; unless otherwise extended or terminated in accordance with the terms of the O&M Agreement.

Payment In consideration of the Operator performing the works under the O&M Agreement, the Issuer shall pay the Operator: (a) Mobilisation Cost A Mobilisation Cost according to the payment schedule set out in Schedule 2

of the O&M Agreement; (b) Fixed Operating Cost From the Commercial Operation Date (as defined in the EPC Contract) for the

duration of the term of the O&M Agreement, the Issuer shall pay the Operator the Fixed Operating Cost, as per Schedule 2 of the O&M Agreement for the works under the O&M Agreement in twelve (12) equal monthly instalments at the end of each month of each operating year during the Term. The Fixed Operating Cost shall be adjusted annually in accordance with Clause 7.4 of O&M Agreement to reflect the increased cost of the works under O&M Agreement.

(c) Reimbursables The Issuer shall pay the reimbursables directly to any third party or the

Operator if borne first by the Operator. The reimbursables will be on an actual incural basis without any mark-up. The reimbursables must be reflected in the approved annual operation and maintenance programme in accordance with the O&M Agreement including any approved revision by the Issuer.

Operator's Obligation The Operator’s obligation is to carry out the works under the O&M Agreement and in particular to operate, maintain and repair the Facility. Without prejudice to the generality of the foregoing, the Operator shall, inter alia:

(i) ensure that the works under the O&M Agreement shall be performed in

accordance with the O&M Agreement, the Grid Code, Operation and Maintenance Manuals, government requirements, the Generation Licence, Design Limits, the Project Documents, good engineering standards and


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practices, insurance requirements, applicable laws and the terms and conditions of the O&M Agreement;

(ii) pay all taxes and duties arising from the performance of the works under the

O&M Agreement (including but not limited to sales taxes and duties on imported equipment, parts and materials), except as provided under the O&M Agreement and save for equipment, parts and materials of which title shall vest with the Issuer under the O&M Agreement;

(iii) undertake recruitment, employment and training of its employees in sufficient

numbers to be technically competent to ensure the continuous operation and maintenance of the Facility and to keep its employees aware of and trained in fire, first-aid and emergency procedures and maintain first aid and fire-fighting facilities;

(iv) to provide the consultancy services as set out in the O&M Agreement; (v) prepare and implement procedures to operate and maintain the Facility,

taking into account the provisions of the PPA; (vi) provide at its cost and expense for the performance of the works under the

O&M Agreement and keep in force relevant insurance including worker's compensation for its employees, and its motor vehicles as detailed in the O&M Agreement;

(vii) allow the Issuer, Grid System Operator (as described in the PPA), TNB or

Government authority entry to the Facility, upon reasonable notice, to either conduct inspections, operating tests or other activities reasonably necessary for the purposes of the O&M Agreement or the PPA;

(viii) pay all fines or penalties imposed by any Government authority in relation to

non-compliance with Government requirements for which the Operator has direct control;

(ix) witness and certify on behalf of the Issuer, all calibration and readings of

water, fuel and electricity meters by the relevant authorities and appropriate third parties including but not limited to TNB;

(x) prepare the operation and maintenance programme and operation budget on

an annual basis in accordance with the O&M Agreement; (xi) establish and implement safety procedures of the Facility, consistent with the

O&M Agreement; (xii) obtain and keep in force its own business licence and those Government

requirements required for the personnel to operate and maintain the Facility; and for its equipment, spare parts, instruments, and other materials required for the performance of the works under the O&M Agreement;

(xiii) review and verify invoices received for fuel delivered to the Facility and other

information reasonably required by the Issuer; and manage the fuel requirement of the Facility;


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(xiv) receive and stock all tools, goods and consumable materials necessary for the operation and maintenance of the Facility;

(xv) implement a computerised plant maintenance management system for the

Facility; (xvi) implement a computerised accounting system including invoicing, billing and

payment for the Facility; (xvii) prepare monthly reports as to the progress of the obligations specified under

the O&M Agreement; (xviii) obtain work permits and visas (if necessary) for its foreign personnel including

its consultants; (xix) obtain from the Government authorities all necessary approvals for the

equipment, spare parts, instruments and other material required to perform the works in accordance with its obligations under the O&M Agreement, save for approvals which are required to be obtained by the Issuer in its capacity as the owner of the Facility;

(xx) pay all demurrage costs at the discharge port to the extent that such costs are

incurred by the Issuer and are attributable to the Operator subject to the annual limit set out in Clause 14.5 of the O&M Agreement (the Issuer shall advise the Operator of all demurrage costs which it has incurred by issuing an invoice for such costs and the Operator must pay such costs to the Issuer); and

(xxi) review and verify invoices received and other information reasonably required

by the Issuer under the CSTA. Bottom and Fly Ash Disposal

The Operator must arrange for the collection and the disposal of all bottom ash and fly ash generated in or at the Facility, from the Commercial Operation Date until the end of the term of the O&M Agreement in accordance with the applicable laws and Government requirements. In the event the bottom ash is required to be transported from the hopper and/or fly ash is required to be transported from the silo then all cost relating to such transportation shall be borne by the Issuer. The Operator will on the instructions of the Issuer arrange and manage the sale and/or disposal of fly ash and bottom ash from the Facility on behalf of the Issuer but the Operator will not be required to provide services in connection with any facilities established by third parties or the Issuer in relation to the sale and/or disposal or storage of the fly ash and bottom ash other than the ash pond provided in the Facility.

Curtailment of Operation and Diversification of Coal Shipments Curtailment Due to Emergencies In the event of any emergencies threatening the operation and maintenance of the Facility, including the occurrence of an Emergency Condition (as described in the


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O&M Agreement), the Operator shall have the right to curtail or to shut down the Facility or parts thereof in accordance with the Facility procedures in order to avoid any potential damage to the Facility or prevent possible injury to any person, in which event, the Operator must immediately notify the Issuer and the control centre for the Grid System and keep them regularly updated on the status of such emergency condition, curtailment or shut down of the Facility. Curtailment Due to TNB or Grid System Operator action If the Operator curtails output of electricity or shuts down the Facility, as a result of TNB or the Grid System Operator’s (as described in the PPA) refusal to accept the Net Electrical Output (as described in the PPA) from the Facility:

(i) the Operator shall inform the Issuer of the additional cost that Issuer and

Operator may incur as a result of a rapid shutdown of the Facility (if applicable); and

(ii) the Issuer must continue to pay the Operator the procurement, operation and

maintenance cost under the O&M Agreement and, unless it is due to the Facility delivering Net Electrical Output (as described in the PPA) which does not conform to the electrical characteristics described in the PPA or an act or omission of the Operator, its employees, agents or subcontractors,

(iii) the Issuer must reimburse the Operator for any reasonable additional

resulting cost incurred by the Operator; and (iv) the Operator will be excused from its Performance Guarantees (as defined

below) and will not be liable to pay any liquidated damages under the O&M Agreement and will not be held to be in breach of the O&M Agreement.

Curtailment Due to Unscheduled Maintenance If the Operator reasonably determines that it is necessary to suspend or substantially reduce the output of electricity from the Facility for reasons of safety or reliability or security of the Facility or part thereof, other than for the purposes of any scheduled outage, the Operator shall provide to the Issuer immediate notice and a reasonable detailed statement of the reason for such suspension or reduction and the likely duration thereof. The Issuer shall acknowledge such notice both verbally and in writing and inform the Operator as to whether it agrees or disagrees with the Operator's determination. If the Issuer agrees with the Operator, the suspension or reduction of output of electricity from the Facility shall take effect and neither party shall have any added obligations to each other, but without prejudice to their obligations in respect of the guarantees and liquidated damages under the O&M Agreement. If the Issuer disagrees with the Operator (either due to the Grid System Operator’s (as described in the PPA) disagreement or otherwise), the Operator shall comply with the Issuer's instructions provided the Issuer agrees to indemnify the Operator against all reasonable additional costs incurred as a result of complying with the Issuer's instructions.


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Diversification of Coal Shipments In the event that due to the following reasons the Operator determines that it is unable to accept delivery of a shipment nominated for delivery in a delivery month and which cannot be cancelled due to reduced need: (a) a force majeure event precluding discharging of vessels at the discharge port

or a force majeure event has resulted in stockpiles of nominated fuel at the Facility being at maximum;

(b) TNB or the Grid System Operator (as described in the PPA) despatches the

Facility at a level lower than TNB’s prior estimates of despatch levels resulting in stockpiles of nominated fuel at the Facility being at maximum and the nominated fuel supplier has already transmitted a corresponding confirmation or order to a nominated fuel producer or has already irrevocably committed to transport arrangements for the shipment of such nominated fuel to the discharge port; or

(c) forced outage has resulted in stockpiles of nominated fuel at the Facility being

at maximum;

the Operator may within seventy (70) days request the Issuer to procure that the nominated fuel supplier:

(i) not to load a shipment if loading has not yet occurred; (ii) to divert a shipment to an alternative discharge port for delivery to a party as

the Issuer may designate; (iii) to sell and deliver a shipment to another party at a price not lower than that

approved by the Issuer; or (iv) take any action deemed reasonable by the nominated fuel supplier with the

purpose of reducing cost.

Any costs reasonably incurred by the nominated fuel supplier in responding to such request or requests shall in the case of paragraphs (a) and (b) be borne by the Issuer and in the case of paragraph (c) be borne by the Operator. Delays to Commercial Operation Dates Prior to the Commercial Operation Date, the Issuer may, by immediate written notice, with or without cause suspend the provision or performance of any part or the whole of the works. If the Issuer decides to suspend the performance of the works pursuant to the foregoing, the Issuer must pay the Operator for all of the Operator’s manpower and unavoidable costs during the period of such suspension. The Issuer shall provide the Operator reasonable prior written notice or in any event not less than fourteen (14) days prior written notice in the event it wishes to recommence the performance of the works after such suspension. In the event the Scheduled Commercial Operation Date is delayed beyond the agreed Mobilisation Period the Issuer shall instead of paying the procurement, operation and maintenance cost under the O&M Agreement, pay the Operator (i) all


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of the Operator’s fixed unavoidable costs such as salary costs pertaining to the staff employed during the delayed period; (ii) all such reasonable costs agreed by the Issuer for the re-employment, de-mobilisation and re-mobilisation of the staff for resuming works under the O&M Agreement; and (iii) all other costs incurred by the Operator to which sufficient evidence is furnished to the Issuer in connection with the Operator’s obligations under the pre-Mobilisation Period. Limitation of Liability Liability Cap Under the O&M Agreement, the Operator’s liability with respect to a claim or claims of any kind relating thereto, whether as a result of breach of contract, warranty, indemnity, tort, strict liability or otherwise, shall be limited as follows:

(a) during the pre-Mobilisation Period, the Operator shall have no liability; (b) during the Mobilisation Period, an aggregate cap of ten percent (10%) of the

Mobilisation Cost; (c) during the Operating Period, a cap of twenty percent (20%) of Fixed

Operating Cost due in the relevant year in each case for the relevant year; and

(d) an overall aggregate cap for the Term of fifty percent (50%) of the Fixed

Operating Cost as prescribed under the O&M Agreement due in the base year during the Operating Period.

Save that the caps listed above shall not apply for any liability arising from the Operator’s gross negligence or wilful default, the Operator’s liability under its indemnification obligations and any liability satisfied by the proceeds of the Operator’s insurance. Liability for latent defects Under the O&M Agreement, the Operator will not: (a) be in breach of any term thereof; or (b) have any liability in respect of loss or damage arising; as a result of inherent or latent defects in plant, machinery and equipment at the Facility or the Site or a combination of them, if the Operator is able to prove that such loss and damage occurs as a result of such inherent or latent defects. In such event the Operator will be excused from having to meet the Performance Guarantees (as defined below) and will not be liable to pay any liquidated damages under the O&M Agreement.


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Insurance Insurance of the Facility The Issuer shall insure in the joint names of the Issuer and the Operator all parts of the Facility for their full replacement value against accidental loss, destruction or damage by any cause. The Issuer shall entitle the Operator to review the insurances to be obtained by the Issuer and the Issuer shall incorporate the Operator's comments, if any, provided such comments are reasonable and consistent with the Issuer's and the Operator's obligations under the O&M Agreement. Such insurance shall be effected and be effective from the Commercial Operation Date of the Facility and continue throughout the term of the O&M Agreement. Insurance by Issuer The Issuer shall obtain and maintain the applicable insurance required to be effected by the EPC Contractor and the Issuer under the EPC Contract and the insurance in accordance with the requirements of the PPA. The insurance policies taken out and maintained by the Owner must, where applicable, (i) name the Issuer, the Operator and the financing parties as additional insureds for their respective rights and interests; (ii) provide for a waiver of subrogation in favour of the Operator; and (iii) provide for not less than sixty (60) days prior notice to be given to the Operator prior to any cancellation, non-renewal or material revision of any such policy. The Operator shall be responsible for deductibles or excess where such deductibles or excess is due to the Operator's negligence, poor performance or failure to comply with the good engineering standards and practices, operation and maintenance manuals and the terms and conditions of the O&M Agreement. The Issuer shall indemnify the Operator against any increase in the size of the deductibles (excluding deductibles for business interruption insurance) unless such increase is due to the Operator’s negligence, poor performance or failure to comply with good engineering standards and practices, operation and maintenance manuals and the terms and conditions of the O&M Agreement.

Insurance by the Operator The Operator shall from the Commercial Operation Date of the Facility have in effect the following insurances:

(i) “Workmen’s compensation” or “Employer Liability” insurance in respect of

death or injury for its employees in compliance with the law and such insurance must include a cross liability clause.

(ii) “Comprehensive Automobile Liability” or “Motor Vehicle Liability” Insurance or similar insurance against death or injury to persons or damage to properties arising out of motor vehicles, both within the Facility and elsewhere, with combined single limits of at least RM3 million per occurrence and in the aggregate. The amount referred to above will be reviewed on an annual basis and may be revised to reflect amended insurance requirements under the PPA, subject to mutual agreement by the parties.


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The abovementioned insurance policies taken out and maintained by the Operator must, where applicable: (i) name the Issuer and TNB as additional insured for their respective

rights and interests; (ii) provide for a waiver of all rights of subrogation in favour of the Issuer

and TNB; (iii) provide that such insurance is primary with respect to the interest of

the Issuer and TNB and that any other insurance maintained by the Issuer and /or TNB is in excess and not contributory to the abovementioned insurance policies;

(iv) contain a severability of interest provision; and (v) provide for not less than 60 days’ prior written notice to be given to the

Issuer and TNB prior to any cancellation, termination, non-renewal or material revision of any such policy.

Loss Payee The proceeds of any claims under the insurances by the Issuer must be paid to the relevant insured party suffering losses (“Insured Party”) except in the following circumstances: (a) no payment in excess of such amount as may be determined by the financing

parties in respect of the interest of the Insured Party will be made unless the financing parties have confirmed in writing to the insurers their approval to such payment being made;

(b) if the financing parties have given notice to the insurers that security for providing financing for the Facility (to which the insurances by the Issuer is subject) has become enforceable, the proceeds of all claims that are due for payment to the Insured Party (or in respect of the liability of the Insured Party will be paid to the financing parties); or the proceeds of any claim will be paid to the financing parties.

Performance Guarantees Under the O&M Agreement, the Operator guarantees that it shall meet the performance guarantees specified in Schedule 5 of the O&M Agreement (“Performance Guarantees”) provided (i) the Facility passes the performance test and meets the capacity, efficiency and emissions requirements as per the EPC Contract at the date of performance testing; and (ii) the delivery of nominated fuel to the Facility is consistent with the specifications under the O&M Agreement. Guarantee on Emissions, Discharge and Noise Subject to item (i) above, the Operator guarantees under the O&M Agreement that: (a) all emission levels from the Commercial Operation Date and during the term of the O&M Agreement will comply with and shall not exceed the permitted emissions


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level and permitted noise level; and (b) all liquid discharges of the Facility from the Commercial Operation Date and during the during the term of the O&M Agreement will comply with and will not exceed the permitted liquid Discharge Level. If any of the Facility’s:

(i) emission levels exceed the permitted emissions level; (ii) noise levels exceed the permitted noise level; or (iii) discharge levels exceed the permitted liquid discharge level.

the Operator must submit to the Issuer a remedial plan within a mutually agreed period and cure the problem at the Issuer’s cost and expense except where such breach of permitted emission, noise and/or discharge levels are caused by the Operator’s wilful default. Notwithstanding the aforementioned, the Issuer must pay all fines and penalties imposed by any of the Government authority for failing to comply with the permitted emission levels of the Facility. Liquidated Damages

Pursuant to the O&M Agreement, if the Operator fails to achieve the Performance Guarantees, the Operator shall pay liquidated damages as provided in Schedule 5 of the O&M Agreement. If the Operator fails to achieve the stipulated guarantees on emissions, discharge and noise provided in items (a) and (b) above under the section entitled “Guarantee on Emissions, Discharge and Noise”, the Operator shall cure the problem at its own cost, subject to the liability cap referred to in the section entitled “Liability Cap” above. The liquidated damages shall be the sole and exclusive remedy available to the Issuer for the Operator's breach of the guarantees under the O&M Agreement. Limit of Liability for Each Performance Guarantee For each year during the term of the O&M Agreement, the maximum amount of liquidated damages that the Operator is liable under the O&M Agreement shall be limited to twenty percent (20%) of the Fixed Operating Cost for the respective year. Limit of Liability for Total of All Performance Guarantees For each year during the term of the O&M Agreement, the maximum combined total amount of liquidated damages that the Operator is liable for under the O&M Agreement shall be limited to forty percent (40%) of the Fixed Operating Cost for the respective year.

Bonus If the levels of performance achieved are above the Performance Guarantees levels

stipulated in Schedule 5, the Operator shall be entitled to receive such bonuses, if applicable, as may be payable pursuant to Schedule 5.


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5.5.12 Bottom Ash Disposal Agreement

The Issuer will enter into the Bottom Ash Disposal Agreement with local brick factories to dispose of all bottom ash produced during the operational phase. The agreement shall be finalised and executed within thirty-six (36) months from the first issuance of the Sukuk Murabahah (as described in the PTC).

5.5.13 Fly Ash Disposal Agreement

The Issuer will enter into the Fly Ash Disposal Agreement with cement factories to dispose of all fly ash produced during the operational phase. The agreement shall be finalised and executed within thirty-six (36) months from the first issuance of the Sukuk Murabahah (as described in the PTC).

5.5.14 Water Pipeline Construction Agreement

The Issuer will enter into the Water Pipeline Construction Agreement with contractor in connection with the procurement, supply, construction, installation, testing and commissioning of the water pipeline for the purposes of the Project. It shall be a fixed-price lump sum turnkey contract with completion target, delay liquidated damages, defects liability period and other terms and conditions that are customary for this kind of agreement. The agreement is expected to be finalised and executed within eighteen (18) months from the first issuance of the Sukuk Murabahah (as described in the PTC).

5.5.15 Jetty Lands Lease Agreement

The Issuer intends to enter into a Jetty Lands Lease Agreement to lease from MBI the land on which a coal unloading jetty, cooling water intake system, outlet culvert and auxiliary jetty for JEP will be located. The Issuer is in the process of negotiating the agreement with MBI and is targeting to execute the agreement within eighteen (18) months from the first issuance of the Sukuk Murabahah (as described in the PTC).

5.5.16 Ashpond Land Sale and Purchase Agreement

The Issuer is in negotiations with MBI to purchase the land for the construction of the Ashpond Land. It is proposed that MBI will secure the said land from the State of Negeri Sembilan.



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Section 6 Principal Terms and Conditions

Words and expressions used and defined in this Section 6 shall, in the event of any inconsistency with the definition section of this Information Memorandum, only be applicable for this Section 6. (1) Name of facility : A Sukuk Murabahah issuance of up to RM10.0 billion in

nominal value (“Sukuk Murabahah”).

(2) One-time issue or programme

: One-time issue.

(3) Shariah principles : Murabahah (via a Tawarruq arrangement).

(4) Facility description : A sukuk issuance of up to RM10.0 billion in nominal

value based on the Shariah principle of Murabahah (via a Tawarruq arrangement). Sukuk Murabahah The issuance of each tranche of the Sukuk Murabahah, shall be effected as follows: (1) The Sukuk Trustee (on behalf of the holders of the

Sukuk Murabahah (“Sukukholders”)) and JEP shall enter into an agency agreement (“Agency Agreement”), pursuant to which JEP (in such capacity, the “Agent”) is appointed as the agent of the Sukukholders for the purchase and sale of Commodities (as defined in item (4) of the section entitled “Other Terms and Conditions”). The Agent will then enter into a “Sub-Agency Agreement” to appoint the Facility Agent as the sub-agent (in such capacity, the “Sub-Agent”) for the purchase and sale of Commodities under the Sukuk Murabahah issuance.

(2) Pursuant to a commodities murabahah master agreement (“Commodities Murabahah Master Agreement”), to be entered into between JEP (in such capacity, the “Purchaser”) and the Agent and the Sukuk Trustee (acting on behalf of the Sukukholders), the Purchaser issues a purchase order (the "Purchase Order") to the Agent and subsequently thereafter, the Agent issues the Purchase Order to the Sub-Agent. In the Purchase Order, JEP (acting as Purchaser for itself) will request the Agent, and subsequently, the Agent will request the Sub-Agent to purchase the Commodities


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on the terms specified therein. The Purchaser will irrevocably undertake to purchase the Commodities from the Sukukholders via the Sub-Agent at the Deferred Sale Price (as defined in item (5) of the section entitled “Other Terms and Conditions”).

(3) Pursuant to the Purchase Order, the Sub-Agent via the Commodity Trading Participant (“CTP”) (pursuant to a CTP purchase agreement entered into between the Sub-Agent and the CTP)(“CTP Purchase Agreement”) will purchase on a spot basis the Commodities from commodity vendor(s) in the Bursa Suq Al-Sila' and/or such other independent commodity trading platforms as may be determined by the Joint Shariah Advisers (“Commodity Seller”) at a purchase price, which shall be an amount equivalent to the Sukuk Murabahah proceeds ("Purchase Price").

(4) JEP (acting as the Issuer) shall issue Sukuk Murabahah to the Sukukholders whereby the proceeds received from such issuance shall be used to pay for the Purchase Price of the Commodities. The Sukuk Murabahah shall evidence, amongst others, the Sukukholders' ownership of the Commodities and subsequently, once the Commodities are sold to JEP (as the Purchaser for itself), the entitlement to receive the Deferred Sale Price.

(5) Thereafter, pursuant to the undertaking under the Purchase Order, the Sub-Agent (acting on behalf of the Agent who in turn acts as agent of the Sukukholders) shall sell the Commodities to JEP (acting as Purchaser for itself) at the Deferred Sale Price under the commodities sale and purchase agreement (the “Sale and Purchase Agreement”).

(6) Subsequently thereafter, JEP (pursuant to the CTP sale agreement entered into between JEP, as Purchaser for itself, and the CTP) (“CTP Sale Agreement”) shall appoint the CTP to sell the Commodities to Bursa Suq Al-Sila’ and/or such other commodity trading platforms acceptable to the Joint Shariah Advisers (“Commodity Buyer”) on a spot basis for an amount equal to the Purchase Price. The CTP Sale Agreement will provide for the CTP to directly sell the Commodities to the Commodity Buyer upon notice by JEP that the Sale and Purchase Agreement has been duly executed and upon receipt of the sale instruction by JEP.


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During the tenure of the Sukuk Murabahah, JEP (in its capacity as the Purchaser), as part of its obligation to pay the Deferred Sale Price, shall make Periodic Profit Payments (as defined in item (7) of the section entitled “Other Terms and Conditions”) to the Sukukholders.

(7) On the Sukuk Murabahah maturity dates or upon the declaration of an Event of Default or Mandatory Redemption, JEP (in its capacity as the Purchaser) shall pay all amounts outstanding in respect of the Deferred Sale Price of the relevant Sukuk Murabahah (subject to Ibra’ as defined in item (11) of the section entitled “Other Terms and Conditions”), where applicable, upon which the relevant Sukuk Murabahah will be cancelled.

(5) Currency : Ringgit. (6) Expected facility /

programme size : Up to RM10,000,000,000.00.

Option to upsize No

(7) Tenure of the

facility / programme

: 23

(8) Availability period

of sukuk programme

: Not applicable.

(9) Clearing and

settlement platform : MyClear.

(10) Mode of issue : Book building, book running, bought deal, direct

placement, private placement. (11) Selling restrictions : (i) Section 4(6) of the Companies Act 1965;

(ii) Part I of Schedule 6 of the Capital Markets &

Services Act, 2007 (CMSA); (iii) Part I of Schedule 7 of the CMSA; and (iv) Read together with Schedule 9 of CMSA. Selling Restrictions at Issuance The Sukuk Murabahah may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 4(6) of the Companies Act, 1965 (as amended from time to time); and Part I


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Schedule 6 and Part I Schedule 7 read together with Schedule 9 of the Capital Markets and Services Act 2007 (“CMSA”) (as amended from time to time). Selling Restrictions Thereafter The Sukuk Murabahah may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 4(6) of the Companies Act, 1965 (as amended from time to time); and Part I Schedule 6 read together with Schedule 9 of the CMSA (as amended from time to time).

(12) Tradability and

transferability : Tradable and transferable.

The Sukuk Murabahah are transferable (subject to the Selling Restrictions described above) and tradable under RENTAS operated by MyClear.

(13) Details of security /

collateral pledged, if applicable

: The Sukuk Murabahah shall be secured by the following security: (1) a first ranking National Land Code charge over the

sub-lease of the Power Plant Land;

(2) a first ranking National Land Code charge over the Power Plant Land;

(3) a first ranking National Land Code charge over the lease of the Jetty Lands;

(4) a first ranking debenture comprising fixed and floating charges over all present and future assets of the Project Company excluding the Distribution Account, Sukuk Trustee’s Reimbursement Account and all credit balances therein and any rights, interest, titles and benefits under the Offset Agreement and Offset Management Services Agreement;

(5) a first ranking legal and absolute assignment of all the Project Company’s rights, titles, interests and benefits under the Project Documents (as defined in item 15 of the section entitled “Other Terms and Conditions”) (which include the Project Company’s rights, title, benefits and interests in and under the applicable material insurance policies/takaful contracts in respect of the Project and all performance and/or maintenance bonds in respect of the Project and all other guarantees, advance payment bonds and other forms of payment or performance security issued in favour of the Project Company pursuant to any Project Document) and the proceeds therefrom (including the PPA and


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revenues thereunder) but excluding the generation licence, Offset Agreement and Offset Management Services Agreement;

(6) a first ranking assignment and charge over the Designated Accounts (as defined in item (20) of the section entitled “Details of designated accounts, if applicable”), other than the Distribution Account and Sukuk Trustee’s Reimbursement Account, and all the credit balances therein and a first ranking charge over the Permitted Investments;

(7) such other security as advised by ASL to the JPA/JLA and to be mutually agreed between the Project Company and the JPA/JLA.

Documentation for the purpose of items (1) to (7) above shall be referred to hereinafter as the “Security Documents”. For the avoidance of doubt, items 1, 2 and 3 will only be executed after the issuance of the Sukuk Murabahah as conditions subsequent in accordance with item 22 of the section entitled “Conditions Precedent” below. The hedging counterpart(ies)(if any) of the hedging arrangements entered or to be entered into by the Project Company (“Hedging Facilities”), the working capital facility provider(s) (if any) and the PPA Performance Bond facility provider, may share the security given or to be given to the Sukukholders on a pari passu basis. In such case, the security sharing arrangement and the application of proceeds received from such security will be governed by an intercreditor agreement to be entered into or acceded by, inter alia, the Project Company, the Sukuk Trustee, the Security Agent, the hedging counterpart(ies) of the Hedging Facilities, the relevant working capital facility provider(s) and the PPA Performance Bond facility provider (“Intercreditor Agreement”).

(14) Details of

guarantee, if applicable

: Not guaranteed.

(15) Convertibility of

issuance and details of the convertibility

: Non-convertible.

(16) Exchangeability of

issuance and details of the exchangeability

: Non-exchangeable.


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(17) Call option and details, if applicable

: No call option.

(18) Put option and

details, if applicable

: No put option.

(19) Details of

covenants : Financial Covenants

(1) Finance to Equity Ratio

On each FSCR Determination Date, the Project Completion Date and the date falling one (1) year after the Project Completion Date, the Project Company shall ensure that the Finance to Equity Ratio does not exceed 80:20. Finance to Equity Ratio means the ratio of: (a) the sum of (i) the aggregate outstanding

nominal value of the Sukuk Murabahah payable by the Project Company and (ii) the aggregate principal amount of other Permitted Indebtedness payable by the Project Company (other than RPS and the indebtedness as described in item (6) of the Permitted Indebtedness);

to:

(b) Shareholder Funds.

“Shareholder Funds” means the aggregate of (a) all proceeds of subscription by the Shareholders for ordinary voting shares in the capital of the Project Company; (b) all proceeds of subscription by the Shareholders for the RPS (including any premium payable to the Project Company in respect thereof) and (c) subordinated shareholder/related corporation loans/Islamic financing (if any).

(2) Finance Service Coverage Ratio (“FSCR”)

The Project Company shall ensure that as at each FSCR Determination Date, the FSCR is not less than 1.25 times. FSCR means, for each FSCR Determination Date, the ratio of (a) Net Available Cash during the relevant FSCR Period to (b) Total Finance Service during the same FSCR Period.


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Net Available Cash is the aggregate of: (a) cash balances standing to the credit of all the

Designated Accounts (excluding Distribution Account and the Sukuk Trustee Reimbursement Account) as at the FSCR Determination Date including the amounts available for drawing under the FSRA Security, plus the Total Finance Service which has been paid; and

(b) the value of Permitted Investments from monies standing to the credit of all the Designated Accounts (excluding Distribution Account and the Sukuk Trustee Reimbursement Account) as at the FSCR Determination Date.

Total Finance Service is the aggregate of: (a) all amounts due and payable of Deferred Sale

Price under the Sukuk Murabahah during the FSCR Period; and

(b) all other outstanding amounts of principal and profit/interest due and payable arising from Permitted Indebtedness of the Project Company during the FSCR Period other than the RPS, financing facilities from related parties and any facility which is subordinated.

FSCR Determination Date means each Profit Payment Date after the COD of Unit 2. FSCR Period means the period of twelve (12) months ending on such FSCR Determination Date.

For the avoidance of doubt, any double counting in respect of the Finance to Equity Ratio and the FSCR shall be disregarded. The FSCR shall be calculated starting from the COD of Unit 2. Information Covenants To include, inter alia, the following: (1) the Project Company shall:

a. as soon as the audited financial statements are available, but in any event, within one hundred and eighty (180) days after the end of each respective financial year, supply to the Sukuk Trustee copies of the financial


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statements of the Project Company in respect of such financial year audited by firm of independent international auditors approved by the Sukuk Trustee;

b. as soon as the unaudited financial statements are available, but in any event within ninety (90) days after the end of each of their respective financial half year, supply to the Sukuk Trustee copies of unaudited semi-annual financial statements for that financial half year of the Project Company prepared on a basis consistent with its audited financial statements;

c. deliver to the Security Agent / Sukuk Trustee no later than fifteen (15) business days after each FSCR Determination Date, a statement (“FSCR Statement”) which shall:

(i) be prepared as of such FSCR Determination Date and set out (A) Net Available Cash for the FSCR Period; and (B) Total Finance Service (including a breakdown of such amount for each of the categories under Total Finance Service) for the FSCR Period;

(ii) set out a calculation of the FSCR as at the relevant FSCR Determination Date;

(iii) be calculated in RM and, to the extent that any sum denominated in a currency other than RM, its equivalent in RM is to be taken into account; and

(iv) be certified by at least one (1) directors of the Project Company;

d. deliver to the Sukuk Trustee, promptly on request, such other information which the Sukuk Trustee may reasonably require in order to discharge its duties and obligations in accordance with the Trust Deed to the extent permitted by law and would not result in the Project Company breaching any stock exchange requirements, duty of confidentiality or confidentiality obligations;

e. promptly notify the Sukuk Trustee of (i) copies of any accounts (other than those provided above), reports, notice, statements or circulars issued by the Project Company to the Shareholders. Such accounts, reports,


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notices, statements or circulars may be circulated by the Sukuk Trustee at its discretion to Sukukholders and the Rating Agency; and

f. no later than sixty (60) days prior to the expected COD of Unit 1 adopt an operating plan and a budget of estimated Operating Costs, estimated income and proposed estimated Capital Costs for the period commencing on the COD of Unit 1 and ending on 31 December of that year (the “Initial Operating Period”), and, no later than sixty (60) days prior to the beginning of each subsequent fiscal year (each, for the purposes of this sub-paragraph, an "Annual Period"), it will similarly adopt an operating plan and a budget of estimated Operating Costs, estimated income and proposed estimated Capital Costs for such ensuing Annual Period (such operating plan and budget for an Annual Period the “Annual Operating Budget”), and the Project Company shall furnish copies of the proposed operating budget for the Initial Operating Period and each Annual Period to the Security Agent and the Sukuk Trustee no later than the start of the Initial Operating Period and each Annual Period, as applicable. The actual Variable Operating Costs incurred may not exceed the Variable Operating Costs (as defined in the O&M Agreement) and as set out in the proposed operating budget by more than twenty percent (20%) per annum.

(2) the Project Company shall promptly upon the Project Company obtaining knowledge thereof, notify the Sukuk Trustee of any change in the board of directors of the Project Company, in any event within thirty (30) days from such change;

(3) the Project Company shall promptly upon the Project Company obtaining knowledge thereof, notify the Sukuk Trustee of any litigation, arbitration or administrative proceeding as referred to in item 23(6) and (7) of the section entitled Representations and Warranties;

(4) the Project Company shall notify the Security Agent and the Sukuk Trustee promptly upon becoming aware of any Events of Default, or any material breach or dispute under any Sukuk Finance Document;


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(5) when the Project Company delivers its audited financial statements in accordance with item (1)(a) of the section entitled Information Covenants, the Project Company shall supply to the Sukuk Trustee a certificate signed by at least one (1) director certifying that:

a. since the date of the previous certificate (or, in the case of the first certificate, since the issue date of the Sukuk Murabahah), no Events of Default or enforcement under any Sukuk Finance Document to which it is a party exists (or if such event is in existence, specifying such event and the steps, if any, being taken to remedy it); and/or

b. the Project Company has observed, performed and complied with all of its covenants (including financial covenants) and other relevant obligations under the Sukuk Finance Documents;

(6) the Project Company shall, subject to the relevant representatives complying with all reasonable Site rules and policies, permit representatives of the Security Agent, the Sukuk Trustee and their advisers, including without limitation, the Insurance Adviser and the Technical Adviser, during business hours and upon reasonable written advance notice, to visit and inspect the Site, to examine the current plans, specifications, and manuals (and all supplements thereto), technical and statistical data, accounting books, records and other data in the possession or control of the Project Company with respect to the Project and to make copies and abstracts therefrom as may be required in order for such parties to discharge their duties and obligations, to attend any tests conducted at the Project under the EPC Contract or the PPA and to confer with its principal officers and engineers;

(7) the Project Company shall provide to the Security Agent and the Sukuk Trustee as soon as possible, but in any event within ten (10) business days of receipt by the Project Company or the issuance by the Project Company of, copies of all default notices, suspension notices, force majeure notices, change in law notices and termination notices in relation to the Project Documents;

(8) the Project Company shall promptly upon the Project Company obtaining knowledge thereof, notify the Security Agent and the Sukuk Trustee of any material breach, termination, rescission,


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discharge (otherwise than by performance), supplement, novation, amendment or waiver in writing of, or indulgence in writing under, any provision of any Project Document or any variation order issued under the EPC Contract, the Transmission Line EPC Contract, Water Pipeline Construction Agreement and Transmission Works EPC Contract, which would require the approval of the Sukuk Trustee under item (14) of the Negative Covenants;

(9) the Project Company shall promptly upon the Project Company obtaining knowledge thereof, notify the Sukuk Trustee of:

a. any change in its withholding tax position or tax jurisdiction;

b. any substantial change in the nature of the business of the Project Company;

c. any change in the use of the proceeds arising from the Sukuk Murabahah and the details of such change in use as set out in the Sukuk Finance Documents or the information memorandum of the Sukuk Murabahah (“IM”);

d. any other matter that may materially prejudice the interests of the Sukukholders under the Sukuk Finance Documents;

e. any circumstances that have occurred that would materially prejudice the Project Company or the Security Interests created under the Sukuk Finance Documents; and

f. the occurrence of any event that has caused or could cause, one or more of the following:

(i) any amount secured or payable under the Sukuk Murabahah to become immediately payable;

(ii) the security created for the Sukuk Murabahah to become immediately enforceable; or

(iii) any other right or remedy under the terms, provisions or covenants of the Sukuk Murabahah to become immediately enforceable.

(10) until the COD of Unit 2, the Project Company shall provide to (i) the Technical Adviser, no later than thirty (30) days following the end of each quarter,


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the information required by the Technical Adviser for the preparation of a Progress Report; and (ii) the Security Agent and the Sukuk Trustee, no later than forty five (45) days following the end of each quarter, a Progress Report;

(11) the Project Company shall inform the Sukuk Trustee within thirty (30) days after completion of any permitted transfer of shares as described in the section entitled Shareholding Covenants;

(12) any other covenants as advised by ASL and mutually acceptable to the Project Company and the JPA/JLA.

Shareholding Covenants

Save as permitted pursuant to the Equity Contribution Agreement, the Project Company shall procure that: (a) not less than sixty five percent (65%) of the issued

and paid up share capital of the Project Company is indirectly or directly owned by TNB;

(b) not less than twenty five percent (25%) of the issued and paid up share capital of the Project Company is indirectly or directly owned by 3B Power;

(c) fifty percent (50%) of the issued and paid up share capital of 3B Power is legally and beneficially owned by Mitsui; and

(d) not less than ninety five percent (95%) of the issued and paid up share capital of the Project Company is indirectly or directly owned by TNB and 3B Power collectively.

In respect of items (a) and (b) above, each of the current Shareholders may transfer up to five percent (5%) of their respective current shareholdings of seventy percent (70%) and thirty percent (30%) in the Project Company provided that (i) Project Completion Date has occurred; (ii) a written confirmation is procured from the Rating Agency to confirm that such change in the shareholdings in the Project Company would not result in a downgrade in the rating assigned to the Sukuk Murabahah or a negative outlook; (iii) the approval of TNB, Energy Commission of Malaysia, and if required, the approval of the Government of Malaysia; (iv) not less than ninety five percent (95%) of the issued and paid up share capital of the Project Company is indirectly or directly owned by TNB and 3B Power and (v) other than a change in shareholdings pursuant to transfers amongst existing


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shareholders of the Project Company, the approval from the Sukukholders by way of extraordinary resolution is obtained, before such change in shareholdings in the Project Company is effected. In respect of item (c) above, Mitsui may transfer up to fifty percent (50%) of its current one hundred percent (100%) shareholdings in 3B Power provided that (i) a written confirmation is procured from the Rating Agency to confirm that such change in the shareholdings in 3B Power would not result in a downgrade in the rating assigned to the Sukuk Murabahah or a negative outlook; (ii) if required, the approval of (a) TNB, (b) Energy Commission of Malaysia, and/or (c) the Government of Malaysia; (iii) the execution of the relevant documents by the transferee to accede to the Equity Contribution Agreement as a Sponsor and (iv) other than a change in shareholdings pursuant to transfers to TNB or Chugoku Electric Power Co., Inc or its wholly owned subsidiary (which transfer in favour of Chugoku Electric Power Co., Inc or its wholly owned subsidiary shall not result in Mitsui holding less than fifty percent (50%) of the issued and paid up share capital of 3B Power), the approval from the Sukukholders by way of extraordinary resolution is obtained before such change in shareholdings in 3B Power is effected. Positive Covenants To include, but subject to appropriate thresholds, exclusions and carve-outs for each of such covenants as agreed in the Deed of Covenants, inter alia, the following: (1) The Project Company shall obtain, maintain and

comply with all material government approvals and any additional governmental authorisations as shall now or hereafter be required under applicable laws, where failure to do so would have a Material Adverse Effect,

a. to enable the Project Company lawfully to enter into, and exercise its rights and perform its obligations under, the Sukuk Finance Documents;

b. to maintain the due legality, validity, binding effect and enforceability of the Project Company's obligations under the Sukuk Finance Documents; and

c. to enable the Project Company to own, operate and maintain the Project and its assets and carry on its business;


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(2) The Project Company shall at all times upon request by the Sukuk Trustee execute or cause to be executed all such further documents and do all such further acts, as are reasonably necessary to give further effect to the terms and conditions of the Sukuk Finance Documents;

(3) The Project Company shall exercise reasonable diligence in carrying out its business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices of the power industry and in accordance with its memorandum and articles of association;

(4) The Project Company shall perform in all material respects each of its obligations under each of the Project Documents to which it is a party and shall, to the extent within its reasonable control, procure that the other parties to the Project Documents comply with their respective obligations thereunder;

(5) The Project Company shall, without cost to the Sukuk Trustee, take out and maintain at all times such relevant insurances/takaful contracts in accordance with an insurance plan to be mutually agreed between the Issuer and the JPA/JLA before issuance of the Sukuk Murabahah;

(6) The Project Company shall prepare its financial statements on a basis consistently applied in accordance with approved accounting standards in Malaysia (unless otherwise disclosed) and those financial statements shall give a true and fair view of its results of the operations for the period to which the financial statements are made up;

(7) The Project Company shall maintain an accounting system and records in compliance with applicable statutory requirements and in accordance with generally accepted accounting principles in Malaysia which are adequate to record and reflect its operations and financial condition and it will permit upon reasonable request by the Sukuk Trustee or its agent and servants and any person appointed or authorised by it with prior notice and at all reasonable times to have access to and to inspect its books of accounts and records relating to its business at any office, branch or place of business of the Project Company and all records kept by any other persons subject to such parties executing confidentiality undertakings as prescribed by the Project Company and provided further that such access and disclosure does not result in any contravention of any laws, regulations or directives


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by the Project Company and would not result in Project Company breaching any stock exchange requirements, duty of confidentiality or confidentiality obligations;

(8) The Project Company shall open and maintain the required Designated Accounts; pay all relevant amounts into such accounts, make all payments from such accounts only as permitted under the Sukuk Finance Documents, and comply with the terms and conditions of the Sukuk Finance Documents in all matters concerning the Designated Accounts. Further, the Project Company shall forthwith notify the Security Agent in writing of any change in the authorised signatories to any of the Designated Accounts;

(9) The Project Company shall comply with all applicable laws and regulations, all environmental laws, the environmental management plan and environmental licences where failure to do so would have a Material Adverse Effect;

(10) The Project Company shall pay and discharge all taxes, assessments and governmental charges or levies whatsoever imposed on it or on its income or profits or on any of its property and all taxes, assessments and governmental charges or levies that it has agreed to pay pursuant to any Sukuk Finance Document or material government approval and all lawful claims relating thereto prior to the date on which penalties attach thereto, and shall timely file all returns relating thereto, except to the extent that any such tax, assessment, governmental charge, levy or claim is being contested in good faith and by appropriate proceedings (and where it is not required under applicable law to pay such taxes, assessments and governmental charges, levies or claims pending determination of the matter) and for which adequate segregated reserves have been established therefor;

(11) The Project Company shall preserve and maintain good and valid title to the Plant and all other assets of the Project Company (save as permitted pursuant to item 3 of the section entitled “Negative Covenants”), free and clear of any Security Interests other than Permitted Security Interests, and shall not grant any tenancy, licence or right to occupy or otherwise, subject to sub-paragraph item 3 of the section entitled “Negative Covenants”, part with title to or possession of any of the assets of the Project Company (other than amounts deposited in


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the Distribution Account);

(12) The Issuer at all times maintain a Paying Agent with a specified office in Malaysia;

(13) The Issuer will make available to the Sukuk Trustee particulars of all ratings on the Sukuk Murabahah by the Rating Agency;

(14) The Issuer will procure that the Paying Agent will notify the Sukuk Trustee in writing in the event that the Paying Agent does not receive payment from the Issuer on the due dates as required under the Trust Deed and the terms and conditions of the Sukuk Murabahah;

(15) The Issuer shall promptly comply with all applicable provisions of the CMSA and/ or the notes, circulars, conditions or guidelines issued by the SC, BNM and any other relevant regulatory authorities from time to time in relation to the Sukuk Murabahah;

(16) The Issuer will ensure that the terms in the Sukuk Finance Documents of the Sukuk Murabahah do not contain any matter which is inconsistent with the provisions of the IM;

(17) The Issuer shall cause all advances, if any, made by its directors, Shareholders and/ or its related company or associated company to be subordinated to the Sukuk Murabahah and no repayment and/ or prepayment of such advance shall be made unless otherwise provided and permitted under the Sukuk Finance Documents; and

(18) Any other covenants as advised by ASL and mutually acceptable to the Project Company and the JPA/JLA.

Negative Covenants To include, but subject to appropriate thresholds, exclusions and carve-outs for each of such covenants as agreed in the Deed of Covenants, inter alia, the following: (1) The Project Company shall not change the

utilisation of the proceeds of the Sukuk Murabahah from the purposes specified in the Sukuk Finance Documents or IM;

(2) The Project Company shall not create or attempt or permit or agree to subsist any Security Interest (other than Permitted Security Interests) over any


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of its property, assets, rights or undertaking, or all or any part of the assets in respect of the Project other than pursuant to the Security Documents, or enter into any other preferential arrangement with any person having a similar effect which is not a Permitted Security Interest;

(3) The Project Company shall not sell, transfer, lease or otherwise assign, deal with or dispose of all or any part of its business or all or any material part of its assets (or agree to do any of the foregoing) whether by a single transaction or by a number of transactions whether related or not, or permit a set-off (other than by operation of law) or combination of accounts (in respect of its book debts) except:

a. sales of electric power and electric capacity pursuant to the PPA;

b. the transfer of the Interconnection Facilities (as defined in the PPA) and the Transmission Line (as defined in the PPA) to TNB under the PPA;

c. other sales, transfers and other dispositions of assets for good consideration and in the ordinary course of business or of obsolete, superfluous, worn out, defective or replaced assets in the ordinary course of business (not including assets reasonably required for the operation or maintenance of the Plant or for the performance of the Project Company's obligations or as permitted under the Transaction Documents unless such assets are substituted with replacement assets of equivalent value and use and secured in favour of the Security Agent in a manner similar to that of the assets replaced);

d. purchases or sales for cash of Permitted Investments prior to the maturity thereof in accordance with the Sukuk Finance Documents;

e. where the sale, transfer or lease is solely for the purposes of facilitating Shariah concepts used in Islamic financing facilities which constitute Permitted Indebtedness granted to the Project Company, is on customary terms and has no adverse consequences for the Project Company;


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f. any disposal constituted by the granting of any Permitted Security Interest;

g. sale or disposal which would not have a Material Adverse Effect; or

h. as permitted under the Sukuk Murabahah.

provided that this paragraph shall not be deemed to prohibit the Project Company from making any payments that it is otherwise authorised to make in the accordance with the Sukuk Finance Documents;

(4) the Project Company shall not permit any amendment, supplement or variation to its memorandum and articles of association in a manner which may be materially prejudicial to the interests of the Sukukholders;

(5) the Project Company shall not incur or have outstanding any financial indebtedness which is not Permitted Indebtedness;

(6) the Project Company shall not enter into any interest rate, currency or other derivative transaction except as permitted in the Sukuk Finance Documents;

(7) the Project Company shall not enter into a transaction, whether directly or indirectly with interested persons (including a director, substantial shareholder or persons connected with them) unless:-

a. such transaction shall be on terms that are no less favourable to the Project Company than those which could have been obtained in a comparable transaction from persons who are not interested persons; and

b. with respect to transactions involving an aggregate payment or value equal to or greater than the agreed percentage ratios as set out in the Bursa Malaysia Main Market Listing Requirements, the Project Company obtains certification from an independent adviser that the transaction is carried out on fair and reasonable terms, provided that the Project Company certifies to the Sukuk Trustee that the transaction complies with item (a) above, that the Project Company has received the certification referred to in this item (b) (where applicable) and that the


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transaction has been approved by the majority of the board of directors or shareholders in a general meeting as the case may require.

(8) the Project Company shall not, without the prior written consent of the Sukuk Trustee: (i) provide financing/lend any money to any party other than Islamic financing/loan to its directors, officers or employees as part of their terms of employment and on ordinary commercial terms of employment; (ii) provide or permit to exist any guarantee where the Project Company is a guarantor or is liable to pay for the same thereunder; (iii) make any Islamic financing/loan or investment other than Islamic financing/loans or investments authorized or not prohibited under the Transaction Documents; or (iv) make any prepayment of or make any payment of profit/interest on any Islamic financing/loans or advances from its directors or its related or associated companies (unless otherwise provided or required under the Project Documents or as permitted under the Sukuk Finance Documents);

(9) the Project Company shall not enter into any transactions or material agreement, other than:

a. on arm's length commercial terms in the ordinary course of business;

b. where such transaction would not have a Material Adverse Effect; and

c. in any event subject to the restrictions in the Sukuk Finance Documents, and in the case of material agreement, a copy of such material agreement is provided to the Security Agent promptly after such agreement is entered into;

(10) The Project Company shall not enter into any consolidation or amalgamation with, or merger with or into, or transfer all or substantially all its assets to (unless as permitted under item 3 of the section entitled Negative Covenant), another entity or enter into any reconstruction, or winding-up;

(11) the Project Company shall not voluntarily enter into, commence or institute for the dissolution or for the appointment of a receiver, receiver and manager, liquidator, judicial manager or such similar officer of the Project Company;

(12) the Project Company shall not amend the terms of the Project Development Agreement without the


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prior written consent of the Sukuk Trustee;

(13) the Project Company shall not open any bank accounts other than Designated Accounts, any accounts opened pursuant to the Permitted Investments and any other accounts as may be permitted under the Sukuk Finance Documents. The following terms shall apply to the Sukuk Trustee’s Reimbursement Account for Sukukholders:-

a. the sum of Ringgit Thirty Thousand (RM30,000.00) will be maintained at all times throughout the tenure of the Sukuk Murabahah;

b. the Sukuk Trustee’s Reimbursement Account will be maintained as long as any Sukuk Murabahah is outstanding; and

c. the moneys in the Sukuk Trustee’s Reimbursement Account will be used by the Sukuk Trustee in carrying out its duties in relation to the occurrence of an Event of Default or an enforcement event provided for under the financing documents pertaining to the Sukuk Murabahah;

(14) The Project Company shall not, without the prior written consent of the Sukuk Trustee, suspend, amend, modify or vary or agree to any suspension of, or any amendment, modification or variation to, or abandon, or issue or agree to any change order or variation order being issued under, or set-off, forebear or waive compliance with, any provision of any Project Document or serve any notice of breach or default or suspension under any Project Document, provided that no such consent shall be required:

(i) in relation to any change or variation order, amendment, modification, concession, forbearance or waiver (each a "Change") under the EPC Contract if such Change (A) does not increase the contract price by more than RM15,000,000.00 per Change or by more than RM60,000,000.00 when aggregated with all other Changes previously issued under the EPC Contract, provided that any Changes previously approved by the Sukuk Trustee shall not be taken into account for the purpose of determining whether the RM15,000,000.00 limit set out in this sub-paragraph (A) has been exceeded; and (B)


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does not give any extension of time which would be reasonably likely to result in the Project Company being in breach of its obligations under the Sukuk Finance Documents;

(ii) in relation to any change or variation order, amendment, modification, concession, forbearance or waiver (each a "Change" for purposes of this paragraph) under the Transmission Line EPC Contract if such Change (A) does not increase the contract price by more than RM6,000,000.00 per Change or by more than RM18,000,000.00 when aggregated with all other Changes previously issued under the Transmission Line EPC Contract, provided that any Changes previously approved by the Sukuk Trustee shall not be taken into account for the purpose of determining whether the RM6,000,000.00 limit set out in this sub-paragraph (A) has been exceeded; and (B) does not give any extension of time which would be reasonably likely to result in the Project Company being in breach of its obligations under the Sukuk Finance Documents;

(iii) in relation to any change or variation order, amendment, modification, concession, forbearance or waiver (each a "Change" for purposes of this paragraph) under the Transmission Works EPC Contract if such Change (A) does not increase the contract price by more than RM6,000,000.00 per Change or by more than RM18,000,000.00 when aggregated with all other Changes previously issued under the Transmission Works EPC Contract, provided that any Changes previously approved by the Sukuk Trustee shall not be taken into account for the purpose of determining whether the RM6,000,000.00 limit set out in this sub-paragraph (A) has been exceeded; and (B) does not give any extension of time which would be reasonably likely to result in the Project Company being in breach of its obligations under the Sukuk Finance Documents;

(iv) without limitation to paragraphs (i), (ii) and (iii) above, in relation to any Change under any other Project Document, if such Change is not


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material and does not increase the contract price by more than RM3,000,000.00 when aggregated with all other Changes previously agreed to under such Project Document;

(15) The Project Company shall not make any transfers to the Distribution Account for any dividend payments, payments under indebtedness which is subordinated, payment of dividend/interest on the RPS, payment of shareholders’ advances/grants, repayment of preference shares, purchase or redemption of any of its issued shares or reduction of its share capital or make a distribution of assets or other capital distribution to the Shareholders or any payment to an affiliate other than pursuant to a Project Document or from the Distribution Account unless if each of the following conditions is satisfied on the date of such Restricted Payment Date and if the Project Company certifies to the Security Agent that each such condition is satisfied on such Restricted Payment Date:

(i) the Project Completion Date shall have been achieved;

(ii) the first scheduled principal payment under the Sukuk Murabahah have been redeemed in full;

(iii) no Event of Default or Potential Event of Default has occurred and is continuing;

(iv) the balance of the Operating Accounts on the immediately preceding Profit Payment Date was at least equal to the payments projected (where relevant, in accordance with the Annual Operating Budget and financial model) to be required to be made from those

Designated Accounts pursuant to item (i) of the section entitled “Revenue Account” prior to the next Monthly Transfer Date;

(v) the balance of the Finance Service Account on the immediately preceding Profit Payment Date was at least equal to the sum of the then required Principal Accrual Requirement and the Profit Accrual Requirement;

(vi) the Maintenance Reserve Account is funded in accordance with item (iii) of the section entitled “Revenue Account” and there is no outstanding funding shortfall;


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(vii) the then required Finance Service Reserve Requirement on the immediately preceding Profit Payment Date had been met; and

(viii) the FSCR would be at least 1.50 times if recomputed immediately after deducting such distribution amount from Net Available Cash.

(16) The Project Company undertakes that upon the issuance of the legal title to the Power Plant Land in the name of the Project Company, the Project Company will not take any action to cancel the registered lease to Jimah Energy Ventures Sdn Bhd or the registered sub-lease to the Project Company prior to the registration of the charge in favour of the Security Agent over the Power Plant Land; and

(17) any other covenants as advised by ASL and mutually acceptable to the Project Company and the JPA/JLA.

(20) Details of

designated accounts, if applicable

: Designated Accounts Name of account Shariah-compliant Ringgit Disbursement Account with an Islamic financial institution rated AA3/AA- or above (“Ringgit Disbursement Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Security Agent and the Project Company shall jointly operate the Ringgit Disbursement Account provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall solely operate the Ringgit Disbursement Account. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall jointly operate the Ringgit Disbursement Account. Signatories to the account The Security Agent and the Project Company shall be the joint signatories provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall be the joint signatories. Sources of funds (i) all proceeds from the issuance of the Sukuk

Murabahah;


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(ii) equity injection by the Shareholders and subordinated Islamic financing/loan from related parties prior to Project Completion Date.

Utilisation of funds (i) payments for Development Costs and Project

Costs payable in Ringgit; (ii) upon conversion to Dollar or Yen, transfers to

Dollar Disbursement Account and Yen Disbursement Account;

(iii) prior to Initial Scheduled COD of Unit 2, transfer to

the Finance Service Accounts for payment of Periodic Profit Payments;

(iv) payments of staff costs and petty cash in

accordance with construction budget but no more than RM1,215,000 per month into the Staff Costs and Petty Cash Account prior to Project Completion Date;

(v) upon Project Completion Date, balance for

transfers to Revenues Account.

Other than the Development Costs, all payments in connection with the relevant Project Document or in relation to the construction or development of the Project made from the Disbursement Accounts shall be made subject to certification from the Technical Adviser, documentary evidence in form and substance acceptable to the Security Agent and/or such other terms and conditions to be agreed upon in the Deed of Covenants. In respect of the Development Costs, the payment shall be made in accordance with the Project Development Agreement. Each of the Disbursement Accounts may be closed at such time after the Project Completion Date, when the balance standing to the credit thereof to the relevant Disbursement Account equals zero. Name of account Shariah-compliant Dollar Disbursement Account with an Islamic financial institution rated AA3/AA- or above (“Dollar Disbursement Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Security Agent and the Project Company shall jointly operate the Dollar Disbursement Account provided that


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upon the occurrence of an Event of Default that is continuing the Security Agent shall solely operate the Dollar Disbursement Account. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall jointly operate the Dollar Disbursement Account. Signatories to the account The Security Agent and the Project Company shall be the joint signatories provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall be the joint signatories. Sources of funds Upon conversion to Dollar from the Ringgit Disbursement Account of the following: (i) all proceeds from the issuance of the Sukuk

Murabahah; (ii) equity injection by the Shareholders and

subordinated Islamic financing/loan from related parties prior to Project Completion Date.

Utilisation of funds (i) payments for Development Costs and Project

Costs payable in Dollar; and (ii) upon Project Completion Date, balance for

transfers to Revenues Account. Name of account Shariah-compliant Yen Disbursement Account with an Islamic financial institution rated AA3/AA- or above (“Yen Disbursement Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/opearated by The Security Agent and the Project Company shall jointly operate the Yen Disbursement Account provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall solely operate the Yen Disbursement Account. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall jointly operate the Yen Disbursement Account.


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Signatories to the account The Security Agent and the Project Company shall be the joint signatories provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall be the joint signatories. Sources of funds Upon conversion to Yen from the Ringgit Disbursement Account of the following: (i) all proceeds from the issuance of the Sukuk

Murabahah; (ii) equity injection by the Shareholders and

subordinated Islamic financing/loan from related parties prior to Project Completion Date.

Utilisation of funds (i) payments for Project Costs payable in Yen; and (ii) upon Project Completion Date, balance for

transfers to Revenues Account. Name of account Shariah-compliant Revenues Account with an Islamic financial institution rated AA3/AA- or above (“Revenues Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Security Agent and the Project Company shall jointly operate the Revenues Account provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall solely operate the Revenues Account. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall jointly operate the Revenues Account. Signatories to the account The Security Agent and the Project Company shall be the joint signatories provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall be the joint signatories. Sources of funds (i) all revenues, income and receivables (including

delay liquidated damages and insurance proceeds


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(other than those required to be deposited into the Insurance Proceeds Account)) received from the Project and all Project Documents;

(ii) all amounts drawn from the working capital

facilities; (iii) any excess amounts (for the avoidance of doubt,

such amounts to include, where relevant, any proceeds of Permitted Investments) in the Maintenance Reserve Account, the Finance Service Account the Finance Service Reserve Account and the Compensation Account will be credited to the Revenues Account as soon as practicable; and

(iv) any credit balance remaining in the Disbursement

Accounts. Utilisation of funds Subject to any Mandatory Redemption, unless an Event of Default has occurred and is continuing, amounts standing to the credit of the Revenues Account may be used in the following order of priority (“RA Priority Cashflows”): (i) immediately upon receipt into the Revenues

Account or at any time thereafter, but no later than the Monthly Transfer Date of the current calendar month, for transfers to the Operating Account for the payments of:

(aa) firstly, the Operating Costs in accordance with

the Annual Operating Budget for the relevant period or in case of transfers for Variable Operating Costs in excess of the Annual Operating Budget, amounts which do not exceed the Variable Operating Costs as set out in the proposed Annual Operating Budget by more than twenty percent (20%) per annum;

(bb) secondly, the Capital Costs which are in the

relevant Annual Operating Budget; and (cc) thirdly, Major Maintenance Costs;

(ii) as such amounts fall due, for (a) payment into the

Finance Service Account of fees, costs and expenses, related to the Facility Agent, Security Agent, and Sukuk Trustee and (b) payment of all fees, costs and expenses in relation to the other Permitted Indebtedness (other than RPS and


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subordinated Permitted Indebtedness (if any)); (iii) for periodic transfers on each Monthly Transfer

Date to the Finance Service Account to meet Periodic Profit Payments and for payment of relevant profit payment obligations under other Permitted Indebtedness (other than RPS and subordinated Permitted Indebtedness (if any));

(iv) for payment on each Monthly Transfer Date into (a)

the Finance Service Account of any other fees, costs, expenses, commissions, taxes and other financing costs payable, excluding those covered in item (ii) above, in connection with the Sukuk Murabahah and (b) payment of any other fees, costs, expenses, commissions, taxes and other financing costs payable, excluding those covered in item (ii) above, in connection with the other Permitted Indebtedness (other than RPS and subordinated Permitted Indebtedness (if any));

(v) for periodic transfers on each Monthly Transfer

Date to the Finance Service Account to meet principal payments of the Sukuk Murabahah and payment of relevant principal payment obligations under other Permitted Indebtedness (other than RPS and subordinated Permitted Indebtedness (if any));

(vi) for payment into the Finance Service Account of all

amounts required to be applied in or towards satisfaction of any Mandatory Redemption required to be paid;

(vii) for transfers on each Monthly Transfer Date to the

Finance Service Reserve Account to meet the Finance Service Reserve Requirement, if applicable;

(viii) for transfers on each Monthly Transfer Date to the

Maintenance Reserve Account to meet the Maintenance Reserve Requirement, plus any amount of the aggregate funding shortfall arising from all previous Monthly Transfer Date(s), as contemplated in the description of Maintenance Reserve Account below;

(ix) for transfers to the Finance Service Account to pay

any amounts which have fallen due under the Sukuk Finance Documents and which are not covered under other sub-paragraphs in this items (ii) to (vii);


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(x) to the extent elected by the Project Company, for transfers to the Finance Service Account for making voluntary prepayments of the Sukuk Murabahah as approved by way of extraordinary resolutions by the Sukukholders;

(xi) for transfers to the Distribution Account subject to

the Distribution Covenant. Wherever any payment appears in more than one paragraph of the RA Priority Cashflows, it shall be deemed to fall only in the earlier paragraph. On any Monthly Transfer Date upon which the balance of the Revenues Account is insufficient to make payment in full of any amount required on such date pursuant to paragraphs (i) to (ix) above, the Project Company shall immediately notify the Sukuk Trustee of such insufficiency. In the event that TNB is late in paying any amounts to the Project Company due under the PPA, but pays such amounts prior to the end of the calendar month (but after the Monthly Transfer Date), the Project Company shall transfer and apply such funds so received from TNB in accordance with paragraphs (i) to (xi) above. If, at any time after COD of Unit 2, the balance standing to the credit of the Operating Account is less than the aggregate amount required in accordance with paragraphs (i)(aa) through (i)(cc) above or less than the aggregate amount actually payable in respect of the items referred to in paragraphs (i)(aa) through (i)(cc) above, the Project Company may, upon notice to the Security Agent, withdraw an amount up to such shortfall, subject to the availability of funds standing to the credit of the Revenues Account, from the Revenues Account (provided that the funds remaining in the Revenues Account after withdrawal shall not be less than any required minimum deposit amounts). In the event that the amounts withdrawn from the Revenues Account are insufficient to cover such shortfall in full, then the Project Company may, withdraw an amount equivalent to the shortfall from the Designated Accounts in the following order of priority: (i) first, the Maintenance Reserve Account; (ii) second, any other Designated Account (other than

Finance Service Reserve Account); (iii) last, the Finance Service Reserve Account, and deposit such funds into the Operating Account to enable the Project Company to pay such shortfall.


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Name of account Shariah-compliant Finance Service Account with an Islamic financial institution rated AA3/AA- or above (“Finance Service Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by Security Agent shall solely operate the Finance Service Account. Signatories to the account Security Agent shall be the sole signatory. Sources of funds Amounts from the Revenues Account for the payment of inter alia, sub-items mentioned in item (ii) to (vii) and (ix) to (x) of the RA Priority Cashflows and the Periodic Profit Payments and the principal amounts of the Sukuk Murabahah when due and prior to the Initial Schedule COD of Unit 2, from the Ringgit Disbursement Account for the payment of Periodic Profit Payments when due. Utilisation of funds Save as provided under the Deed of Covenants, monies in the Finance Service Account may only be used to make payments due in respect of the Sukuk Murabahah. Any excess amounts (for the avoidance of doubt, such amounts to include, where relevant, any proceeds of Permitted Investments) in the Finance Service Account will be credited to the Revenues Account as soon as practicable. Name of account Shariah-compliant Staff Costs and Petty Cash Account with an Islamic financial institution rated AA3/AA- or above (“Staff Costs and Petty Cash Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Project Company shall solely operate the Staff Costs and Petty Cash Account provided that upon the occurence of an Event of Default that is continuing the Security Agent shall solely operate the Staff Costs and Petty Cash Account. Once the Event of Default is no longer continuing, the Project Company shall solely operate the Staff Costs and Petty Cash Account.


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Signatories of the account The Project Company shall be the sole signatory provided that upon the occurence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Project Company shall be the sole signatory. Sources of funds From the date of issuance of the Sukuk Murabahah to Project Completion Date, for purposes of depositing amounts not exceeding RM1.215 million per month, transferred from the Disbursement Account for the payment of staff costs and petty cash in accordance with the construction budget, prior to Project Completion Date. Utilisation of funds From the date of issuance of the Sukuk Murabahah to Project Completion Date, for purposes of depositing amounts not exceeding RM1.215 million per month, transferred from the Disbursement Account for the payment of staff costs and petty cash in accordance with the construction budget, prior to Project Completion Date. Name of account Shariah-compliant Operating Account with an Islamic financial institution rated AA3/AA- or above (“Operating Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Project Company shall solely operate the Operating Account provided that upon the occurence of an Event of Default that is continuing the Security Agent shall solely operate the Operating Account. Once the Event of Default is no longer continuing, the Project Company shall solely operate the Operating Account. Signatories of the account The Project Company shall be the sole signatory provided that upon the occurence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Project Company shall be the sole signatory. Sources of funds Amounts transferred from the Revenues Account for the payment in accordance with item (i)(aa) to (cc) of the


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Revenues Account above or, as the case may be, in accordance with the RA Priority Cashflows. Utilisation of funds Amounts transferred from the Revenues Account for the payment in accordance with item (i)(aa) to (cc) of the Revenues Account above or, as the case may be, in accordance with the RA Priority Cashflows. Name of account Shariah-compliant Finance Service Reserve Account with an Islamic financial institution rated AA3/AA- or above (“Finance Service Reserve Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by Security Agent shall solely operate the Finance Service Reserve Account. Signatories to the account Security Agent shall be the sole signatory. Sources of funds (a) Subject to paragraph (b) below:

(i) on or before the Project Completion Date, the Project Company shall transfer to the Finance Service Reserve Account an amount equal to the then required Finance Service Reserve Requirement; and

(ii) thereafter, the Finance Service Reserve

Account shall be funded by the Project Company in accordance with sub-paragraph (vii) of the RA Priority Cashflow periodically, to the extent funds are available in the Revenues Account, so that the balance in this account is equal to the then required Finance Service Reserve Requirement.

(b) In the event that the balance of the Finance Service

Reserve Account exceeds the Finance Service Reserve Requirement for that period, the Project Company shall credit the excess to the Revenues Account as soon as practicable.

(c) The Project Company may, if so requested by the

Shareholders, be permitted to meet the whole or part of the current Finance Service Reserve Requirement by delivering to the Security Agent, and the Security Agent at all times thereafter


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continuing to be the beneficiary of either: (A) a shareholder guarantee from each Shareholder covering their respective share of the whole or part of the current Finance Service Reserve Requirement, in form and substance consistent with the form to be set out in the Equity Contribution Agreement (“FSRA Shareholder Guarantee”) (other than where the Shareholder and the Sponsor is the same party, such FSRA Shareholder Guarantee shall in turn be backed by a guarantee from each Sponsor of the respective Shareholder (“FSRA Sponsor Guarantee”), if (i) Sponsors each have either an unsecured and unsubordinated long term debt rating of AAA by RAM Rating Services Berhad (“RAM”) / MARC or at least BBB+ by Standard & Poor's or A3 by Moody's (“Qualifying Sponsor”), and (ii) all Shareholders are providing the FSRA Shareholders Guarantee; or (B) a letter of credit or otherwise in form and substance satisfactory to the Security Agent from each Shareholder covering their respective share of the whole or part of the current Finance Service Reserve Requirement issued by a Qualifying LC Bank and which shall be for the benefit of the Security Agent (an "FSRA Letter of Credit"). The terms of the FSRA Letter of Credit, FSRA Shareholder Guarantee and FSRA Sponsor Guarantee shall be such that it is unconditional, irrevocable, on-demand and there is no recourse by the provider of such FSRA Letter of Credit to the Project Company or any of its assets. In relation to the FSRA Shareholder Guarantee or FSRA Sponsor Guarantee and the entity who takes the FSRA Letter of Credit, such recourse shall be subordinated to the Sukuk Murabahah in the manner set out in the Sukuk Finance Documents. The FSRA Letter of Credit, the FSRA Shareholder Guarantee or FSRA Sponsor Guarantee provided to fund the Finance Service Reserve Requirement shall be known as the “FSRA Security”.

(d) Following the provision of an FSRA Security, the

Project Company may withdraw any funds which stand to the credit of the Finance Service Reserve Account but are no longer required by virtue of the provision of one or more FSRA Security and credit such funds to the Revenues Account for application in accordance with RA Priority Cashflows. For the avoidance of doubt, the Project Company may only withdraw such funds up to the equivalent to the FSRA Security, and the aggregate of such funds and FSRA Security shall be equivalent to the Finance Service Reserve Requirement at all times.


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(e) If an FSRA Security has been provided in accordance with paragraph (c) above, the Project Company may on any periodic transfer procure the release of such FSRA Security by crediting to the Finance Service Reserve Account an amount of cash equal to the face value of such FSRA Security, following which, such FSRA Security shall be promptly released.

(f) In the event that: (i) there is an Account Deficiency

in respect of the Finance Service Account; (ii) the issuing bank of the FSRA Letter of Credit ceases to be a Qualifying LC Bank and the FSRA Letter of Credit is not replaced within seven (7) days thereof; or (iii) an FSRA Security is not renewed or replaced by the date that is thirty (30) days prior to its stated expiry date, then the Security Agent shall be entitled to make a demand under such FSRA Security to the extent necessary to cure the Account Deficiency or if the conditions set out in (ii) or (iii) is not satisfied.

(g) All sums received by the Security Agent from the

issuer of an FSRA Security shall be paid into the Finance Service Reserve Account.

Any excess amounts (for the avoidance of doubt, such amounts to include, where relevant, any proceeds of Permitted Investments) in the FSRA will be credited to the Revenues Account as soon as practicable. Utilisation of funds (a) Subject to paragraph (b) below:

(i) on or before the Project Completion Date, the Project Company shall transfer to the Finance Service Reserve Account an amount equal to the then required Finance Service Reserve Requirement; and

(ii) thereafter, the Finance Service Reserve

Account shall be funded by the Project Company in accordance with sub-paragraph (vii) of the RA Priority Cashflow periodically, to the extent funds are available in the Revenues Account, so that the balance in this account is equal to the then required Finance Service Reserve Requirement.

(b) In the event that the balance of the Finance Service

Reserve Account exceeds the Finance Service Reserve Requirement for that period, the Project Company shall credit the excess to the Revenues


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Account as soon as practicable. (c) The Project Company may, if so requested by the

Shareholders, be permitted to meet the whole or part of the current Finance Service Reserve Requirement by delivering to the Security Agent, and the Security Agent at all times thereafter continuing to be the beneficiary of either: (A) a shareholder guarantee from each Shareholder covering their respective share of the whole or part of the current Finance Service Reserve Requirement, in form and substance consistent with the form to be set out in the Equity Contribution Agreement (“FSRA Shareholder Guarantee”) (other than where the Shareholder and the Sponsor is the same party, such FSRA Shareholder Guarantee shall in turn be backed by a guarantee from each Sponsor of the respective Shareholder (“FSRA Sponsor Guarantee”), if (i) Sponsors each have either an unsecured and unsubordinated long term debt rating of AAA by RAM Rating Services Berhad (“RAM”) / MARC or at least BBB+ by Standard & Poor's or A3 by Moody's (“Qualifying Sponsor”), and (ii) all Shareholders are providing the FSRA Shareholders Guarantee; or (B) a letter of credit or otherwise in form and substance satisfactory to the Security Agent from each Shareholder covering their respective share of the whole or part of the current Finance Service Reserve Requirement issued by a Qualifying LC Bank and which shall be for the benefit of the Security Agent (an "FSRA Letter of Credit"). The terms of the FSRA Letter of Credit, FSRA Shareholder Guarantee and FSRA Sponsor Guarantee shall be such that it is unconditional, irrevocable, on-demand and there is no recourse by the provider of such FSRA Letter of Credit to the Project Company or any of its assets. In relation to the FSRA Shareholder Guarantee or FSRA Sponsor Guarantee and the entity who takes the FSRA Letter of Credit, such recourse shall be subordinated to the Sukuk Murabahah in the manner set out in the Sukuk Finance Documents. The FSRA Letter of Credit, the FSRA Shareholder Guarantee or FSRA Sponsor Guarantee provided to fund the Finance Service Reserve Requirement shall be known as the “FSRA Security”.

(d) Following the provision of an FSRA Security, the

Project Company may withdraw any funds which stand to the credit of the Finance Service Reserve Account but are no longer required by virtue of the provision of one or more FSRA Security and credit


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such funds to the Revenues Account for application in accordance with RA Priority Cashflows. For the avoidance of doubt, the Project Company may only withdraw such funds up to the equivalent to the FSRA Security, and the aggregate of such funds and FSRA Security shall be equivalent to the Finance Service Reserve Requirement at all times.

(e) If an FSRA Security has been provided in

accordance with paragraph (c) above, the Project Company may on any periodic transfer procure the release of such FSRA Security by crediting to the Finance Service Reserve Account an amount of cash equal to the face value of such FSRA Security, following which, such FSRA Security shall be promptly released.

(f) In the event that: (i) there is an Account Deficiency

in respect of the Finance Service Account; (ii) the issuing bank of the FSRA Letter of Credit ceases to be a Qualifying LC Bank and the FSRA Letter of Credit is not replaced within seven (7) days thereof; or (iii) an FSRA Security is not renewed or replaced by the date that is thirty (30) days prior to its stated expiry date, then the Security Agent shall be entitled to make a demand under such FSRA Security to the extent necessary to cure the Account Deficiency or if the conditions set out in (ii) or (iii) is not satisfied.

(g) All sums received by the Security Agent from the

issuer of an FSRA Security shall be paid into the Finance Service Reserve Account.

Any excess amounts (for the avoidance of doubt, such amounts to include, where relevant, any proceeds of Permitted Investments) in the FSRA will be credited to the Revenues Account as soon as practicable. Name of account Shariah-compliant Maintenance Reserve Account with an Islamic financial institution rated AA3/AA- or above (“Maintenance Reserve Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Project Company shall solely operate the Maintenance Reserve Account provided that upon the occurence of an Event of Default that is continuing the Security Agent shall solely operate the Maintenance Reserve Account. Once the Event of Default is no longer


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continuing, the Project Company shall solely operate the Maintenance Reserve Account. Signatories of the account The Project Company shall be the sole signatory provided that upon the occurence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Project Company shall be the sole signatory. Sources of funds Amounts transferred from the Revenues Account for the payment in accordance with item (viii) of the Revenues Account above or, as the case may be, in accordance with the RA Priority Cashflows. Utilisation of funds For the purpose of fulfilling its obligations under the PPA and maintain therein a minimum amount of Ringgit Twenty-Four Million (RM24,000,000.00) (the “Maintenance Reserve Requirement”) which shall be built up over a three (3)-year period commencing on and from the COD of Unit 1 at the rate of Ringgit Eight Million (RM8,000,000.00) per annum. The MRA shall be maintained for so long as there are outstanding amounts under the Sukuk Murabahah. The Project Company is allowed to withdraw from the MRA to pay for Major Maintenance Costs. However the Maintenance Reserve Requirement shall be reinstated within three (3) months from the withdrawal. To the extent that there are insufficient funds in the Revenues Account on any Monthly Transfer Date to fund the Maintenance Reserve Account, the Project Company shall add any shortfall to the Maintenance Reserve Account on the following Monthly Transfer Date (to the extent there are sufficient funds available for such purpose). Any excess amounts (for the avoidance of doubt, such amounts to include, where relevant, any proceeds of Permitted Investments) in the MRA will be credited to the Revenues Account as soon as practicable. Name of account Shariah-compliant Insurance Proceeds Account with an Islamic financial institution rated AA3/AA- or above (“Insurance Proceeds Account”)


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Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Security Agent and the Project Company shall jointly operate the Insurance Proceeds Account provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall solely operate the Insurance Proceeds Account. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall jointly operate the Insurance Proceeds Account. Signatories to the account The Security Agent and the Project Company shall be the joint signatories provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall be the joint signatories. Sources of funds All applicable insurance/takaful proceeds shall be paid into the Shariah-compliant Insurance Proceeds Account. Utilisation of funds All amounts standing to the credit of the Insurance Proceeds Account shall be applied by the Security Agent in accordance with the Deed of Covenants to, inter alia, if no Total Loss has occurred, rebuild, repair or restore the affected portion of the Plant, and if Total Loss has occurred, to transfer to the Revenue Account for purposes of Mandatory Redemption of the Sukuk Murabahah on the next applicable Profit Payment Date, save that (i) any proceeds from delay in start-up insurance or business interruption insurance paid to the Project Company shall be transferred to the Revenues Account for application in accordance with the RA Priority Cashflows; and (ii) any proceeds from third party liability, employer's liability, automobile third party liability and workers' compensation insurance (to the extent received in the Insurance Proceeds Account) shall be applied in payment of the relevant claim. Name of account Shariah-compliant Compensation Account with an Islamic financial institution rated AA3/AA- or above (“Compensation Account”) Opened/to be opened by Project Company


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Maintained/operated or to be maintained/operated by The Security Agent and the Project Company shall jointly operate the Compensation Account provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall solely operate the Compensation Account. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall jointly operate the Compensation Account. Signatories to the account The Security Agent and the Project Company shall be the joint signatories provided that upon the occurrence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Security Agent and the Project Company shall be the joint signatories. Sources of funds All proceeds from liquidated damages, termination payments and/or compensation. Utilisation of funds (a) proceeds from any delay liquidated damages shall

be applied:

(i) first, in payment to TNB of any damages payable under the PPA arising from a failure by the Project Company to meet a relevant milestone as described in the PPA or where TNB has called on the PPA Performance Bonds to make good such damages, in payment to the relevant PPA Performance Bond Facility Provider to the extent of the amount that has been claimed by TNB from it and the balance thereof, if any, to TNB; and

(ii) second, by transferring any balance to the

Revenues Account for application in accordance with the RA Cashflows Priority.

(b) proceeds from any performance liquidated

damages shall be applied:

(i) first, in payment to TNB of any damages payable under the PPA arising from a failure by the Project Company to meet a relevant performance criteria as described in the PPA or where TNB has called on the PPA Performance Bonds to make good such damages, in payment to the relevant PPA Performance Bond Facility Provider to the extent of the amount that has been claimed by TNB from it and the balance thereof, if any,


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to TNB; and (ii) second, the balance, if any, its application be

decided by the Sukukholders by way of extraordinary resolutions at that juncture, either to apply the balance for Mandatory Redemption of the Sukuk Murabahah or to transfer to the Revenue Account for application in accordance with the RA Priority Cashflows;

(c) any amounts received from any governmental

authority following an Event of Default pursuant to nationalisation and any termination payments that have been received from TNB, in any such case, shall be applied on the next applicable Profit Payment Date for Mandatory Redemption of the Sukuk Murabahah; and

(d) proceeds from any compensation received from

TFS under the CSTA shall be applied:

(i) first, in payment to TNB of any damages payable under the PPA corresponding to such compensation so received and

(ii) second, by transferring any balance to the

Revenues Account for application in accordance with the RA Cashflows Priority.

Any excess amounts (for the avoidance of doubt, such amounts to include, where relevant, any proceeds of Permitted Investments) in the Compensation Account will be credited to the Revenues Account as soon as practicable. Name of account Shariah-compliant Distribution Account with an Islamic financial institution rated AA3/AA- or above (“Distribution Account”) Opened/to be opened by Project Company Maintained/operated or to be maintained/operated by The Project Company shall solely operate the Distribution Account provided that upon the occurence of an Event of Default that is continuing the Security Agent shall solely operate the Distribution Account. Once the Event of Default is no longer continuing, the Project Company shall solely operate the Distribution Account.


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Signatories of the account The Project Company shall be the sole signatory provided that upon the occurence of an Event of Default that is continuing the Security Agent shall be sole signatory. Once the Event of Default is no longer continuing, the Project Company shall be the sole signatory. Sources of funds Amounts transferred from the Revenues Account for the payment in accordance with item (xi) of the Revenues Account above or, as the case may be, in accordance with the RA Priority Cashflows. Uitlisation of funds Other than any restrictions imposed by applicable law and a prohibition against making any payment which may result in a contingent liability of the Project Company, the Project Company may make any withdrawal or distribution from the Distribution Account (including any investment which does not incur contingent liability for the Project Company in excess of the principal amount invested) as it determines in its sole discretion, including for payment of dividends and redemption of RPS.

(21) Name of credit

rating agency, credit rating (state whether final or indicative) and amount rated, if applicable

: Credit Rating Agency Malaysian Rating Corporation Berhad (“Rating Agency” or “MARC”). Credit Rating Assigned The Sukuk Murabahah has been assigned an indicative rating of AA-IS. Amount related RM10,000,000,000.

(22) Conditions

precedent : Upon completion of documentation and, unless waived

by the JPA/JLA, compliance of all conditions precedent, including but not limited to the conditions precedent set out below, and those agreed in the Deed of Covenants, and other applicable conditions to the satisfaction of the JPA/JLA: (1) Main Documentation

a. the relevant Sukuk Finance Documents and such other documents as may be advised by the Legal Counsel to the JPA/JLA (and agreed upon by the Project Company) shall have been executed and, where applicable, stamped or endorsed as being exempted from


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stamp duty and presented for registration;

b. all relevant acknowledgements of notices of assignment for the Designated Accounts (other than Distribution Account and Sukuk Trustee’s Reimbursement Account), notices and where applicable, consents from the relevant counterparties to the PPA, CSTA, EPC Contract, O&M Agreement, Transmission Works Agreement, Transmission Works EPC Contract, Transmission Line EPC Contract, Sub-Lease Agreement and Sale and Purchase Agreement (Power Plant Land), material insurance policies/takaful contracts, performance and/or maintenance bonds which are to be assigned shall have been made or received other than those which are required to be executed or perfected under Conditions Subsequent, as the case may be;

c. receipt from the Project Company of certified true copies of all the executed and stamped relevant Project Documents and any other supplemental documentation in relation thereto, together with the certified true copies of the board of directors’ resolution(s) of the Project Company authorizing the execution and performance of each of the Project Documents to which the Project Company is a party.

(2) Project Company and Malaysian Obligor

a. receipt of certified true copies of its certificate of incorporation, Form 13 (if applicable) and the memorandum and articles of association;

b. receipt of certified true copies of the latest Forms 24, 44 and 49;

c. receipt of certified true copies of the board of directors’ resolutions of each of the Project Company and Malaysian Obligor authorising, among others, the execution of the relevant Sukuk Finance Documents to which it is a party and other documents as advised by the Legal Counsel to the JPA/JLA and which are acceptable to the Project Company;

d. receipt of a list of each of the Project Company’s and the Malaysian Obligor’s authorised signatories and their respective


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specimen signatures;

e. receipt of a report of the relevant company search on each of the Project Company and the Malaysian Obligor which revealed that there are no charges which have been registered with the Companies Commission of Malaysia which would adversely affect the interest of the Sukukholders or JPA/JLA/JLM of the Sukuk Murabahah;

f. receipt of a report of the relevant winding-up search on each of the Project Company and the Malaysian Obligor which revealed that none of such companies has been wound-up; and

(3) General

a. receipt of acknowledgment by the SC of the lodgement in respect of the Sukuk Murabahah with the SC;

b. the Sukuk Murabahah shall have received a rating of at least AA-IS from the Rating Agency;

c. evidence that all the Designated Accounts have been opened according to the provisions of the Sukuk Finance Documents;

d. evidence that the Forms 34 (as prescribed under the Companies Act) in respect of the charges created pursuant to the relevant Sukuk Finance Documents (for the purpose of registration of such charges with the Companies Commission of Malaysia in accordance with Section 108 of the Companies Act 1965) have been duly lodged with the Companies Commission of Malaysia and that immediately prior to the lodgement of such Forms 34, a search conducted on the company in respect of which each of the Forms 34 is filed, revealed that there are no other charges that have been registered by it with the Companies Commission of Malaysia;

e. receipt of a final due diligence report from the Technical and Environmental Adviser in form and substance satisfactory to the JPA/JLA;

f. receipt of a final due diligence report from the Insurance Adviser in form and substance satisfactory to the JPA/JLA;


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g. receipt of a certified copy of the environmental impact assessment and development order in relation to the Project;

h. receipt of legal opinions from:-

(i) the Legal Counsel to the JPA/JLA addressed to the JPA/JLA and the Sukuk Trustee advising on the legality, validity, binding effect and enforceability of the relevant Sukuk Finance Documents and confirming that all the conditions precedent therein have been fulfilled or waived, as the case may be;

(ii) the Project Company’s external counsel addressed to inter alia, the JPA/JLA and the Sukuk Trustee advising on the legality, validity, binding effect and enforceability of the relevant Project Documents and confirming that all the conditions precedent of the relevant Project Documents have been fulfilled or otherwise waived in accordance with the relevant Project Documents; and

(iii) Japanese law legal opinion with respect to Mitsui’s authority and capacity to enter into the Equity Contribution Agreement;

i. delivery of a report on cash projections from a third party consultant and a financial model, showing a minimum projected base case FSCR of at least 1.25 times and a Finance to Equity Ratio not exceeding 80:20, both of which are satisfactory to the JPA/JLA;

j. receipt of confirmation from the Joint Shariah Advisers that the structure and mechanism together with the Principal Terms and Conditions, as well as, the financing documents of the Sukuk Murabahah and associated documents are in compliance with Shariah principles;

k. such other conditions precedent as may be advised by the Legal Counsel to the JPA/JLA and mutually acceptable to Project Company and the JPA/JLA.


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Conditions Subsequent Including but not limited to the following: a. no later than twelve (12) months after the issuance

of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing), presentation for registration of a charge over sub-lease of the Power Plant Land in favour of the Security Agent, and the Project Company shall have provided the Security Agent with: (i) the receipt of such presentation from the relevant land authority; (ii) evidence that the Form 34 (as prescribed under the Companies Act) in respect of such charge has been lodged with the CCM; and (iii) a legal opinion satisfactory to the Security Agent, and addressed to the Security Agent advising with respect to, among others, the legality, validity, binding effect and enforceability of such charge. In the event condition subsequent (b) below is satisfied prior to the compliance of this condition subsequent, this condition subsequent shall no longer be applicable;

b. no later than twenty four (24) months after the issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing), presentation for registration of a charge over the Power Plant Land in favour of the Security Agent, and the Project Company shall have provided the Security Agent with: (i) the receipt of such presentation from the relevant land authority; (ii) evidence that the Form 34 (as prescribed under the Companies Act) in respect of such charge has been lodged with the CCM; and (iii) a legal opinion satisfactory to the Security Agent, and addressed to the Security Agent advising with respect to, among others, the legality, validity, binding effect and enforceability of such charge;

c. no later than eighteen (18) months after the issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing), presentation for registration of a charge over lease of all those four (4) plots of land required for the purposes of constructing the coal unloading jetty, the cooling water outfall culvert, the cooling water intake channel and the auxiliary jetty (“Jetty Lands”) in favour of the Security Agent, and the Project Company shall have provided the Security Agent with: (i) the receipt of such presentation from the relevant land authority; (ii) evidence that the Form 34 (as prescribed under the Companies Act)


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in respect of such charge has been lodged with the CCM; and (iii) a legal opinion satisfactory to the Security Agent, and addressed to the Security Agent advising with respect to, among others, the legality, validity, binding effect and enforceability of such charge;

d. no later than one (1) year before Scheduled COD of Unit 1 (or such later date as may be agreed by the Security Agent in writing), receipt of a certified true copy of the generation licence issued by the Energy Commission of Malaysia established under the Energy Commission Act 2001 and any successor thereof (“Energy Commission”) to the Project Company together with documentary evidence that the conditions therein (which are required to be complied with at such time) have been complied with;

e. no later than thirty-six (36) months after the issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing), the delivery of executed and stamped Bottom Ash Disposal Agreement and the Security Agent has received a satisfactory legal opinion from the Project Company’s solicitors addressed to them advising on the legality, validity, binding effect and enforceability of the Bottom Ash Disposal Agreement and confirming that all the conditions precedents of the Ash Disposal Agreement have been fulfilled or otherwise waived in accordance with the Bottom Ash Disposal Agreement and all acknowledgements, notices and where applicable, consents from the relevant counterparties to the Bottom Ash Disposal Agreement, which is to be assigned shall have been made or received, as the case may be;

f. no later than thirty-six (36) months after the issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing), the delivery of executed and stamped Fly Ash Disposal Agreement the Security Agent has received a satisfactory legal opinion from the Project Company’s solicitors addressed to them advising on the legality, validity and enforceability of the Fly Ash Disposal Agreement and confirming that all the conditions precedents of the Fly Ash Disposal Agreement have been fulfilled or otherwise waived in accordance with the Fly Ash Disposal Agreement and all acknowledgements, notices and where applicable, consents from the relevant counterparties to the Fly Ash Disposal


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Agreement, which is to be assigned shall have been made or received, as the case may be;

g. all relevant acknowledgments of the notices of assignments from the relevant counterparties to the PPA, CSTA, EPC Contract, O&M Agreement, Transmission Works Agreement, Transmission Works EPC Contract, Transmission Line EPC Contract, Sub-Lease Agreement and Sale and Purchase Agreement (Power Plant Land), insurance policies/takaful contracts, performance and/or maintenance bonds which have been assigned shall have been received within thirty (30) days after the issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing);

h. no later than eighteen (18) months after the issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing), the delivery of executed and stamped Jetty Lands Lease Agreement and the Security Agent has received a satisfactory legal opinion from the Project Company’s solicitors addressed to them advising on the legality, validity, binding effect and enforceability of the Jetty Lands Lease Agreement and confirming that all the conditions precedent of the Jetty Lands Lease Agreement have been fulfilled or otherwise waived in accordance with the Jetty Lands Lease Agreement, and all acknowledgements, notices and where applicable, consents from the relevant counterparties to the Jetty Lands Lease Agreement, which is to be assigned shall have been made or received, as the case may be;

i. no later than twelve (12) months after the Project Company is endorsed as the registered proprietor on the issue document of title of the Ashpond Land or the date of the executed and registrable memorandum of transfer between MBI and the Project Company in respect of the Ashpond Land, has been delivered to the Project Company together with the original issue document of title and all other documents required for the registration of the transfer of the Ashpond Land in favour of the Project Company, whichever is earlier (or such longer period as may be agreed by the Security Agent in writing), presentation for registration of a charge over the Ashpond Land in favour of the Security Agent, and the Project Company shall have provided the Security Agent with: (i) the receipt of such presentation from the


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relevant land authority; (ii) evidence that the Form 34 (as prescribed under the Companies Act) in respect of such charge has been lodged with the CCM; and (iii) a legal opinion satisfactory to the Security Agent, and addressed to the Security Agent advising with respect to, among others, the legality, validity, binding effect and enforceability of such charge. For the avoidance of doubt, if the Ashpond Land Sale and Purchase Agreement is not entered into, this condition subsequent shall not be applicable;

j. no later than eighteen (18) months after the entry into the Ashpond Land Sale and Purchase Agreement (or such longer period as may be agreed by the Security Agent in writing), the delivery of executed and stamped Ashpond Land Sale and Purchase Agreement and the Security Agent has received a satisfactory legal opinion from the Project Company’s solicitors addressed to them advising on the legality, validity, binding effect and enforceability of the Ashpond Land Sale and Purchase Agreement and confirming that all the conditions precedents of the Ashpond Land Sale and Purchase Agreement have been fulfilled or otherwise waived in accordance with the Ashpond Land Sale and Purchase Agreement and all acknowledgements, notices and where applicable, consents from the relevant counterparties to the Ashpond Land Sale and Purchase Agreement, which is to be assigned shall have been made or received, as the case may be. For the avoidance of doubt, if the Ashpond Land Sale and Purchase Agreement is not entered into, this condition subsequent shall not be applicable;

k. no later than eighteen (18) months after the first issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent in writing), the delivery of executed and stamped Water Pipeline Construction Agreement and the Security Agent have received a satisfactory legal opinion from the Project Company’s solicitors addressed to them advising on the legality, validity, binding effect and enforceability of the Water Pipeline Construction Agreement and confirming that all the conditions precedents of the Water Pipeline Construction Agreement have been fulfilled or otherwise waived in accordance with the Water Pipeline Construction Agreement and all acknowledgements, notices and where applicable, consents from the relevant counterparties to the Water Pipeline Construction, which is to be


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assigned shall have been made or received, as the case may be;

l. within seven (7) business days from the date of the Equity Contribution Agreement, documentary evidence of the registration with Bank Negara Malaysia of guarantee provided by Mitsui in favour of the Security Agent for the benefit of 3B Power under the Equity Contribution Agreement;

m. such other conditions as may be advised by the Legal Counsel to the JPA/JLA and mutually acceptable to Project Company and the JPA/JLA.

Save and except where the compliance period has been extended, any failure to meet the fulfilment of any of the above conditions subsequent after the expiry of thirty (30) days from the required compliance period shall automatically constitute an Event of Default.

(23) Representations

and warranties : The Project Company’s representations and warranties

are to include, but subject to appropriate thresholds, exclusions and carve outs for certain representations and warranties as agreed in the Deed of Covenants, inter alia, the following:- (1) it is a company with limited liability duly

incorporated and validly existing under the laws of Malaysia, has full power, authority and legal right to own its assets and to carry out the Project;

(2) subject to the perfection requirements referred to in the legal opinion delivered under item (3)(h)(i) of the section entitled Conditions Precedent and upon taking of all necessary actions and obtaining the consents and approvals referred to in the section entitled Conditions Precedent, it has full power, authority and legal right, and all necessary corporate actions have been or will be taken in order to authorise it, to enter into and to exercise its rights and perform its obligations under the Sukuk Finance Documents and the material governmental approvals to which it is or is to be a party or beneficiary;

(3) subject to the perfection requirements referred to in the legal opinion delivered under item (3)(h)(i) of the section entitled Conditions Precedent and upon taking of all necessary actions and obtaining the consents and approvals referred to in the section entitled Conditions Precedent, the Sukuk Murabahah and each other Sukuk Finance Document to which the Project Company is or is to be a party constitute, or when executed will


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constitute, legal, valid, binding and subject to the general legal qualifications (where applicable) enforceable obligations of the Project Company;

(4) subject to the perfection requirements referred to in the legal opinion delivered under item (3)(h)(i) of the section entitled Conditions Precedent and upon taking of all necessary actions and obtaining the consents and approvals referred to in the section entitled Conditions Precedent, the entry into the Sukuk Finance Documents to which it is a party or is to be a party and/or the performance by the Project Company of any of its obligations and/or the exercise by the Project Company of any of its rights under any such Sukuk Finance Document will not:

a. conflict with any applicable laws by which the Project Company or its assets are bound or affected which would have a Material Adverse Effect;

b. conflict with the constitutional documents of the Project Company;

c. conflict with any other Sukuk Finance Document or any other agreement which is binding upon the Project Company or any asset of the Project Company which would have a Material Adverse Effect;

d. violate any material government approval or any other governmental authorisation or any judgment applicable to the Project Company or the Project which would have a Material Adverse Effect;

e. result in or create any Security Interest (other than a Permitted Security Interest) or any restriction of any nature on any of the assets of the Project Company; or

f. cause any limitation on the Project Company or the powers of its directors, whether imposed by or contained in its memorandum or articles of association or in applicable laws or otherwise to be exceeded;

(5) subject to the perfection requirements referred to in the legal opinion delivered under item (3)(h)(i) of the section entitled Conditions Precedent and upon taking of all necessary actions and obtaining the consents and approvals referred to in the section entitled Conditions Precedent, no registration, recording, filing or notarisation of the Sukuk


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Finance Documents and no payment of any duty or tax and no other action whatsoever is necessary to ensure the legality, validity, binding effect or enforceability in Malaysia of the liabilities and obligations of the Project Company, or the rights of inter alia, the Sukukholders under the Sukuk Finance Documents in accordance with their terms;

(6) no litigation, arbitration or administrative proceeding or claim or lawsuits by a governmental agency or body or other regulatory authority is presently in progress or pending or, to the best of the knowledge, information and belief of the Project Company instituted against the Project Company, or any of its assets, except as has been disclosed in writing to the Sukuk Trustee which would, individually or in aggregate, have a Material Adverse Effect;

(7) no step has been taken by the Project Company nor has any legal proceeding including a winding-up proceeding been commenced, instituted for the dissolution or for the appointment of a receiver, receiver and manager, liquidator, judicial manager or such similar officer of the Project Company, or its assets which in the case of any proceeding undertaken by a person other than the Project Company, has not been discharged, suspended or set aside within the time allowed under the relevant law to do so;

(8) no Event of Default or Potential Event of Default is continuing or would result from the issuance of the Sukuk Murabahah or the performance of any transaction contemplated by any Sukuk Finance Document;

(9) the Project Company has, to the extent required by applicable laws and regulation, timely filed all tax returns that are required to be filed by it and has paid all taxes, fees and other charges properly imposed on it by any relevant governmental authority (other than taxes, fees and other charges the payment of which are not yet due or which are being contested in good faith and for which adequate, segregated reserves have been established);

(10) the Project Company's audited and unaudited financial statements most recently delivered to the Sukuk Trustee (i) were prepared in accordance with approved accounting standards in Malaysia and give a true and fair view of the results of operation and financial position of the Project Company as at


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the end of, and the results of its operations for, the financial period to which they relate (and in particular disclose all of its material liabilities (actual or contingent)) and (ii) there has been no material adverse change in the financial condition of the Project Company since the date of such financial statements;

(11) the IM and any information in whatever form, document, statement or instrument furnished or to be furnished by the Project Company in connection thereto are true in all respects and do not contain any statements or information that are false or misleading in any respect and there is no material omission in respect thereof, and all or any projections or expressions of expectations, intentions, belief and opinion contained therein were honestly made on reasonable grounds after due and careful inquiry by the Project Company. For the purposes of this sub-paragraph, the IM shall include any amendment, modification or update thereto or reissuance thereof; provided that any such amendment, modification, update or reissuance shall not remedy or waive and shall be without prejudice to, any misrepresentation under this sub-paragraph in respect of the IM issued prior to such date;

(12) no mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect (“Security Interest”) exists over all or any part of the Project Assets or the assets of the Project Company which is not a Permitted Security Interest;

(13) it is in compliance and will comply with all applicable laws, guidelines, permits and regulations, including but not limited to all relevant environmental laws, permits and guidelines in all respects where failure to do so would have a Material Adverse Effect;

(14) there is no material outstanding breach of any term of any Sukuk Finance Document to which it is a party and no person has repudiated or disclaimed liability under any Sukuk Finance Document to which it is a party or evinced an intention to do so;

(15) no event of force majeure as defined in or contemplated by any Project Document has, to the best of the Project Company’s knowledge occurred and is continuing for the purposes of that Project


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Document;

(16) the Project Company's payment obligations under the Sukuk Finance Documents (including the Sukuk Murabahah) rank pari passu in all respects amongst themselves and at least pari passu with the claims of all its unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law generally;

(17) any copies of any Project Documents which it has delivered to the Security Agent / Sukuk Trustee are true and complete copies thereof;

(18) other than as disclosed in the IM and to the Security Agent, there is no other agreement in connection with, or arrangements which amend, supplement or affect any Project Document;

(19) other than as disclosed in the IM there is no dispute in connection with any Project Document which has not been disclosed to the Security Agent / which would have a Material Adverse Effect;

(20) no step has been taken by the Project Company, or any of the Shareholders or any other person on its/their behalf, or to the best of its knowledge, by its creditors, to commence or threaten any legal proceedings or applications under Section 176 of the Companies Act 1965 (Malaysia) against the Project Company;

(21) (i) all insurances/takaful contracts which are required to be maintained or effected by it pursuant to the Sukuk Finance Documents are in full force and effect, all premia due and payable have been paid and no event or circumstance has occurred, nor has there been any omission to disclose a fact, which would in either case entitle any insurer to avoid or otherwise reduce its liability under any policy relating to the said insurances/takaful contracts and reinsurances/retakaful contracts; and (ii) there are no insurances arranged, procured or maintained by the Project Company that are not disclosed to the Security Agent and the Sukuk Trustee; and (iii) all insurances/takaful contracts required under the Transaction Documents have been effected and are legal, valid, binding and enforceable and all premia have been paid and to the best of its knowledge after due inquiry, nothing has been done or omitted to be done which has made or could make any such insurances/takaful contracts void or voidable or entitle any insurer to


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reduce its liability thereunder; and

(22) any other representations and warranties customary to project financing facilities as advised by the Legal Counsel to the JPA/JLA and mutually agreed between the Project Company and the JPA/JLA.

The representations and warranties shall be made on the date of the Sukuk Finance Documents and repeated on the date of the issue request, the issue date of the Sukuk Murabahah, and the date of any subscription agreement, as if repeated by reference to the then existing circumstances.

(24) Events of defaults

or enforcement events, where applicable, including recourse available to investors

: To include, but subject to appropriate thresholds, exclusions and carve-outs for each default as agreed in

the Deed of Covenants, inter alia, the following (“Events of Default”): (1) the Project Company does not pay any amount of

principal or any Periodic Profit Payment payable by it under a Sukuk Finance Document when due unless such failure to pay is remedied within five (5) business days from its due date;

(2) the Project Company does not pay any amount other than as described in paragraph (1) above or the Obligor does not pay any amount payable by it under a Sukuk Finance Document, in each case when due at the place and in the currency in which it is expressed to be payable unless such failure is rectified within fourteen (14) days after notice of such failure being given by the Security Agent / Sukuk Trustee to the Project Company;

(3) the Project Company fails to observe or perform its obligations (other than the payment obligations specified under sub-paragraphs (1) and (2) above) including without limitation any of the financial undertakings contained in the Deed of Covenants or there is a breach by the Project Company of any term or condition, under any of the Sukuk Finance Documents or the hedging agreements or under any undertaking or arrangement entered into in connection therewith where such failure or breach would have a Material Adverse Effect and, in the case of a failure or breach which in the opinion of the Sukuk Trustee is capable of being remedied, the Project Company does not remedy the failure or breach within thirty (30) days after the Project Company became aware or has been notified by the Security Agent of the failure or breach;


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(4) a Shareholder or a Sponsor does not comply with any of its (a) payment obligations under the Equity Contribution Agreement or any other Sukuk Finance Document or (b) obligations (other than payment obligations) under the Equity Contribution Agreement or any other Sukuk Finance Document which would have a Material Adverse Effect and, in the case of a failure which in the opinion of the Sukuk Trustee is capable of being remedied, the Project Company does not remedy the failure within thirty (30) days after the Project Company became aware or has been notified by the Security Agent of the failure;

(5) the Project Company fails to observe or perform any of its obligations under any of the Project Documents or under any undertaking or arrangement entered into in writing in connection therewith between the Project Company and the relevant project counterparty which would have a Material Adverse Effect, and in the case of a failure which in the opinion of the Sukuk Trustee is capable of being remedied, the Project Company does not remedy the failure within the period ending on the date falling thirty (30) days prior to the end of any cure or remedy period relating to such failure expressly provided for under the relevant Project Document;

(6) (a) any party to a Project Document does not comply with any provision of that agreement and such breach has a Material Adverse Effect and is not cured, waived or otherwise remedied within the applicable cure period set forth in such agreement and: (i) substitute arrangements satisfactory to the Sukuk Trustee are not put in place (other than in respect of the Project Documents to which a Major Project Party is party, which shall not be susceptible to substitute arrangements for the purposes of this sub-paragraph); or (ii) such breach is not cured, waived or remedied, in each case within sixty (60) days from such breach (or, if applicable, the expiry of any relevant cure period set forth in such agreement), provided that, at all times during such sixty (60) days period, it is using best endeavours to procure the remedy of such breach or to put in place such arrangements; (b) a material provision of any Project Document ceases to be in full force and effect prior to its stated termination date (or any party thereto has a right terminate or issue a notice or termination thereunder) or becomes void or unenforceable, and substitute arrangements satisfactory to the Sukuk


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Trustee are not put in place within sixty (60) days (other than in respect of the Project Documents to which a Major Project Party is party, which shall not be susceptible to substitute arrangements for the purposes of this sub-paragraph) and provided that it is using best endeavours to procure the remedy of such breach or to put in place such arrangements;

(7) the Project Company becomes unable to pay any of its debts generally as they fall due or suspends making payments with respect to all or any class of its debts;

(8) The Project Company changes the nature or scope of any part of its business, or suspends or ceases to carry on all or a part of its business which it now conducts directly or indirectly;

(9) it is or becomes unlawful for any person (other than the Sukuk Trustee on behalf of the Sukukholders) to perform any of its material obligations under the Project Documents which would have a Material Adverse Effect and, such circumstance continues for, or substitute arrangements satisfactory to the Sukuk Trustee are not put in place within sixty (60) days (provided that the Project Company is using best endeavours to avoid the unlawfulness or to put in place such arrangements);

(10) any governmental authority takes, or provides official notice that it intends to take, any step with a view to the seizure, expropriation, nationalisation or compulsory acquisition (whether or not for fair compensation) of the Project Company (or any shares (including redeemable preference shares) in the Project Company) or all or any part of the Project Assets or the undertakings, rights or revenues of the Project Company which have a Material Adverse Effect;

(11) (a) any governmental authorisation (other than the generation licence) is revoked, terminated, withheld, invalidated, cancelled or not renewed or modified or amended or a notice of violation is issued under any governmental authorisation by the issuing agency or other governmental instrumentality having jurisdiction thereover, or any proceeding is commenced by any governmental instrumentality for the purpose of modifying, revoking, terminating, withholding, invalidating or cancelling any governmental authorisation and in each case in a manner which has or would reasonably be expected to give rise to a Material


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Adverse Effect; (b) the generation licence is revoked, terminated, withheld, invalidated, cancelled or not renewed or modified or amended or ceases to be in full force and effect without a substitute licence being issued therefor within one hundred and eighty (180) days of such revocation, termination, withholding, invalidation, cancellation, non-renewal, or cessation; or, as the case may be, and the effect of such modification or amendment would be to prevent the implementation or carrying out of the Project by the Project Company or has or would reasonably be expected to give rise to a Material Adverse Effect; (c) Any condition or provision of the generation licence is not complied with and such non-compliance has not been remedied or waived by the Energy Commission in writing (in each case) within thirty (30) days of its occurrence unless the Energy Commission has permitted the Project Company to remedy such non-compliance and the Project Company has demonstrated to the satisfaction of the Sukuk Trustee by the thirtieth (30) day after its occurrence that it will remedy such non-compliance within ninety (90) days of its occurrence or such other cure period as may be permitted or required by the Energy Commission;

(12) the Project Company ceases to be the sole, lawful and beneficial owner of, or to have good title to, all or a material part of the assets of the Project Company (other than amounts deposited in the Distribution Account), or ceases to be the sole party entitled to the revenues generated by the Project, in each case, save as provided in the Sukuk Finance Documents;

(13) any party repudiates any of the Transaction Documents to which it is a party or the Project Company does or causes to be done any act or thing evincing an intention to repudiate any of the Transaction Documents to which it is a party and which, in relation to the Project Documents, such repudiation, act or thing evincing an intention to repudiate would have a Material Adverse Effect;

(14) any other event or series of events occurs which would have a Material Adverse Effect, and, in the case of an event or series of events which in the opinion of the Sukuk Trustee is capable of being remedied, the Project Company does not remedy such event(s) within sixty (60) days after the Project Company became aware or has been notified by the Security Agent of the failure;


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(15) suspension of construction work on the whole or any material part of the Project, other than as a result of force majeure, and such suspension continues uncured or is not remedied to the satisfaction of the Sukuk Trustee for a period ending on the date falling on the earlier of (A) sixty (60) days prior to the end of any cure or remedy period relating to such suspension expressly provided for under the relevant Project Document and (B) one hundred and eighty (180) days from the date of such suspension;

(16) any representation or warranty made by the Project Company under any provision of the Sukuk Finance Documents to which it is a party or any information, notice, opinion or certificate or other document delivered pursuant to the terms of the Sukuk Finance Documents proves to have been incorrect or misleading in any material respect (where such event would have a Material Adverse Effect) as of the date at which such representation or warranty is made or repeated, or the date at which such information, notice, opinion, certificate or other document is delivered (in each case) by reference to the facts and circumstances existing at such date, unless the circumstances giving rise to the misrepresentation are capable of remedy and are remedied within thirty (30) days of the earlier of the date on which (i) the Sukuk Trustee gives notice to the Project Company to do so and (ii) the Project Company becomes aware of such misrepresentation;

(17) (a) any Security Document ceases to be in full force and effect or ceases to be effective to create the Security Interest or to provide the priority of security purported to be created thereunder which would materially prejudice the interest of the Sukukholders; or (b) for whatever reason, any of the Security Interests created under any Sukuk Finance Document cannot be perfected or is in jeopardy or rendered invalid or defective in any way which would materially prejudice the interest of the Sukukholders;

(18) (a) TNB issues a notice under the PPA and the event in respect of which such notice was issued is not cured by the cure period applicable thereto as provided in the PPA, or any other right to terminate the PPA accrues in favour of TNB under the PPA; (b) TNB or the Energy Commission exercises its step-in rights under the PPA or the generation licence as a result of the Project Company's default


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under the PPA or the generation licence, or evinces an intention to exercise such step-in rights; (c) the COD of Unit 2 has not occurred by the date falling one hundred and eighty (180) days after Initial Scheduled COD of Unit 2; (d) an event of force majeure continues for longer than one hundred and eighty (180) days under the PPA or the CSTA; (e) an event of force majeure occurs under any Project Document and (other than in relation to the PPA or CSTA) such event has or would reasonably be expected to have a Material Adverse Effect in the opinion of the Sukuk Trustee;

(19) other than for the purposes of and followed by a reconstruction previously approved in writing by the Sukuk Trustee, unless during or following such reconstruction the Project Company becomes or is declared to be insolvent, a winding-up order has been made against any of the Project Company or any step is taken for the winding up, dissolution or liquidation of any of the Project Company or a resolution is passed for the winding up of the Project Company or a petition for winding up is presented against any of the Project Company (unless such petition is frivolous or vexatious or related to a claim to which the Project Company have a good defence or which is being contested in good faith by the Project Company and the Project Company has not taken any action in good faith to set aside such petition or the petition is not withdrawn or discharged within 90 days from the date of service of such winding up petition or a winding up order has been made against the Project Company;

(20) where a scheme of arrangement under Section 176 of the Companies Act 1965 (Malaysia) has been instituted against the Project Company;

(21) an encumbrancer takes possession of, or a trustee, receiver, receiver and manager or similar officer is appointed in respect of the whole or substantial part of the assets of any of the Project Company, or distress, legal process, sequestration or any form of execution is levied or enforced or sued out against such assets which would have a Material Adverse Effect and is not discharged within 90 days, or any security interest which may for the time being affect any of such assets becomes enforceable and which would have a Material Adverse Effect.

(22) any financial indebtedness (other than Sukuk Murabahah) of the Project Company becomes due and payable prior to its stated maturity, or any


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security created to secure such financial indebtedness becomes enforceable;

(23) any other Events of Default customary to project financing facilities as advised by the Legal Counsel to the JPA/JLA and mutually agreed between the Project Company and the JPA/JLA.

At any time after the occurrence of an Event of Default which is continuing, and for so long as the Sukukholders have not waived such Event of Default, the Sukuk Trustee may, at its sole and absolute discretion and shall, if so directed by the Sukukholders (subject to its rights to be indemnified to its satisfaction against all reasonable costs and expenses thereby occasioned) by way of an extraordinary resolution, by written notice to the Project Company, declare that an Event of Default has occurred and that all amounts under the Sukuk Murabahah then outstanding be immediately due and payable whereupon they shall become immediately due and payable. At any time after the occurrence of an Event of Default which is continuing, and for so long as the Sukukholders, the PPA Performance Bonds facility provider, if applicable, the hedging counterpart(ies) of the Hedging Facilities and, if applicable, the working capital facility provider(s) have not waived such Event of Default, the Sukukholders, if applicable, the PPA Performance Bonds facility provider, the hedging counterpart(ies) of the Hedging Facilities and, if applicable, the working capital facility provider(s) holding at least seventy five percent (75%) of total amount outstanding, being the aggregate of the nominal value outstanding for the Sukuk Murabahah, the contingent amount payable under the PPA Performance Bonds, and if applicable, the net amount due and payable under the Hedging Facilities and, if applicable, the working capital facility(ies), as calculated by the Facility Agent, may exercise, inter alia, the following remedies: (i) exercise their rights under the Sukuk Finance

Documents to step-in to complete and/or operate the Project;

(ii) enforce security and/or exercise any and all such other rights granted to the Sukukholders, the PPA Performance Bonds facility provider, if applicable, the hedging counterpart(ies) of the Hedging Facilities and, if applicable, the working capital facility providers under the Security Documents;

(iii) demand that the Shareholders and the Sponsors immediately accelerate all their capital contribution


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such that the full amount of capital committed to the Project that is outstanding is immediately due and payable.

(25) Governing laws

and Jurisdiction : Laws of Malaysia and exclusive jurisdiction of the courts

of Malaysia. (26) Provisions on buy-

back, if applicable : Repurchase and cancellation

The Issuer or its subsidiaries or its agent(s) who is/are acting on behalf of the Issuer for the purchase, may at any time purchase the Sukuk Murabahah at any price in the open market or by private treaty, but these Sukuk Murabahah which are purchased by the Issuer or its subsidiaries or its agent(s) who is acting on behalf of the Issuer for the purchase shall be cancelled by the Issuer and cannot be resold. Any of the Sukuk Murabahah acquired by the Issuer’s related corporations (other than the Issuer’s subsidiaries) need not be cancelled but shall not entitle them to participate in the voting of any Sukukholders’ resolution nor form part of the quorum of any meeting. The Sukuk Murabahah held by any interested person (who shall include directors, major shareholders and chief executive) of the Issuer shall not be counted for the purposes of voting. Redemption on maturity Unless previously purchased and cancelled, the Issuer shall redeem the Sukuk Murabahah at face value on their respective maturity dates. Mandatory Redemption In accordance with the provisions of the Insurance Proceeds Account and paragraphs (b)(ii) and (c) of the Compensation Account, mandatory redemption of all tranches of the Sukuk Murabahah on a pro rata basis on the amount outstanding under each tranche, with any amount required to be applied in mandatory redemption shall be paid by the next Profit Payment Date after the date of the receipt. In respect of the mandatory redemption pursuant to a Total Loss, if the takaful/insurance proceeds are insufficient to cover all amounts outstanding in respect of the Deferred Sale Price of the relevant Sukuk Murabahah (subject to Ibra’), the Project Company shall irrevocably and unconditionally undertake to make good the difference and shall immediately make such requisite payment if sufficient proceeds of takaful/insurance have not been received within thirty (30) days after the occurrence of


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the Total Loss. The events leading to the Mandatory Redemptions are in accordance with the provisions of the Insurance Proceeds Account and paragraphs (b)(ii) and (c) of the Compensation Account i.e the occurrence of Total Loss as described in the Insurance Proceeds Account, the receipt of balance of proceeds from performance liquidated damages where the Sukukholders decide to apply such proceeds for mandatory redemption of the Sukuk Murabahah as described paragraph b(ii) of the Compensation Account and the receipt of amounts pursuant to events as described in paragraph (c) of the Compensation Account.

(27) Provisions on early redemption, if applicable

: No provision for early redemption.

(28) Voting : Sukukholders will not be entitled to receive notice of or

attend or vote at any meeting of the ordinary shareholders of the Issuer or participate in the management of the Issuer. No company-shareholder relationship is intended or has been contemplated between the Issuer and the Sukukholders and as such the relationship between the Issuer and the Sukukholders shall not be governed by the memorandum and articles of association of the Issuer.

(29) Permitted

investments, if applicable

: (a) The Issuer shall be permitted from time to time to utilise funds held in the Designated Accounts to make Permitted Investments which are Shariah-compliant, provided that:

(i) such funds utilised for Permitted Investments shall be remitted to the Designated Accounts in a timely manner to meet any payment obligations of the Issuer when due; and

(ii) such Permitted Investments are to be denominated in Ringgit or Yen or Dollar provided such Permitted Investments made in Yen or Dollar shall be made from the Yen Disbursement Account or Dollar Disbursement Account respectively.

(b) Permitted Investments shall include Shariah-compliant investment products approved by the SAC of the SC and/or BNM’s Shariah Advisory Council. Permitted Investments are as follows:

(i) mudharabah, wadiah and other Islamic deposits under Shariah principles with


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licensed financial institutions;

(ii) Islamic banker acceptances, Islamic bills, Islamic money market instruments issued by licensed financial institutions with a short-term rating of P1 or MARC-1 and a minimum long-term rating of AA3 or AA- or its equivalent;

(iii) Islamic money market funds which are approved by the SC;

(iv) Islamic principal guaranteed structured investments approved by BNM and issued by licensed financial institutions with a short-term rating of P1 or MARC-1 and a minimum long-term rating of AA3 or AA- or its equivalent or their local or foreign equivalents;

(v) Islamic treasury bills, Islamic money market instruments, and sukuk issued by BNM or the Government of Malaysia; and

(vi) sukuk issued by corporations, financial institutions, or guaranteed by licensed financial institutions with a short-term rating of P1 or MARC-1 and a minimum long-term rating of AA3 or AA- or its equivalent.

Provided that in respect of the Permitted Investments: (a) fifty percent (50%) of the Permitted Investments

standing to the credit of the FSRA must have a final maturity before the next payment date;

(b) an amount at least equivalent to the next finance service (consisting of principal and profit payments) shall be due not later than three (3) business days before the next forthcoming principal or Profit Payment Date or can be withdrawn at any time without any loss in principal and save and except for money market instruments which shall be due not later than one (1) business day before the next forthcoming principal or Profit Payment Date.

(30) Other terms and

conditions

1. Other

regulatory approvals required in relation to the issue, offer or

: None.


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invitation to subscribe or purchase Sukuk, and whether or not obtained

2. Listing status

and types of listing

: The Sukuk Murabahah may be listed on Bursa Malaysia Securities Berhad under the Exempt Regime if the Issuer so decides. The SC shall be notified accordingly in the event of such listing.

3. Details on

utilisation of proceeds by the Issuer / Obligor

: The proceeds of the Sukuk Murabahah shall be utilised for the following Shariah-compliant purposes in connection with the Project: a. pay for Project Costs;

b. pay and/or reimburse to the Sponsors/Shareholders based on documentary evidence all Project Costs incurred prior to the Sukuk Murabahah issuance as set out in the financial model;

c. after the COD of Unit 1 has been achieved pay and/or reimburse to TNB and Mitsui the Development Costs based on the Project Development Agreement;

d. pay financing costs in relation to the Project (including fees and expenses incurred for the issuance of the Sukuk Murabahah).

For the avoidance of doubt, the use of the proceeds by the Project Company as set out above in item (a) shall be subject to the construction budget prepared by the Project Company and approved by the Security Agent acting on the advice of the Technical Adviser. The payment and/or reimbursement to the Shareholders under items (b) and (c) above will include redemption of the RPS held by the Shareholders and shall not be subjected to Distribution Covenant.

4. Identified

Assets : Shariah-compliant commodities which shall include, but

are not limited to, crude palm oil and such other acceptable commodities (excluding ribawi items in the category of mediums of exchange such as currency, gold and silver) which are provided through the commodity trading platform, Bursa Suq Al-Sila’ and/or such other independent commodity platform as approved by the Joint Shariah Advisers (“Commodities”).


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5. Purchase and selling price / rental

: Purchase Price The Purchase Price shall be determined prior to the issuance of the Sukuk Murabahah. The Purchase Price shall comply with the Securities Commission’s (“SC”) Shariah Advisory Council (“SAC”) asset pricing requirements (“Asset Pricing Requirements”) as provided in the SC’s Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework (“LOLA Guidelines”). Deferred Sale Price The Deferred Sale Price shall be an amount equal to the Purchase Price plus the aggregate profit margin which is based on profit rate determined upfront (applicable for a Sukuk Murabahah with periodic payments) and, in respect of a Sukuk Murabahah issued at a discount, plus the Discounted Amount (as defined below) payable on a deferred payment basis and will be determined prior to the sale of the Commodities to the Issuer. "Discounted Amount" means the difference between the nominal value of the Sukuk Murabahah and the Purchase Price in the case of Sukuk Murabahah issued at a discount.

6. Profit / coupon /

rental rate : The profit rates for each tranche of the Sukuk Murabahah

will be determined and agreed between the Issuer and the JLM prior to the date of issuance of the Sukuk Murabahah.


rental payment frequency

: The periodic profit payments shall be payable semi-annually in arrears (“Periodic Profit Payments”) with the first Periodic Profit Payment to be made six (6) months from the issue date of the Sukuk Murabahah with the last Periodic Profit Payment for each tranche of the Sukuk Murabahah to be made on the maturity date of such tranche (each such date for payment, a “Profit Payment Date”).


rental payment basis

: Actual/365 days

9. Form and Denomination

: The Sukuk Murabahah shall be issued in accordance with MyClear Rules and Procedures. The Sukuk Murabahah shall be represented by a global certificate to be deposited with BNM, and is exchanged for a definitive bearer form only in certain limited circumstances. The denomination of the Sukuk Murabahah shall be RM1,000 or in multiples of RM1,000 at the time of issuance or, subject to MyClear Rules and Procedures, such other


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denominations as may be agreed between the Issuer and the Facility Agent.

10. Compensation

(Ta/widh) In the event of delay in payments of any amount,

including the Deferred Sale Price due and payable under any tranche of the Sukuk Murabahah, the Issuer shall pay Ta’widh (compensation) to the Sukuk Trustee for the benefit of the Sukukholders on such delay in payment at the rate and manner prescribed by the SC’s SAC from time to time in accordance with Shariah principle.

11. Ibra’ : The Sukukholders in subscribing or purchasing the

Sukuk Murabahah, hereby consent to grant an ibra’ if the Sukuk Murabahah are redeemed before maturity, upon the declaration of an Event of Default or Mandatory Redemption of the Sukuk Murabahah. Upon the declaration of Event of Default or Mandatory Redemption of the Sukuk Murabahah, the ibra’ shall be calculated as follows:

(i) in the case of Sukuk Murabahah with Periodic Profit Payments and issued at a discount

the aggregate of unearned Periodic Profit

Payments and the unearned discounted amount (ii) in the case of Sukuk Murabahah without Periodic

Profit Payments and issued at a discount the unearned discounted amount (iii) in the case of Sukuk Murabahah with Periodic Profit

Payments and issued at par or at a premium the aggregate of unearned Periodic Profit

Payments The Ibra’ in relation to (i), (ii) and (iii) above shall be calculated from the date of the declaration of any Event of Default or Mandatory Redemption of the Sukuk Murabahah, where relevant, up to the respective maturity date of the Sukuk Murabahah. Ibra’ refers to an act of releasing absolutely or conditionally one’s rights and claims on any obligation against another party which would result in the latter being discharged of his/its obligation or liabilities towards the former. The release may be either partially or in full. The ibra’ clause and the formula for the computation of early settlement may be stated in the main agreement of sukuk which is based on `uqud mu`awadhat. However, the ibra’ clause in the main agreement shall be separated


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from the part related to the price of the transacted asset. The ibra’ clause shall only be stated under the section for mode of payment or settlement in the said agreement.

12. Taxation : All payments by the Issuer shall be made without

withholding or deductions for or on account of any present and future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia unless such withholding or deduction is required by law, in which event the Issuer shall not be required to gross up in connection with such withholding or deduction on these payments or distributions.

13. Status : The Sukuk Murabahah will constitute direct, unconditional and secured obligations of the Issuer and at all times rank pari passu in all respect amongst themselves and at least pari passu with the claims of all its unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law generally.

14. Other

Conditions : The Sukuk Murabahah shall at all times be governed by

the guidelines issued and to be issued from time to time by the SC, BNM and MyClear over matters pertaining to the Sukuk Murabahah and the Sukuk Murabahah.

15. Definitions:

Account Deficiency

: The amount by which the credit balance of any Designated Account is less than the balance which would be required to be credited to that Designated Account had the Project Company had additional sufficient funds credited to the Revenues Accounts in the preceding calendar month.

Ash Disposal

Agreement : Collectively, the Bottom Ash Disposal Agreement and the

Fly Ash Disposal Agreement.

Ashpond Land Sale and Purchase Agreement

: A proposed agreement to be entered into between the Project Company and MBI for the purchase by the Project Company of land for the construction of an ash pond for the disposal of ash produced from the Project (“Ashpond Land”).

Bottom Ash

Disposal Agreement

: The agreement to be entered into by the Project Company enabling the Project Company to dispose of all of the bottom ash produced during the operation of the Plant (which includes any supplemental entered into from time to time).

Capital Costs : All costs, expenses and liabilities of a capital (but not an operating) nature in connection with the Project (excluding the financial indebtedness under the Sukuk Finance Documents and amounts payable by the Project


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Company in respect of financial indebtedness).

Commercial Operation Date (“COD”)

: With respect to either of Unit 1 or Unit 2, the date upon which each of the conditions to the "Commercial Operation Date" (as defined under the PPA) for such Unit under clause 3.3 of the PPA have been satisfied.

CSTA : Coal Supply & Transportation Agreement dated 22 July 2014 and Supplementary CSTA dated 9 July 2015 entered into between the Project Company and TFS (as may be amended or supplemented from time to time).

Deed of Covenants

: A deed of covenants to be entered into between, amongst others, JEP, the Sukuk Trustee, the Facility Agent, the Security Agent and the JPA/JLA setting out, inter alia, the definitions, the covenants and the operation and maintenance of the Designated Accounts between such parties.

Development Costs

: Costs incurred and fees charged by TNB and Mitsui of an amount of up to USD100 million (or its equivalent in Ringgit) which shall be paid by the Project Company directly to or to the order of TNB and Mitsui in accordance with the Project Development Agreement.

Distribution Covenants

: The covenants as set out in item 15 of the section entitled Negative Covenants.

EPC Contract : Engineering Procurement and Construction Contract dated 29 August 2014 and Supplementary EPC dated 6 July 2015 entered into between the Project Company and the EPC Contractors (as may be amended or supplemented from time to time).

EPC Contractors

: Consortium formed by IHI Corporation, ISHI Power Sdn Bhd, Toshiba Corporation, TOS Energy Malaysia Sdn Bhd, Hyundai Engineering & Construction Co., Ltd/Hyundai Engineering Co., Ltd.

Equity Contribution Agreement

: An equity contribution agreement entered into by the Shareholders, the Sponsors, the Security Agent and the Project Company on or about the date of the Deed of Covenant setting out, inter alia, the undertaking of each of the Shareholders to provide capital contribution to the Project Company.

Finance Documents

: The Sukuk Finance Documents, the PPA Performance Bonds facility agreement, the hedging agreements and the working capital facilities agreements.

Finance Service Reserve Requirement

: As at each Monthly Transfer Date and on any other date on which the Finance Service Reserve Requirement is required to be determined, an amount equal to the


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aggregate of all amounts payable in respect of the Sukuk Murabahah (other than amounts payable in the event of the Mandatory Redemption of the Sukuk Murabahah), in each case, falling due and payable on the immediately following Payment Date.

Financing Costs : To include, inter alia, any periodic profit payments, fees and other costs or expenses payable in respect of the Sukuk Murabahah.

Fly Ash Disposal Agreement

: The agreement to be entered into by the Project Company enabling the Project Company to dispose of all of the fly ash produced during the operation of the Plant (which includes any supplemental entered into from time to time).

GST : Goods and services tax or other equivalent tax chargeable in Malaysia.

Initial Scheduled COD of Unit 2

: 15 December 2019.

Issue Date : The date on which any tranche of the Sukuk Murabahah are issued.

Jetty Land Lease Agreement

: The lands lease agreement to be entered into between JEP and Menteri Besar Incorporated of Negeri Sembilan (“MBI”) in relation to the lease of the Jetty Land by MBI to JEP (including any supplemental entered into from time to time).

Major Maintenance Costs

: All costs and expenses incurred by the Project Company in relation to the Major Maintenance (being items identified as major scheduled maintenance in the planned maintenance schedule) of up to Ringgit One Hundred and Fifty Million (RM150,000,000.00).

Major Project Party

: (a) at all times, TNB Fuel Services Sdn Bhd (“TFS”), TNB Repair and Maintenance Sdn Bhd and TNB;

(b) at all times prior to the expiry of the defects liability period (howsoever defined) under the EPC Contract, each of IHI Corporation, Toshiba Corporation, Hyundai Engineering Co., Ltd. and Hyundai Engineering & Construction Co., Ltd;

(c) at all times prior to the expiry of the defects liability period (howsoever defined) under the Transmission Line EPC Contract and Transmission Works EPC Contract, each such construction contractor;

(d) at all times prior to the date on which the Project


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Company acquires legal title to the Power Plant Land or registered sub-lease, whichever is earlier, Jalur Jernih Sdn Bhd and Jimah Energy Ventures Sdn Bhd; and

(e) until registration of the lease over the Jetty Lands, MBI.

Malaysian

Obligor : Any and each of the Obligors which is incorporated in

Malaysia. Material

Adverse Effect : The effect of any event or circumstance which is or could

reasonably be expected to be materially adverse to: (a) the ability of any of the Project Company or prior to

the Project Completion Date, any other Obligor, to perform or comply with any of their respective obligations under the Sukuk Finance Documents in a timely manner;

(b) (i) the validity, legality, binding effect or enforceability

of the Sukuk Finance Documents or to any of the Security Interests granted pursuant thereto or to any of the rights or remedies of any Secured Party thereunder; or (ii) the operations, business, property, assets, liabilities or financial condition of the Project Company and prior to the Project Completion Date, any other Obligor.

Monthly

Transfer Date : For each calendar month, the earlier of:

(a) the twenty-fourth (24th) day of such calendar month

(or, if that day is not a business day, the next following business day in the same calendar month (if there is one) or the preceding business day (if there is not); or

(b) if a Payment Date falls in such calendar month, the

business day falling two (2) business days prior to such Payment Date.

MyClear Rules

and Procedures : (1) the Participation and Operation Rules for Payment

and Securities Services issued by Malaysian Electronic Clearing Corporation Sdn Bhd (“MyClear”);

(2) the Operational Procedures for Securities Services

issued by MyClear; and (3) the Operational Procedures for Malaysian Ringgit

(MYR) Settlement in RENTAS issued by MyClear;


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or their replacement thereof (collectively, the “MyClear Rules and Procedures”) applicable from time to time.

Obligor : Any and each of (i) the Project Company; (ii) each Shareholder; and (iii) each Sponsor.

Offset Agreement

: The agreement dated 8 October 2014 entered into between the Project Company and Toshiba Corp (as may be amended or supplemented from time to time) in relation to provision of offset activities, benefits, packages and programmes in compliance with the Treasury Circular on Policy and Guidelines on Offset Programme in Government Procurement published on 18 March 2011 (as may be amended from time to time) (“Offset Policy”) including the provision and development of a power plant simulator associated with the Project.

Offset Management Services Agreement

: The agreement dated 30 September 2014 entered into between JEP and Malaysian Industry-Government Group for High Technology (MIGHT) (as may be amended or supplemented from time to time) in relation to performing the offset management services and setting up of the Offset Management Unit (“OMU”) for JEP in compliance with the Government’s Offset Policy. The OMU function is to manage and co-ordinate the offset programme activities implementation for JEP based on the Malaysian Offset Program Management Framework and becomes the integral point for all JEP offset project management activities.

Operating Costs : All costs and expenses incurred by the Project Company in the ordinary course of its business.

O&M Agreement

: Operations and Maintenance Agreement to be entered into between JEP and TNB Repair and Maintenance Sdn Bhd.

Payment Date : The date falling six (6) months after the Issue Date and each date falling six (6) months after the preceding Payment Date until (and including) the Maturity Date.

Permitted Indebtedness

: In respect of the Project Company, to include, inter alia, the following:- (1) financial indebtedness of the Project Company

secured by Permitted Security Interest;

(2) financial indebtedness under the Project Documents and the Finance Documents;

(3) RPS;

(4) to the extent constituting financial indebtedness,


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any lease or hire-purchase of automobiles or office equipment made in the ordinary course of business by the Project Company, provided that the aggregate amount of such financial indebtedness shall not exceed Ringgit Five Million (RM5,000,000.00) (or its equivalent);

(5) any financial indebtedness arising from or in connection with the Project Company’s obligations under the Project Documents (including the PPA) to provide any bonds or performance guarantee capped to Ringgit two hundred and sixteen million (RM216,000,000);

(6) any financial indebtedness arising from related corporations of the Project Company that are, except as otherwise permitted under the Transaction Documents, subordinated to the Sukuk Murabahah;

(7) other financial indebtedness which does not exceed, when aggregated with any amounts of financial indebtedness under agreements relating to the issuance of performance bonds, letters of credit or acceptance financing where, in each case, such obligations are for a term of less than one hundred and eighty (180) days and are entered into in the normal course of business, Ringgit One Hundred and Fifty Million (RM150,000,000.00); and

(8) any financial indebtedness arising from hedging facilities entered into during the construction period of the Project of up to the foreign currency amount payable in relation to the engineering, procurement and construction costs under the EPC Contract; and

(9) working capital facilities of up to

prior to Unit 2 COD: RM250m

from Unit 2 COD to COD + 5 years (inclusive): RM400m

from COD + 5 years to COD + 10 years (inclusive): RM550m

from COD + 10 years to COD + 15 years (inclusive): RM550m

from COD + 15 years onwards: RM600m

Permitted Security Interest

: To include, inter alia, the following: (1) those Security Interests contemplated under the


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Transaction Documents;

(2) those Security Interests arising by operation of law and contractual liens and retention of title arrangements, in each case arising in the ordinary course of the Project Company's business provided that the same are in respect of obligations which are not overdue for more than thirty (30) days and for which appropriate segregated cash reserves have been established;

(3) any Security Interest which (i) secures the repayment of indebtedness not exceeding five percent (5%) of its net assets; and (ii) is a result of a court order or judgment that is not yet final or is being contested or is discharged within forty-five (45) days of its creation;

(4) any Security Interest created to secure the Hedging Facilities, the working capital facilities or the PPA Performance Bonds facilities and shared pari passu with the Sukukholders as set out in the section entitled “Details of security/collateral pledged, if applicable” labove; and/or

(5) any other Security Interests expressly permitted under the Sukuk Finance Documents.

Plant : Unit 1, Unit 2, and other facilities to be constructed in

accordance with the terms and conditions of the PPA and the EPC Contract.

Potential Event of Default

: Any event or circumstance which, with the giving of notice, the making of any determination by the Sukuk Trustee (where the factual circumstances permit the making of such determination) or the expiry of any grace period (or any combination of the above), and on the basis that it is still continuing, would become an Event of Default.

Power Plant Land

: A part of the two (2) pieces of land measuring approximately 257 acres currently held under Pajakan Negeri Hakmilik No. 45938 for Lot No. 10878 and Pajakan Negeri Hakmilik No. 45939 for Lot No. 10879, both in Mukim Jimah, Daerah Port Dickson, Negeri Sembilan for the purposes of the Plant and associated facilities.

PPA : Power Purchase Agreement dated 22 July 2014 entered into between JEP and TNB (as may be amended or supplemented from time to time).


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PPA Performance Bonds

: The performance bond amounting up to Ringgit Two Hundred and Sixteen Million (RM216,000,000.00) given or to be given or procured for the benefit of TNB in accordance with the terms of the PPA.

Principal Accrual Requirement

: As at each Monthly Transfer Date and on any other date on which the Principal Accrual Requirement is required to be determined, an amount equal to: (a) during the period until Scheduled COD of Unit 2,

zero; (b) during the period from Scheduled COD of Unit 2 until

the first principal payment date, a fractional portion calculated on the date of Scheduled COD of Unit 2, equal to one (1) divided by the number of such Monthly Transfer Dates falling between the Scheduled COD of Unit 2 and the first principal payment date of the aggregate principal amount of the tranche of Sukuk Murabahah falling due on the first principal payment date; and

(c) during the period from the first principal payment

date until final maturity date, one sixth (1/6) of the aggregate principal amount of the tranche of Sukuk Murabahah for which the immediately following Profit Payment Date is the maturity date.

Profit Accrual

Requirement : As at each Monthly Transfer Date after Scheduled COD

of Unit 2 and on any other date on which the Profit Accrual Requirement is required to be determined in accordance with the terms of the Deed of Covenants, an amount equal to one sixth (1/6) of the Profit Payment due in respect of the Sukuk Murabahah on the immediately following Payment Date.

Progress Report

: A report on the progress of construction and commissioning of the Project prepared by the Technical Adviser, which report shall include a description in reasonable detail of the progress of the construction of the Project since the immediately preceding construction report. The report will be based on the information provided by the Project Company from its own monthly progress reports.

Project : The financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of the Plant and associated facilities, including the Transmission Line (as defined in the PPA) and Interconnection Facilities (as defined in the PPA), to be located at Kuala Lukut, Mukim Jimah, District of Port Dickson, Negeri Sembilan Darul Khusus, Malaysia.


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Project Assets : The assets from time to time required by the Project Company for the purposes of the Project or otherwise owned by the Project Company.

Project Completion Date

: The first date on which all of the following conditions have been complied to the satisfaction of the Security Agent: (1) TNB has confirmed in writing that each of the

conditions to the Commercial Operation Date of both Units and the Transmission Line and Interconnection Facilities has been satisfied in accordance with the PPA, and the Project Company has established that the claw-back provisions of clauses 10.4(d) and (e) of the PPA shall not apply and that there are no material unresolved disputes relating thereto;

(2) TNB has confirmed in writing its acceptance of the

transfer from the Project Company to TNB of all rights, title and interest to the completed Interconnection Facilities and the Transmission Line and the land titles relating to the site of the Transmission Line;

(3) the Completion Certificate for the Works (as defined

in the EPC Contract) has been issued in accordance with the EPC Contract and the Technical Adviser has confirmed that such Completion Certificate for the Works has been properly issued;

(4) the completion certificate (as described in the

Transmission Line EPC Contract) has been issued in accordance with the Transmission Line EPC Contract and the Technical Adviser has confirmed that such completion certificate has been properly issued;

(5) the completion certificate (as described in the

Transmission Works EPC Contract) has been issued in accordance with the Transmission Works EPC Contract;

(6) the Project Company has discharged in full its

payment obligations under the EPC Contract, Transmission Works EPC Contract and Transmission Line EPC Contract or has demonstrated that it has sufficient funds available to enable it to discharge in full all such payment obligations when they fall due and such funds have been placed in a segregated reserve account.

Project Costs : The costs and expenses associated with the Site,

development, design, engineering, procurement,


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construction, installation, testing, commissioning, ownership, operation and maintenance in respect of the Project that were incurred by the Project Company and accrued prior to the Project Completion Date, and for the purpose of, achieving COD of Unit 2, to the extent that such costs and expenses are included in the construction budget which has been reviewed and approved by the Technical Adviser and provided to the Technical Adviser to enable the issuance of its report under item (3)(e)of the section entitled Conditions Precedent and as set out in the financial model.

Project Documents

: To include, inter alia, the following:- (1) PPA(including Supplementary PPA);

(2) EPC Contract (including Supplementary EPC);

(3) Transmission Line EPC Contract between HG Power Transmission Sdn Bhd;

(4) CSTA (including Supplementary CSTA);

(5) applicable insurance policies/takaful contracts of the Project Company in respect of the Project;

(6) all performance and/or maintenance bonds in respect of the Project and all other guarantees, advance payment bonds and other forms of payment or performance security issued in favour of the Project Company pursuant to any Project Document;

(7) Transmission Works Agreement between TNB and JEP;

(8) Transmission Works EPC Contract between JEP and Transgrid Ventures Sdn Bhd;

(9) Ash Disposal Agreement;

(10) until such time as the Project Company has acquired the Power Plant Land, Sub-Lease Agreement, Supplementary Sub-Lease Agreement and the Sale and Purchase Agreement (Power Plant Land), Supplementary SPA (Power Plant Land), and Second Supplementary SPA (Power Plant Land);

(11) Jetty Lands Lease Agreement;

(12) generation licence;

(13) Offset Agreement;


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(14) Offset Management Services Agreement;

(15) O&M Agreement between JEP and TNB Repair and Maintenance Sdn Bhd (“TNB Remaco”);

(16) Water Pipeline Construction Agreement;

(17) Ashpond Land Sale and Purchase Agreement, if any;

such other project documents as advised by the Legal Counsel to the JPA/JLA and mutually agreed between the Project Company and the JPA/JLA.

Project Development Agreement

: The agreement to be entered into between the Project Company, TNB and Mitsui in relation to the Development Costs, which shall include but not limited to the services rendered and to be rendered to the Project Company required in developing the Project for the achievement of COD of Unit 1 and the other terms and conditions in respect of the payment of the Development Costs by the Project Company.

Qualifying LC Bank

: A financial institution which is acceptable to the Security Agent/Sukuk Trustee and which has an unsecured and unsubordinated long term debt rating at or above AA3 / AA- by RAM / MARC.

RENTAS : Real Time Electronic Transfer of Funds and Securities.

Restricted Payment Date

: In relation to any Profit Payment Date, any date during the period beginning on the date that the FSCR Statement delivered with respect to the FSCR determination period ending on such Profit Payment Date (the "FSCR Statement Delivery Date") is delivered to the Security Agent and ending on the Monthly Transfer Date immediately following such Profit Payment Date.

Ringgit or RM : The lawful currency of Malaysia.

RPS : Redeemable preference shares.

Sale and Purchase Agreement (Power Plant Land)

: The sale and purchase agreement in relation to the Power Plant Land entered into between JEP and Jalur Jernih Sdn Bhd dated 13 June 2014, the Supplementary SPA (Power Plant Land) dated 11 September 2014 and the Second Supplementary SPA (Power Plant Land) dated 8 July 2015 (as may be amended or supplemented from time to time).

Scheduled COD : In relation to Unit 1, 15 June 2019 and, in relation to Unit 2, 15 December 2019, in each case, as such date may be postponed under and in accordance with the PPA.


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Secured Parties : Sukuk Trustee, hedging counterparty, PPA Performance Bonds facility provider and working capital facilities provider.

Site : The sites in Mukim Jimah, Malaysia where the Plant is to be constructed, including the main and auxiliary sites for the Plant, as described in further detail in the site survey set forth in the EPC Contract and including the sites for the Interconnection Facilities.

Sponsors : Tenaga Nasional Berhad and Mitsui & Co., Ltd. and any additional sponsors.

Sub-Lease Agreement

: The sub-lease agreement in relation to the Power Plant Land entered into between JEP, Jalur Jernih Sdn Bhd and Jimah Energy Ventures Sdn Bhd dated 13 June 2014 and the Supplementary Sub-Lease Agreement dated 8 July 2015 (as may be amended or supplemented from time to time).

Sukuk Finance Documents

: The financing agreements in relation to the Sukuk Murabahah, the Intercreditor Agreement, the Equity Contribution Agreement (and all guarantees and letters of credit issued thereunder), the Deed of Covenants, the Security Documents, the facility agreement, the trust deed and other document (whenever executed) designated as such in writing by the Project Company and the Security Agent.

Total Loss : Any damage to all or any substantial part of the Plant

which results in an insurance settlement with respect thereto on the basis of a total loss, or a constructive total loss or agreed total loss, pursuant to the terms of and conditions of the insurance maintained by the Project Company (or any contractor) in respect thereof, or any other damage to all or any substantial part of the Plant which results or, in the opinion of the Sukuk Trustee (acting reasonably in consultation with the Insurance Adviser and the Technical Adviser), will result in the same being permanently unfit for use.

Transaction Documents

: Collectively, the Sukuk Finance Documents and the Project Documents.

Transmission Line EPC Contract

: The agreement dated 10 July 2015 entered into between the Project Company and HG Power Transmission Sdn Bhd (as may be amended or supplemented from time to time) in connection with the design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing and commissioning of the Transmission Line.


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Transmission Works Agreement

: The agreement dated 9 July 2015 entered into between TNB and the Project Company (as may be amended or supplemented from time to time) in connection with design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing and commissioning of the IPP Works (as defined in the PPA).

Transmission Works EPC Contract

: The agreement dated 10 July 2015 entered into between the Project Company and Transgrid Ventures Sdn Bhd (as may be amended or supplemented from time to time) in connection with design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing and commissioning of the IPP Works (as defined in the PPA).

Unit : Each net 1,000 MW block consisting of consisting of a coal fired steam generator, steam turbine and generator with all auxiliary and ancillary equipment and interconnecting systems as more specifically described in Appendix A of the PPA with all auxiliary and ancillary equipment and interconnecting systems.

Unit 1 : The first Unit to achieve its Commercial Operation Date.

Unit 2 : The second Unit to achieve its Commercial Operation Date.

Variable Operating Costs

: The variable operating costs as set out in the Annual Operating Budget and encompassing only the elements as detailed in the O&M Agreement.

Water Pipeline Construction Agreement

: The agreement to be entered into by the Project Company in connection with the procurement, supply, construction, installation, testing and commissioning of the water pipeline for purposes of the Project (including any supplemental entered into from time to time).



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APPENDIX

TRANSACTION STRUCTURE OF THE SUKUK MURABAHAH

Steps Description of the Sukuk Murabahah Structure

1 The Sukuk Trustee (on behalf of the holders of the Sukuk Murabahah (“Sukukholders”)) and JEP shall enter into an agency agreement (“Agency Agreement”), pursuant to which JEP (in such capacity, the “Agent”) is appointed as the agent of the Sukukholders for the purchase and sale of Commodities. The Agent will then enter into a “Sub-Agency Agreement” to appoint the Facility Agent as the sub-agent (in such capacity, the “Sub-Agent”) for the purchase and sale of Commodities under the Sukuk Murabahah issuance.

2 Pursuant to a Commodities Murabahah Master Agreement, to be entered into between JEP (in such capacity, the “Purchaser”) and the Agent and the Sukuk

Commodity Vendor(s)

Bursa Malaysia Islamic Services

Sdn Bhd

Commodity Trading Participant

Facility Agent (as Sub-Agent)

Jimah East Power Sdn Bhd

(as Agent for Sukukholders /

Issuer)

Jimah East Power Sdn Bhd (as Purchaser)

Sukuk Proceeds

Issue Sukuk

1a

1b

Purchase Order with Undertaking to Purchase

2a

2b

Purchase Order with Undertaking to Purchase

6

3 Purchase Commodities on spot

Sale of Commodities on spot

Sukuk Proceeds / Purchase Price

6

5 Sale of Commodities at Deferred Sale Price

7 Periodic Profit Payments (Deferred Sale Price) Sukukholders

(via Sukuk Trustee)

Sub Agency Agreement

Agency Agreement 4

Sukuk Proceeds / Purchase Price

3

(as Commodity Seller)

(as Commodity Buyer)

Sukuk Proceeds

/Other Commodity Platform


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Steps Description of the Sukuk Murabahah Structure

Trustee (acting on behalf of the Sukukholders), the Purchaser issues a purchase order (the “Purchase Order”) to the Agent and subsequently thereafter, the Agent issues the Purchase Order to the Sub-Agent. In the Purchase Order, JEP (acting as Purchaser for itself) will request the Agent, and subsequently, the Agent will request the Sub-Agent to purchase the Commodities on the terms specified therein. The Purchaser will irrevocably undertake to purchase the Commodities from the Sukukholders via the Sub-Agent at a deferred sale price ("Deferred Sale Price").

3 Pursuant to the Purchase Order, the Sub-Agent via the Commodity Trading Participant (“CTP”) (pursuant to the CTP Purchase Agreement entered into between the Sub-Agent and the CTP) will purchase on a spot basis the Commodities from commodity vendor(s) in the Bursa Suq Al-Sila' and/or such other independent commodity trading platforms as may be determined by the Joint Shariah Advisers (“Commodity Seller”) at a purchase price, which shall be an amount equivalent to the Sukuk Murabahah proceeds ("Purchase Price").

4 JEP (acting as the Issuer) shall issue Sukuk Murabahah to the Sukukholders whereby the proceeds received from such issuance shall be used to pay for the Purchase Price of the Commodities. The Sukuk Murabahah shall evidence, amongst others, the Sukukholders' ownership of the Commodities and subsequently, once the Commodities are sold to JEP (as the Purchaser for itself), the entitlement to receive the Deferred Sale Price.

5 Thereafter, pursuant to the undertaking under the Purchase Order, the Sub-Agent (acting on behalf of the Agent, who in turn acts as agent of the Sukukholders) shall sell the Commodities to JEP (acting as Purchaser for itself) at the Deferred Sale Price under the “Sale and Purchase Agreement”.

6 Subsequently thereafter, JEP (pursuant to the CTP Sale Agreement entered into between JEP, as Purchaser for itself and the CTP) shall appoint the CTP to sell the Commodities to Bursa Suq Al-Sila’ and/or such other commodity trading platforms acceptable to the Joint Shariah Advisers (“Commodity Buyer”) on a spot basis for an amount equal to the Purchase Price. The CTP Sale Agreement will provide for the CTP to directly sell the Commodities to the Commodity Buyer upon notice by JEP that the Sale and Purchase Agreement has been duly executed and upon receipt of the sale instruction by JEP.

7 During the tenure of the Sukuk Murabahah, JEP (in its capacity as the Purchaser), as part of its obligation to pay the Deferred Sale Price shall make Periodic Profit Payments to the Sukukholders. Upon the Sukuk Murabahah maturity dates or upon the declaration of an Event of Default or mandatory redemption, JEP (in its capacity as the Purchaser) shall pay all amounts outstanding in respect of the Deferred Sale Price of the relevant Sukuk Murabahah (subject to ibra’, where applicable) upon which the relevant Sukuk Murabahah will be cancelled.



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DIAGRAMMATICAL ILLUSTRATION OF THE DESIGNATED ACCOUNTS


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Section 7 Investment Considerations

Each issue of the Sukuk Murabahah will carry different risks and all potential investors are strongly encouraged to evaluate each issue of the Sukuk Murabahah on its own merit. Recipients of this Information Memorandum are advised to independently evaluate the risks described in this section before making an investment decision. The Sukuk Murabahah is subject to certain risk factors that could adversely affect, amongst others, the business of the Issuer. The risk factors relating to the Sukuk Murabahah and its possible mitigating factors which are summarised below do not purport to be comprehensive or exhaustive and are not intended to be a substitute or replacement for an independent assessment of the risk factors that may affect the Sukuk Murabahah. Each investor or prospective investor should carefully conduct his or her independent evaluation of the risks associated with investing in the Sukuk Murabahah. 7.1 Considerations Relating to the Sukuk Murabahah 7.1.1 Rating

MARC has assigned a preliminary rating of AA-IS for the Sukuk Murabahah. A rating is not a recommendation to purchase, hold or sell the Sukuk Murabahah. There is no assurance that a rating will remain in effect for any given period of time or that a rating will not be downgraded, suspended or withdrawn entirely by MARC in the future, if, in its judgment, circumstances in the future so warrant. Further, such a rating is not a guarantee of repayment or that there will be no default by the Issuer under the Sukuk Murabahah. In the event that the rating initially assigned to the Sukuk Murabahah is subsequently downgraded, suspended or withdrawn for any reason, no person or entity will be obliged to provide any additional credit enhancement with respect to the Sukuk Murabahah. Any downgrading, suspension or withdrawal of a rating may have an adverse effect on the liquidity and market price of the Sukuk Murabahah. Any downgrading, suspension or withdrawal of a rating will not constitute an event of default with respect to the Sukuk Murabahah or an event by itself that warrants the Sukuk Murabahah to be immediately due and payable.

7.1.2 No Prior Market in the Sukuk Murabahah

The Sukuk Murabahah comprises a new issue of securities for which there is currently no secondary market. There can be no assurance that such secondary market will develop or, if it does develop, that it will provide the Sukukholders with the liquidity of investments or will continue for the tenor of the Sukuk Murabahah. If a market develops, the market value of the Sukuk Murabahah may fluctuate. Any sale of the Sukuk Murabahah by the Sukukholders in any secondary market which may develop may be at a discount from the original issue price of the Sukuk Murabahah, depending on many factors, including the prevailing interest rates and the market for similar securities.


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7.1.3 Suitability of Investments Each potential investor in the Sukuk Murabahah must determine the suitability of its investment in light of its own circumstances. In particular, each potential investor should: (i) have sufficient knowledge and experience to make a meaningful evaluation of

the Sukuk Murabahah, the merits and risks of investing in the Sukuk

Murabahah and the information contained in this Information Memorandum;

(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in

the context of its particular financial situation, an investment in the Sukuk

Murabahah and the impact the Sukuk Murabahah will have on its overall

investment portfolio;

(iii) have sufficient financial resources and liquidity to bear all of the risks of an

investment in the Sukuk Murabahah;

(iv) understand thoroughly the terms of the Sukuk Murabahah and be familiar with

the behaviour of any relevant indices and financial markets; and

(v) be able to evaluate (either alone or with the help of a financial adviser)

possible scenarios for economic and other factors that may affect its

investment and its ability to bear the applicable risks.

7.1.4 Shariah Compliance

Notwithstanding the approvals of the Joint Shariah Advisers of the Sukuk

Murabahah, case law in Malaysia indicates that the courts in Malaysia may still

examine the issue of whether there has been compliance with Shariah and if held to

be non-Shariah compliant, the recoverability of the profit element under the Sukuk

Murabahah may be affected. No assurance is given that the approvals of the Joint

Shariah Advisers will not be subject to challenge on grounds that the Sukuk

Murabahah is not Shariah compliant.

7.1.5 Risk of Mandatory Prepayments and Redemptions The provision for mandatory prepayments and redemptions of the Sukuk Murabahah

earlier than the fixed maturity date may result in the Sukukholders incurring capital loss as this will impact the Sukukholders who have purchased the Sukuk Murabahah above par. The liquidity of the remaining Sukuk Murabahah may also be affected.

7.1.6 Total Loss Upon the receipt by the Project Company of any takaful/insurance proceeds following

a Total Loss, the Project Company shall apply the amount so received towards mandatory redemption of all tranches of the Sukuk Murabahah on a pro rata basis on the amount outstanding under each tranche in accordance with the terms of the


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Sukuk Murabahah. If the takaful/insurance proceeds are insufficient to cover the amounts outstanding in respect of the Deferred Sale Price (as defined in the PTC) of the relevant Sukuk Murabahah (subject to Ibra’), the Project Company shall irrevocably and unconditionally undertake to make good the difference and shall immediately make such requisite payment if sufficient proceeds of takaful/insurance have not been received within thirty (30) days after the occurrence of the Total Loss.

In this regard, there is no assurance that any disruption, decline or threat to the

continuation of the Project Company’s business will not have an adverse effect on the Project Company’s ability to make good the difference, for not taking full takaful/insurance coverage in connection with the Project Assets (as defined in the PTC) and the Plant on the Power Plant Land (as defined in the PTC). However, a written report will be obtained from the Independent Insurance Adviser prior to Financial Close that the Takaful/insurance cover obtained by the Project Company in relation to the Project is adequate and in compliance with the Project Company’s obligations to insure under the relevant Project Documents. “Total Loss” is defined as any damage to all or any substantial part of the Plant which results in an insurance settlement with respect thereto on the basis of a total loss, or a constructive total loss or agreed total loss, pursuant to the terms of and conditions of the insurance maintained by the Project Company (or any contractor) in respect thereof, or any other damage to all or any substantial part of the Plant which results or, in the opinion of the Sukuk Trustee (acting reasonably in consultation with the Independent Insurance Adviser and the Independent Technical Adviser), will result in the same being permanently unfit for use.

7.1.7 Performance of Contractual Obligations

The ability of the Issuer to make payments in respect of the Sukuk Murabahah shall depend upon due performance by the other parties to the Transaction Documents (as defined in the PTC) and their obligations thereunder.

7.1.8 Market Risk

Other than the operating results and/or the financial conditions of the Issuer and/or the Shareholders/Sponsors, the price of the Sukuk Murabahah in the secondary market may be influenced by numerous factors, including but not limited to, the political, economic, and any other factors that can affect the capital markets, the industry, the Issuer and/or the Shareholders/Sponsors in general. Adverse economic and financial developments could have a material adverse effect on the market value of the Sukuk Murabahah.

7.1.9 Interest Rate Risk

Sukukholders may suffer unforeseen losses due to fluctuations in interest rates. Although the Sukuk Murabahah are Islamic securities which do not pay interest, they are similar to fixed income securities and may therefore see their price fluctuate due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in bond prices. The Sukuk Murabahah may be similarly affected resulting in a capital loss for the Sukukholders. Conversely, when interest rates fall, bond prices and the


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prices at which the Sukuk Murabahah are traded may rise. Sukukholders may enjoy a capital gain but profit received may be reinvested for lower returns.

7.1.10 Inflation Risk

JEP may be exposed to inflation risks on its operating cost. In this regard, the Fixed Operating Rate and Variable Operating Rate under the PPA will be adjusted by multiplying the prevailing rate by 1.04 every forty eight (48) months under the terms of the PPA. The adjustment is primarily to cater for inflationary pressures such as rising labour cost, operating cost and other expenses. However, there is no assurance that such adjustments will sufficiently compensate for any actual inflationary impact on JEP’s operating cost.

JEP has included inflation as one of the key assumptions in the financial projection. For such purposes, inflation is assumed to be two percent (2%) to five percent (5%) per annum as stated below:-

Inflation rate (%)

Variable operator expenses and fixed operator expenses

3

Manpower costs 5

Other expenses 2

7.2 Risks Relating to the Issuer 7.2.1 Issuer’s Ability to Meet its Obligations Under the Sukuk Murabahah

The ability of the Issuer to meet its obligations to the Sukukholders in terms of payment of amounts due in respect of the Sukuk Murabahah will depend on the Issuer’s income and revenue and in particular the strength of the Issuer’s operation to generate sufficient and positive cashflows. Payments of all amounts due and payable in respect of the Sukuk Murabahah will be the Issuer’s obligation alone and there is no recourse to the Sponsors.

7.2.2 Foreign Exchange Risk

The Issuer faces foreign exchange risk as some of the engineering, procurement and construction costs are denominated in foreign currencies, such as USD and JPY, which will be actively managed by the Shareholders/Sponsors. This risk is mitigated by the Shareholders/Sponsors’ significant experience as power developers and in managing foreign currency exposures across their respective portfolios. The following steps will be taken by the Shareholders/Sponsors on behalf of the Issuer to mitigate the foreign exchange risk: (i) Forward exchange contracts

The Issuer will purchase currencies more than two (2) days before settlement date provided firm amount and value date are known earlier to avoid


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speculative hedging as stipulated under BNM rules and regulations. This mechanism will enable the Issuer to lock-in the forward rates upfront to protect itself from adverse currency fluctuation.

(ii) Floats in USD and JPY

The Issuer will carry out opportunistic spot buying of USD and JPY whenever MYR strengthens against the currencies. The floats will act as natural hedge and any USD and JPY payments will be settled via foreign currency accounts. Whenever necessary, the Issuer may purchase the additional amount of USD and JPY to top up the floats should the amounts decrease due to utilisation.

(iii) USD and JPY Permitted Investments

The Issuer has the ability to invest in either USD or JPY Permitted Investments.

JEP has included the following forward currency exchange rates as one of the key base case assumptions in the financial projection:-

Exchange rate 2015 2016 2017 2018 2019 2020

USD/Ringgit 4.30 4.30 4.30 4.30 4.30 4.30

Ringgit/JPY 32.717 31.993 30.953 29.871 29.864 28.139

7.3 Risks Relating to the Project 7.3.1 Pre-Completion Risk

(a) Cost Overrun

JEP has entered into a fixed price EPC Contract with the EPC Contractors for the Project. Within the specifications of the EPC Contract, the EPC Contractors are expected to bear all cost overruns (up to the liquidated damages ceiling). However, the EPC Contract allows certain adjustments to the Contract Price in certain limited circumstances and such adjustment may lead to cost overrun.

Cost overruns would be funded out of budgeted project contingency. The Shareholders/Sponsors have included two point five percent (2.5%) of the Contract Price as the project contingency to cover any potential cost overruns experienced during the construction stage. While the level of contingency included is lower than the level of contingency recommended by the Independent Technical Adviser, which is five percent (5%) of the Contract Price, the Shareholders/Sponsors believe that they have a track record of low cost overruns during construction for existing operating plants in Malaysia which they own or have been involved in and therefore possess the ability to manage cost within the budget. In addition, the Shareholders/Sponsors are required to provide the supplemental capital contribution of up to two point five percent (2.5%) of the Contract Price pursuant to the Equity Contribution Agreement to meet any increased cost above the contingency.


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(b) Technology

The use of ultra-supercritical technology is new to JEP and such technology requires a significant amount of technological expertise in order to operate and maintain the Plant efficiently. However, JEP’s exposure is now mitigated as this risk is now passed to TNB Remaco. Under the O&M Agreement, TNB Remaco is required to submit a plan on parts and equipment for overhaul as part of the proposed reimbursable costs which will be reviewed annually. Translational loss on foreign exchange will be mitigated via a contingency amount dedicated to operations and maintenance under the O&M Agreement. In addressing the availability of parts the process of procuring parts will usually begin no later than nine (9) months before the scheduled outage thereby allowing sufficient time for manufacturing and shipping. The risk of unavailability of parts is further minimised as such parts will be sourced from IHI Corporation and Toshiba Corporation, both being reputable original equipment manufacturers. Further, Mitsui will contribute to the development and operation of the Project by leveraging its expertise from its experience in ultra-supercritical technology and power industry.

(c) Site

The land required for the Project is approximately 257.019 acres to accommodate its generating units, coal stockyard and Interconnection Facilities. Part of the land is currently submerged and the EPC Contract has provided for its reclamation as part of the works thereunder. JEP is currently in the process of conducting extensive land reclamation works at the site. In addition, JEP intends to enter into a JLLA to lease from MBI the land on which a coal unloading jetty, cooling water intake system, outlet culvert and auxiliary jetty for JEP will be located. Any delay in the land reclamation or the entry into the JLLA may affect the development timeline and cause JEP to be unable to meet the critical milestones in the PPA.

(d) Completion Delay

The completion risks of the Project are mainly dependent on the performance of the EPC Contractors in completing the same in accordance with the agreed dates in order for JEP to meet the Scheduled Commercial Operation Date for such Unit under the PPA. If the EPC Contractors fail to achieve the actual Commercial Operation Date of each Unit by the Scheduled Commercial Operation Date of such Unit, they shall pay JEP liquidated damages for each day of delay up to the occurrence of the actual Commercial Operation Date of that Unit. Pursuant to the Independent Technical Adviser’s report, the Independent Technical Adviser believes that the delay liquidated damages are generally in line with the current market conditions. The Independent Technical Adviser also notes that the delay liquidated damages under the EPC Contract are more than sufficient to offset the delay liquidated damages under the PPA. However, JEP can give no assurance on the performance of the EPC Contractors under the EPC Contract. The liquidated damages for delay under the Transmission Line EPC Contract and the Transmission Works EPC Contract are inadequate to offset the


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liquidated damages for delay under the PPA. In this regard, JEP has taken the following measures: (i) With regard to the works under the Transmission Line EPC Contract,

the handing over of the Right Of Way (“ROW”) is scheduled to occur in stages whereby the majority of the ROW is to be acquired and handed over ahead of schedule and therefore, notwithstanding any delay on the land acquisition for certain parcels, the overall work can still be completed as scheduled.

(ii) With regard to the works under the Transmission Works EPC Contract, JEP has issued a limited notice to proceed to the EPC Contractor to allow for the early commencement of the required preliminary works.

(e) Other Completion Delays

Delays in achieving the Commercial Operation Date of a Unit could arise due to the failure of the construction works for the Project, which could also arise due to:

(i) the failure by TNB to inspect or approve without reasonable cause the

interconnection protective devices referred to in the PPA within fourteen (14) days of receipt by TNB of the certificate by the Independent Engineer issued in accordance with the PPA;

(ii) the failure by TNB to complete the relevant portion of the TNB

Lenggeng Works to enable 500kV back energisation by 14 April 2018; or

(iii) the failure by TNB to energise the Interconnection Facilities, the

Transmission Lines and the IPP Works or accept the required generation to enable the testing of such Unit.

(f) Force Majeure during Construction

Force majeure provisions are found in the PPA, the CSTA and other Project Documents. A force majeure event is an event, condition, or circumstance, which is beyond the reasonable control of the parties and occurs without fault or negligence on the part of the party claiming it. Such an event would result in delay or disruption in the performance of obligation under the affected agreements despite all reasonable efforts of the party claiming it to prevent it or mitigate its effects. There is a risk that JEP may be adversely affected by a force majeure event either directly or indirectly if the other project counterparties to the affected agreements are relieved of their contractual obligations thereunder.

Under the terms of the PPA, JEP is able to extend the Scheduled Commercial Operation Date of a Unit for each day the relevant Commercial Operation Date is delayed by a force majeure event and JEP would not be liable to pay liquidated damages for such delay.


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Furthermore, if a force majeure event affecting TNB occurs before the Commercial Operation Date of the First Unit and delays the occurrence of the Commercial Operation Date of a Unit past its Scheduled Commercial Operation Date, TNB shall pay JEP the costs of servicing debt and any other unavoidable that JEP may reasonably incurred to the extent JEP does not receive insurance proceeds which reimburse it for such costs incurred.

(g) Change in Law Adjustment

To the extent a change in law occurs after the date of the PPA which compels JEP to make any material capital improvement or other material modification to the Facility and/or the Interconnection Facilities and/or the Transmission Lines that is required for the purpose of enabling JEP to fulfil its obligations under the PPA in compliance with such change, TNB and JEP shall determine, in good faith and subject to the approval of the Commission, any extension of the Term or any adjustment to the Capacity Rate Financial to reflect such cost as may be reasonably incurred by JEP in making such improvement or modification and the date from which such adjustment is to be effective. However, this recovery is limited as under the terms of the PPA, JEP will need to bear up to RM10 million of costs in any calendar year for any material capital improvement or other material modification to the Facility necessitated by a change in law. Only costs in excess of such threshold will be recoverable by way of an extension of the Term or an adjustment to the Capacity Rate Financial.

(h) Risks of Liquidated Damages Amount being challenged

Whilst the liquidated damages are supported by on-demand performance bonds issued by the EPC Contractors with the liquidated damages level acting as the ceiling to the compensation available, it is possible that the EPC Contrators may challenge the quantum of the liquidated damages payable. The performance bonds are subject to the uniform rules issued by International Chamber of Commerce and the matters not addressed by the uniform rules will be governed and construed in accordance with the laws of England. There is no assurance that JEP will be able to recover reasonable compensation to cover the losses in the event that the amount of compensation is challenged by the EPC Contractors and the courts agree with the EPC Contractors.

(i) EPC Contractors Performance and Termination

The EPC Contractors have experience in all aspects of designing and building coal fired power plants. Although the EPC Contractors have a track record and are of a certain financial strength, there is no assurance that the Project will be completed within the agreed costs, schedule time and deliver the guaranteed performance. If JEP chooses to terminate the EPC Contract, the aggregate liability of the EPC Contractors to the Issuer is capped at the Contract Price, with specified carve outs from the limit on liability, such as delay liquidated damages, performance liquidated damages and liquidated damages.


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7.3.2 Post-Completion Risk (a) Offtake Risk

Under the PPA, JEP will have to sell all the electrical energy generated to TNB and thus making TNB the sole offtaker. TNB currently has a monopoly in the transmission and distribution of electricity in the country. The risk associated with such monopoly is that the expected revenue stream of JEP will depend on the ability of TNB to make timely payments as JEP’s revenue is principally derived from Available Capacity Payments and Energy Payments payable by TNB under the PPA. Therefore, JEP bears the risks of depending solely on the credit quality of a single buyer. To the extent that TNB’s future power purchase obligations are compromised, there could be a material adverse effect on JEP’s ability to meet its payment obligations under the Sukuk Murabahah.

(b) Despatch Risk

Under the PPA, TNB will be required to make Available Capacity Payments to JEP to the extent the Facility makes Daily Available Capacity to TNB. The Available Capacity Payments will be based on the following Capacity Rate Financial (“CRF”) and Fixed Operating Rate (“FOR”): CRF RM37.448870 per kW/month in the first 111 months from the Commercial Operation Date of the First Unit (Tier 1 period); RM52.428419 per kW/month in the period of 171 months after the expiry of the Tier 1 period (Tier 2 period); RM56.173306 per kW/month in the period of 243 months after the expiry of the Tier 2 period (Tier 3 period); and RM46.3000000 per kW/month for the remainder of the Term after the expiry of the Tier 3 period (Tier 4 period). FOR RM7.180401 per kW/month in the first 48 months from the Commercial Operation Date of the First Unit. Subsequently, in every 48 months shall be adjusted by multiplying the prevailing FOR by 1.04. This portion of the Facility’s revenue is not subject to despatch risk and JEP will be entitled to the full amount provided that the Facility does not exceed unplanned outage limits and meets specified availability targets.

On the other hand, Energy Payments to be made by TNB to JEP are exposed to despatch risk as these payments would not be due to JEP if the Facility is not requested by TNB to generate electricity.


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However, JEP expects this risk to be low in view of the relatively favourable position of coal-fired power plants in the merit order leading to their regular base load operation. JEP further expects that the Facility would be listed in the same manner in the merit order, if not better in view of the projected higher efficiency of ultra-supercritical technology.

(c) Plant Performance

Under the terms of the PPA, JEP is required to meet the declared Contractual Available Capacity for such Unit. If the Contractual Available Capacity of any Unit is less than the Nominal Capacity, JEP is liable to pay one time liquidated damages calculated at RM5,000 per kW of the shortfall in the capacity. Under the terms of the PPA, such liquidated damages are payable only once by JEP. In addition, JEP is required to comply with each Despatch Instruction issued by the Grid System Operator. JEP will not be entitled to Energy Payments for any excess net electrical output generated over and above the level of generation specified in the relevant Despatch Instruction. Each failure by JEP to comply with the Despatch Instruction will result in TNB liquidated damages of RM250,000 payable to TNB.

Although there would be no further liquidated damages payable by JEP under the PPA, the lower dependable capacity will impinge on the available capacity payments to be received in future.

Under the EPC Contract, the EPC Contractors have guaranteed certain performance targets at completion, which include net heat rate and net power capacity. If the EPC Contractors have achieved the minimum performance criteria but have not achieved the guaranteed net power capacity and guaranteed heat rate, the EPC Contractors shall pay JEP liquidated damages:

(i) at the rate of RM12,000,000 per MW of shortfall and pro-rata per part thereof where the net power capacity is less than the applicable guaranteed net power capacity; and

(ii) at the rate of RM1,200,000 per kJ/kWh of shortfall and pro-rata per part thereof where the net heat rate is greater than the applicable guaranteed net heat rate.

The performance liquidated damages are capped at fifteen percent (15%) of the Contract Price and the performance liquidated damages have to be supported by a performance bond representing twenty percent (20%) of the Contract Price issued by the EPC Contractors.

(d) Operations and Maintenance Risk

There are a number of operational factors that can lead to reduced revenue, penalties and/or increased costs to JEP. These include unexpected and extended breakdowns leading to breaches of unplanned outage limits, failures to achieve availability targets and higher than anticipated heat rates.


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The first unplanned outage limit and second unplanned outage limit under the PPA are six percent (6%) and eight percent (8%) respectively. If unexpected breakdowns do not exceed the first unplanned limit, Available Capacity Payments would remain unaffected. But if the first unplanned limit is exceeded, Available Capacity Payments will be reduced. If JEP exceeds the second unplanned outage limit, there will be a further reduction on the Available Capacity Payments.

On the other hand, JEP shall meet the Contracted Average Availability Target (“CAAT”) for each Unit for each Contract Year Block. If a CAAT for a Unit is unmet, JEP will be required to pay a sum to TNB calculated based on the shortfall between the relevant CAAT and the average Availability Target for that Unit achieved by the Plant in a block of five or six Contract Years.

JEP enjoys a fuel cost pass-thorough mechanism under the PPA whereby the fuel payment payable to JEP is calculated based on the applicable heat rates. If JEP fails to achieve the heat rate performance or the heat rate achieved is higher than the anticipated heat rates, JEP would suffer increased costs as the fuel payments do not fully compensate JEP for the coal cost incurred.

To address the abovementioned risks, the PPA requires JEP to establish a maintenance reserve in the sum of not less than RM24 million to fund the maintenance expenses of the Facility. The maintenance reserve shall be used exclusively to pay for maintenance expenses for the Plant to ensure that it will continue to be operated in accordance with prudent utility practices, design limits and the conditions of the PPA.

(e) Force Majeure Risk

If either party is rendered unable by reason of force majeure to perform, wholly or in part, any obligation set out in the PPA, those obligations shall be suspended or excused to the extent their performance is affected by such event. If a force majeure event affecting JEP occurs after the Commercial Operation Date of a Unit, such force majeure event does not relieve TNB of its obligation to make Available Capacity Payments to JEP to the extent that the relevant Unit is available to deliver electrical energy to TNB. On the other hand, if a force majeure event affecting TNB occurs after the Commercial Operation Date of the First Unit, TNB shall continue to make Available Capacity Payments to JEP to the extent that the relevant Unit is available to deliver electrical energy to TNB. Should these amounts be insufficient to cover debt service and JEP’s unavoidable costs, TNB shall pay such amounts necessary to do so but unavoidable costs are capped to a sum equal to the Fixed Operating Rate portion of the Fixed Availability Payment.

Any interruption in the supply of coal to the Facility due to the default or negligence of TFS under the CSTA will constitute a force majeure event under the PPA. Under the terms of the CSTA, any event of force majeure duly declared under the PPA will constitute a force majeure event under the CSTA.


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(f) Coal Supply The supply of coal for the Facility will need to be procured exclusively from TFS under the CSTA. While TFS has identified some suppliers of coal, these producers or mines are not dedicated suppliers and TFS may supply coal wholly or partially from other suppliers or sources. JEP is required to provide TFS with monthly nominations of quantities of coal for delivery. TFS is required to prepare remedial plans in the event of delays and JEP shall be entitled to purchase coal on its own if such remedial plans are unacceptable to JEP or not implemented. Additional costs incurred by JEP for such purchase must be reimbursed by TFS. In the event of supply interruptions, JEP should be able to avail of its minimum stockpile of (i) 360,000 tonnes from the Commercial Operation Date of the First Unit but before the Commercial Operation Date of the Second Unit; and (ii) 720,000 tonnes from the Commercial Operation Date of the Second Unit and throughout the term of the PPA, but such stockpile is only sufficient for the full operation of the Facility over a period of forty five (45) days.

(g) Coal Quality and Blending Ratio

All coal delivered by TFS shall meet quality specifications stipulated in the CSTA and be substantially free from impurities. JEP may reject any individual shipment of coal that exceeds any of the quality rejection limits, or if discharging the coal would cause damage to the discharge port or the Facility. The price of coal delivered to JEP shall be adjusted and determined taking into account gross calorific value, moisture, ash content, sulphur content and size and further adjustments based on the results of analysis by an inspection company. The CSTA provides the operational mechanism for JEP to submit and nominate coal type and quantity required on a monthly basis. However, TFS is not obliged to fulfil JEP’s request for certain quantities of Low CV Coal and Medium CV Coal for a specific delivery and is only required to ensure that the ratio of quantities of Low CV Coal and Medium CV Coal to be delivered in any Delivery Year shall comply with the Blending Ratio. In addition, JEP has no right to obtain any third party coal to allow a suitable quality coal to be blended from the resources received. Unlike Straight Burn Coal which may be burned without blending, Low CV Coal and Medium CV Coal have to be blended in the Blending Ratio. In the event JEP is not able to blend the coal received into a suitable blend, it may impact JEP’s ability to meet its obligations under the PPA, which require JEP to ensure, amongst others, that the Plant uses Medium CV Coal and Low CV Coal after blending in equal parts. The Shareholders/Sponsors have indicated that coal blending will be performed by JEP on the belt by reclaiming from different coal stocks at the same time. The key blending parameters are CV and Ash Content. The HGI value shall also be considered during blending, depending on the condition of


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the pulveriser. To ensure blending parameters are achieved, the performance of stacker/reclaimers and yard conveyors and the accuracy of the belt weigher (load cell) during reclaiming have to be maintained.

(h) Coal Price

The coal price (including insurance, transportation charges and taxes) is a pass-through to TNB in the form of Energy Payments payable under the PPA based on an agreed-upon partial heat rate table and subsequently tested heat rates. However, higher than anticipated heat rates will cause the Plant to bear increased costs as explained in paragraph 7.3.2(d) above.

(i) PPA Termination Payment

If TNB terminates the PPA due to an Event of Default by JEP, TNB has the option, but not the obligation to purchase the Project in accordance with the terms of the PPA. In such event that TNB elects to purchase the Project, TNB has a right to set-off amounts owing to it from JEP, including liquidated damages payable by JEP, against the purchase price. Any set-off will reduce the termination payments that may be payable by TNB otherwise. Further, in the event if the Sponsors’ gross equity contribution amount is less than twenty percent (20%) of the Total Project Costs (as defined in the PPA), TNB is only obliged to pay ninety five percent (95%) of the outstanding indebtedness owed by JEP to its financiers as part of the purchase price of the Project and the Sukukholders may suffer loss if TNB only pays such amount in actual fact.

(j) Adequacy of Insurance Coverage

It is a condition precedent to the issuance of the Sukuk Murabahah that JEP procures a confirmation from the Independent Insurance Adviser that the insurance/takaful contracts and reinsurance/retakaful arrangements then required to be in effect under the terms of the finance documents in relation to the Sukuk Murabahah are in full force and effect. However, there can be no assurance that there will be sufficient coverage to adequately protect against interruption to business, generation of revenue, increased expenditure or any other liabilities associated with the business of JEP.

7.3.3 Regulatory and Environmental Risks

(a) Change in Law

A change in law resulting in the Project Company being required to make capital improvements in excess of Ringgit Ten Million (RM10,000,000.00) will result in TNB and the Project Company renegotiating the Capacity Rate Financial (as defined in the PPA). If the parties cannot agree the dispute resolution process applies.


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(b) Generation Licence

Under the Electricity Supply Act, a person who intends to operate a power plant is required to hold an electricity generation licence. The Commission, in issuing such licence, may also impose such conditions as may appear to be requisite or expedient in accordance with the provisions of the Electricity Supply Act. There is no certainty as to the nature of such conditions that may be imposed. Pursuant to the Electricity Supply Act, in the event of a breach of any of such conditions imposed, the Generation Licence may be suspended or revoked by the Commission. Under the PPA, JEP is required, not later than 15 July 2017, to submit to TNB a certified copy of the Generation Licence. A delay in obtaining the Generation Licence could result in the Initial Operation Date and consequentially the Scheduled Commercial Operation Date not being met. In such event, it would reduce the revenues and cashflow of JEP post-Commercial Operation Date.

Under the PPA, TNB is entitled to terminate the PPA in accordance with its terms in the event the Generation Licence is suspended or revoked or terminated due to JEP’s default and JEP has not caused the same to be reinstated or renewed within the stipulated remedy period.

(c) Renewal of Licence/Permit Risks

JEP will require various approvals, licences, permits and certificates to operate their business and the Facility and will be required to renew these approvals, licences, permits and certificates or to obtain new approvals, licences, permits and certificates. Whilst JEP may not have experienced any significant difficulty in renewing and maintaining the approvals, licences, permits and certificates granted, there will not be any assurance that in the future the relevant authorities will issue or renew any required approvals, licences, permits or certificates in a timely manner or at all. Failure to renew, maintain or obtain the required approvals, licences, permits and certificates may interrupt the operations or delay or prevent the implementation of any capacity expansion or other new projects and may have a material adverse effect on JEP’s business, financial condition and results of operations.

(d) Property and Jetty Lands

(i) SPA The requirement to create and present a charge over the Property for registration in favour of the Security Agent (the “Property Charge”) is a condition subsequent to the issuance of the Sukuk Murabahah, which condition subsequent is to be fulfilled no later than twenty four (24) months from the date of the first issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent). The creation of the Property Charge is dependent on, inter alia, the completion of the SPA.


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Upon the fulfilment of all the conditions precedent in the SPA, transfer of legal ownership in the Property from Jalur Jernih in favour of JEP will be by way of a memorandum of transfer as prescribed under the National Land Code, 1965 (the “NLC”) which must be presented for registration at the relevant land registry. Under the NLC, once registered, the transfer is effective on the date the memorandum of transfer was presented for registration at the relevant land registry provided there are no technical or procedural errors. However, there is a risk that the memorandum of transfer may not be registered in the name of JEP due to certain reasons (for example, due to technical or procedural errors or due to an injunction by third parties alleging fraud). Therefore, there can be no assurance that the SPA will complete and JEP will become the registered proprietor of the Property so as to enable the creation of the Property Charge in favour of the Security Agent. The creation of the Property Charge by JEP in favour of the Security Agent will be by way of a memorandum of charge as prescribed under the NLC which must be presented for registration at the relevant land registry. Under the NLC, once registered, the Property Charge is effective on the date the memorandum of charge was presented for registration at the relevant land registry provided there are no technical or procedural errors. However, there is a risk that the memorandum of charge may not be registered in favour of the Security Agent due to similar reasons as stated above. Therefore, there can be no assurance that the Property Charge will be registered in favour of the Security Agent.

(ii) SLA Pending the fulfilment of the conditions precedent in the SPA and the completion of the sale, purchase and transfer of the Property in favour of JEP, Jalur Jernih (as the registered proprietor of the Land), JEV (as the sub-lessor) and JEP (as the sub-lessee) have entered into the SLA for the sub-lease over the Property by JEV to JEP in accordance with the terms of the SLA (the “Sub-Lease”). JEP is required to create and present the charge over the Sub-Lease (the “Sub-Lease Charge”) for registration at the relevant land registry no later than twelve (12) months after the first issuance of the Sukuk Murabahah (or such longer period as may be agreed upon by the Security Agent). Upon the fulfilment of all the conditions precedent in the SLA, the Sub-Lease in favour of JEP will be created by way of a memorandum of sub-lease as prescribed under the NLC which must be presented for registration at the relevant land registry. Under the NLC, once registered, the Sub-Lease is effective on the date the memorandum of sub-lease was presented for registration at the relevant land registry provided there are no technical or procedural errors. However, there is a risk that the memorandum of sub-lease may not be registered in favour of the Security Agent due to similar reasons as stated above. Therefore, there can be no assurance that the Consent to Charge will be obtained and that the Sub-Lease will be registered in favour of JEP


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so as to enable the creation of the Sub-Lease Charge in favour of the Security Agent. The creation of the Sub-Lease Charge by JEP in favour of the Security Agent will be by way of a memorandum of charge as prescribed under the NLC which must be presented for registration at the relevant land registry. Under the NLC, once registered, the Sub-Lease Charge is effective on the date the memorandum of charge was presented for registration at the relevant land registry provided there are no technical or procedural errors. However, there is a risk that the memorandum of charge may not be registered in favour of the Security Agent due to similar reasons as stated above. Therefore, there can be no assurance that the Sub-Lease Charge will be registered in favour of the Security Agent.

(iii) Jetty Lands

JEP intends to lease the Jetty Lands from the land owner (the “Jetty Lands Lease”) and register the Jetty Lands Lease in favour of JEP. The requirement to create a charge over the Jetty Lands in favour of the Security Agent (the “Charge over Jetty Lands Lease”) also constitutes a condition subsequent to the issuance of the Sukuk Murabahah, which condition subsequent is to be fulfilled no later than eighteen (18) months from the date of the issuance of the Sukuk Murabahah (or such longer period as may be agreed by the Security Agent). As at the date hereof, JEP is still in the midst of negotiating the terms and conditions of the Jetty Lands Lease with the land owner. Depending on the terms granted by the land owner, there is no assurance that the Jetty Lands Lease will not be terminated by the land owner if an event of breach or default occurs. In addition, the State Authority’s approvals may be required for the creation of the Jetty Lands Lease and the Charge over Jetty Lands Lease. As such, there is no assurance that the Jetty Lands Lease will be obtained by and registered in favour of JEP and that the Charge over Jetty Lands Lease will be created and registered in favour of the Security Agent.

(iv) Avoidance of Sale Under Section 293(1) of the Companies Act, “any transfer, mortgage, delivery of goods, payment, execution or other act relating to property made or done by or against a company which, had it been made or done by or against an individual, would in his bankruptcy under the law of bankruptcy be void or voidable shall in the event of the company being wound up, be void or voidable in the like manner.” Therefore, Section 52(1) of the Bankruptcy Act, 1967 (“2-year Rule”) is applicable to a company being wound up. Section 52(1) of the Bankruptcy Act, 1967 states:


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“any settlement of property, not being a settlement made before and in consideration of marriage or a settlement made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, or a settlement made on or for the wife or children of the settlor of property which has accrued to the settlor after marriage in right of his wife, shall, if the settlor becomes bankrupt within two years after the date of the settlement, be absolutely void against the Director General of Insolvency, and shall, if the settlor becomes bankrupt at any subsequent time within five years after the date of settlement, be void against the Director General of Insolvency, unless the parties claiming under the settlement can prove that settlor was at the time of making the settlement able to pay all his debts without the aid of the property comprised in the settlement, and that the interest of the settlor in such property had passed to the trustee of such settlement on the execution thereof.”

For purposes of this section, “settlement” includes any conveyance or transfer of property, bill, bond, note, security for money or covenant for the payment of money. This will mean the sale of the Property will be a settlement within the 2-year Rule. The 2-year Rule may not apply to the sale of Property, as it is envisaged that the Property to be sold by Jalur Jernih would be in good faith and for valuable consideration. The purchase consideration for the Property is based on valuation conducted by an independent valuer. However, there is no assurance that a Director General of Insolvency would take this view and not challenge this settlement.

(v) Compulsory Land Acquisition

The Property and the Jetty Lands may be subject to a compulsory land acquisition by the Government. If a compulsory land acquisition is made in respect of any or all of the Property and/or the Jetty Lands, compensation would be payable to JEP if JEP completes the SPA, the Sub-Lease is created in favour of JEP and/or the Jetty Lands Lease is obtained by JEP. However, there can be no assurance that the amount of such compensation would be equal to the market value of such land or sufficient to redeem the Sukuk Murabahah in full. In addition, there may be a delay between the completion of the compulsory land acquisition and the date of payment of the compensation. Any such delay, or a payment of compensation which is lower than the value of such land, may have an adverse impact on the ability of JEP to meet its obligation to make payments under the Sukuk Murabahah.

(e) Environmental and Social Risks

JEP, as with all other independent power producers, is subject to environmental legislations, policies and regulations. These include meeting air, water and noise emission standards. Under the Environmental Quality Act 1974 (“EQA”), JEP is required to carry out an environmental impact assessment (“EIA”) and obtain approval from the DOE.


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At the initial stage of the Project, JEP has engaged Chemsain Konsultant Sdn Bhd to prepare the detailed environmental impact assessment (“DEIA”) report to study the potential impact of the Facility and identify necessary measures to mitigate the risks. In respect of the environment requirements, DOE has confirmed that the DEIA report submitted by JEP fulfills the requirements of Section 34A(2) of the EQA and thus has granted its approval on the report to JEP on 10 March 2014. In addition, a separate approval has been obtained from the Department of Irrigation and Drainage (“DID”) in respect of the offshore hydraulic marine activities. JEP is in the process of preparing a supplementary DEIA for the Transmission Line route in view of the revised route. The supplementary DEIA is expected to be submitted to the DOE by November 2015. There can be no assurance that the standards imposed by the environmental legislations and regulations will not change or otherwise result in the increase in costs or losses of or reductions in revenue to JEP. Non-compliance could also result in the suspension or revocation of the Generation Licence and/or the imposition of fines.

7.4 Risks Relating to TNB and Mitsui 7.4.1 The business, operations and/or financial position of TNB and/or Mitsui may

affect the ability of TNB and/or Mitsui to inject the Capital Contribution into the Project

TNB and Mitsui are required to contribute Capital Contributions in the form of equity for the Project. An adverse effect to the business, operations and/or financial position of TNB and/or Mitsui may directly have an adverse effect on the TNB’s and/or Mitsui’s s ability to fulfil its obligations under the Equity Contribution Agreement (as described in the PTC) to inject the Capital Contributions for the Project, which in turn may have a negative impact on the Project as a whole. The Capital Contributions from TNB and 3B Power are back-ended in nature. Mitsui will, inter alia, unconditionally and irrevocably guarantee to the Security Agent the performance when due of all payment obligations of the 3B Power of its Capital Contribution.

7.4.2 Chugoku’s Involvement in the Project as a sponsor

Mitsui has been in continuing discussion with Chugoku for the sale of fifty percent (50%) of its shares in 3B Power, which is expected to be completed after Financial Close subject to the receipt of TNB’s and the Commission’s written approvals. There can be no assurance that Chugoku would be able to meet its payment obligations of 3B Power’s Capital Contribution (proportionate to its interest in 3B Power) in the event the financial standing of Chugoku were to deteriorate. Notwithstanding the above, the Issuer is of the view that the involvement of Chugoku is unlikely to have a negative impact on the construction or operations of the Project should Chugoku not meet its obligations, due to the following considerations:

Chugoku is the sixth (6th) largest electric power company in Japan and owns

generation capacity of 11,995MW, including 12 stations with thermal generation capacity of 7,801MW, highlighted by the Misumi 1,000MW ultra-supercritical


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coal-fired power plant, which achieved commercial operations date in 1998. This demonstrates the experience of Chugoku in both the construction and operations of thermal power plants.

The construction and development of the Project will be undertaken by the respective EPC Contractors, the TW EPC Contractor and the TL EPC Contractor for the power plant, transmission works and transmission line, none of whom are related parties of Chugoku. As long as the funding is in place to make payments for the milestones under the engineering procurement and construction contracts be met, the construction work is unlikely to be impacted if the financial standing of Chugoku were to deteriorate.

The operations of the project will be undertaken by TNB Remaco, which is a wholly owned subsidiary of TNB. TNB Remaco will be responsible for the operations and maintenance of the plant and its ability to meet its obligations under the O&M Agreement is unlikely to be impacted if the financial standing of Chugoku were to deteriorate.

Chugoku has been credited a rating of A3 by Moody’s.

The shareholders agreement for JEP requires that, in the event Chugoku is unable to meet its equity obligations and 3B Power is unable to meet its equity obligations to JEP, TNB would have the right to step in to bridge the gap.

7.5 General Consideration 7.5.1 Forward Looking Statements

Certain statements, information, estimates and reports in this Information Memorandum are based on historical data, which may not be reflective of the future results, and others are forward-looking in nature, which are subject to uncertainties and contingencies. All forward-looking statements are based on estimates and assumptions made by the Issuer, the Shareholders and the Sponsors and although each of the Board of Directors of the Issuer, the Shareholders and the Sponsors believes that these forward-looking statements are reasonable, the statements are nevertheless subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in such forward-looking statements. In light of these and other uncertainties, the inclusion of forward-looking statements in this Information Memorandum should not be regarded as a representation or warranty by the Issuer, the Shareholders, the Sponsors or its advisers or arrangers, and there can be no assurance that the plans and objectives will be achieved. A deterioration in the financial condition of the Issuer, the Shareholders, the Sponsors could adversely affect the market value of the Sukuk Murabahah and the ability of the Issuer, the Shareholders or the Sponsors to make payments under Transaction Documents (as defined in the PTC) relating to the Sukuk Murabahah to which it is a party when due, if at all.


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7.5.2 Change in law

The issue of the Sukuk Murabahah is based on Malaysian law, tax and administrative practices in effect at the date hereof and have due regard to the expected tax treatment of all relevant statutes under such law and practice. No assurance can be given that Malaysian law, tax or administrative practice will not change after the closing or that such changes will not adversely impact the structure of the transaction and the treatment of the Sukuk Murabahah.

7.5.3 Inherent regulatory risk

Regulatory risk is an inherent feature for IPPs such as JEP. Events such as the imposition of an annual windfall profit levy on IPPs in Peninsular Malaysia and Sabah in 2008 – which had subsequently been abolished – and the Government’s sporadic attempts to renegotiate power purchase agreements over the years highlight that the power industry, being a concession-based sector, remains vulnerable to regulatory risk.

Other regulatory risks such as the environmental-related tax (i.e. carbon tax) may be

introduced by the Government in the future which may affect the industry landscape.

7.5.4 Political, Economic and Regulatory Risks

Adverse developments in the political and economic conditions in Malaysia and other countries in the region could materially affect the financial prospects of the Issuer, the Shareholders and the Sponsors. Political and economic uncertainties include risks of war, expropriation, nationalisation, re-negotiation or nullification of existing contracts, changes in interest rates and methods of taxation and currency exchange controls.

Investors should note that whilst the Issuer, the Shareholders and the Sponsors strive to continue to take effective measures such as prudent financial management and efficient operating procedures, there can be no assurance that adverse political and economic factors will not materially affect the Issuer, the Shareholders and the Sponsors.

7.5.5 Draft Project Development Agreement JEP will enter into the Project Development Agreement with TNB and Mitsui in

relation the payment of the Development Cost. The disbursements of payment of Development Cost will be made in accordance to the payment schedule agreed in the Project Development Agreement. The Project Development Agreement sets out the terms and conditions on the types of project management and services rendered and to be rendered to JEP, and the project management and services fee and reimbursement to be paid by JEP.


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7.5.6 Draft project documents

Some of the project documents such as the BADA, FADA, WPCA, JLLA and the Ashpond Land Sale and Purchase Agreement have not been finalised and executed. These project documents are expected to only be executed after Financial Close and their execution will constitute part of the conditions subsequent. There is no assurance that JEP may be able to secure the contracts on favourable terms or at all.



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Section 8 Potential Conflict of Interest

A. CIMB Investment Bank Berhad

Save as disclosed below, as at the date hereof and after making enquiries as were reasonable in the circumstances, CIMB Investment Bank Berhad has confirmed that it is not aware of any circumstances that would give rise to a conflict-of-interest situation or potential conflict-of-interest situation in its capacity as the Joint Principal Advisers, Joint Lead Arrangers, Joint Lead Managers, Joint Lead Bookrunners, Facility Agent and Security Agent in relation to the Sukuk Murabahah. Dato’ Zainal Abidin bin Putih who sits on the board of directors of TNB as Senior Independent Non-Executive Director is also the Chairman and Independent Non-Executive Director of CIMB Bank Berhad and Senior Independent Director of CIMB Group Holdings Berhad. CIMB Investment Bank Berhad, CIMB Bank Berhad and CIMB Group Holdings Berhad are related corporations. CIMB Investment Bank Berhad: (i) it is a licensed investment bank and its appointment as, amongst others, one

of the Joint Principal Advisers, Joint Lead Arrangers, Joint Lead Managers, Joint Lead Bookrunners, Facility Agent and Security Agent for the Sukuk Murabahah is in the ordinary course of its business;

(ii) a due diligence review pursuant to the Sukuk Murabahah has been

undertaken together with other independent professional advisers; and (iii) the conduct of CIMB Investment Bank Berhad is regulated by Bank Negara

Malaysia and the SC and governed under, inter alia, the Financial Services Act 2013, the CMSA and by its own internal controls and checks;

Also, the board of directors of the Issuer is aware that the following measures have been/will be taken to further mitigate or address the above potential conflicts of interest: (a) due diligence review pursuant to the Sukuk Murabahah will be or has been

undertaken by the solicitors for the Sukuk Murabahah;. As such, notwithstanding such potential conflict of interest situations, the board of directors of the Issuer is agreeable to proceed with the Sukuk Murabahah based on the present terms and conditions, after considering all the mitigating measures afore-mentioned.

B. HSBC Amanah Malaysia Berhad

Save as disclosed below, as at the date hereof and after making enquiries as were reasonable in the circumstances, HSBC Amanah Malaysia Berhad confirms that, to the best of its knowledge and belief, there is no existing or potential conflict of interest in its capacity as, amongst others, one of the Joint Principal Advisers, Joint


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Lead Arrangers, Joint Lead Managers, Joint Bookrunners and Joint Shariah Advisers in relation to the Sukuk Murabahah. HSBC Bank Malaysia Berhad is the Financial Adviser to the Sponsors. HSBC Amanah Malaysia Berhad and HSBC Bank Malaysia Berhad are related corporations. Potential conflict of interest situations may arise on the part of HSBC Amanah Malaysia Berhad in its role as one of the Joint Principal Advisers, Joint Lead Arrangers, Joint Lead Managers, Joint Bookrunners and Joint Shariah Advisers in terms of duties owed to potential investors and HSBC Bank Malaysia Berhad’s role as Financial Adviser to the Issuer. The following are the existing mitigating measures or measures that will be adopted by HSBC Amanah Malaysia Berhad in order to mitigate or address the potential conflict of interest situations set out above: HSBC Amanah Malaysia Berhad, in all its appointed roles in respect of the Sukuk Murabahah, has considered the factors involved and believes that its objectivity and independence in carrying out its various roles have been/will be maintained at all times for the following reasons: (aa) HSBC Amanah Malaysia Berhad is a licensed financial institution and its

appointment as one of the Joint Principal Advisers, Joint Lead Arrangers, Joint Lead Managers, Joint Bookrunners and Joint Shariah Advisers in respect of the Sukuk Murabahah is in the ordinary course of its business;

(bb) the conduct of HSBC Amanah Malaysia Berhad is regulated strictly by BNM

and governed under, amongst others, the Financial Services Act, 2013 and CMSA, and HSBC Amanah Malaysia Berhad has in place its own internal policies, controls and checks with regard to such transactions. Additionally, HSBC Bank Malaysia Berhad’s role as the Financial Adviser and HSBC Amanah Malaysia Berhad’s roles as one of the Joint Principal Advisers, Joint Lead Arrangers, Joint Lead Managers, Joint Bookrunners and Joint Shariah Advisers are performed by separate departments with segregation of duties and responsibilities and each department has different reporting obligations to their respective management at local as well as regional levels; and

(cc) save for the professional fees charged, HSBC Amanah Malaysia Berhad will

not be deriving any other monetary benefits outside its aforesaid roles. The potential conflict of interest situations have been brought to the attention of the board of directors of the Issuer and hence the board of directors of the Issuer is fully aware of the same. The board of directors of the Issuer has confirmed that having considered the above situation, they intend to proceed with the appointment of HSBC Amanah Malaysia Berhad as one of the Joint Principal Advisers, Joint Lead Arrangers, Joint Lead Managers, Joint Bookrunners and Joint Shariah Advisers and HSBC Bank Malaysia Berhad as the Financial Adviser.

C. Adnan Sundra & Low After making enquiries as were reasonable in the circumstances, Adnan Sundra &

Low has confirmed that it is not aware of any circumstances that would give rise to a


217

conflict-of-interest situation or potential conflict-of-interest situation in its capacity as the solicitor for the JPA/JLA in relation to the Sukuk Murabahah.

D. Zaid Ibrahim & Co After making enquiries as were reasonable in the circumstances, Zaid Ibrahim & Co

has confirmed that it is not aware of any circumstances that would give rise to a conflict-of-interest situation or potential conflict-of-interest situation in its capacity as the solicitor for the Issuer in relation to the Sukuk Murabahah.

E. AmanahRaya Trustees Berhad After making enquiries as were reasonable in the circumstances, AmanahRaya

Trustees Berhad has confirmed that it is not aware of any circumstances that would give rise to a conflict-of-interest situation or potential conflict-of-interest situation in its capacity as the Sukuk Trustee in relation to the Sukuk Murabahah.

F. CIMB Islamic Bank Berhad Save as disclosed below, as at the date hereof and after making enquiries as were

reasonable in the circumstances, CIMB Islamic Bank Berhad has confirmed that it is not aware of any circumstances that would give rise to a conflict-of-interest situation or potential conflict-of-interest situation in its capacity as one of the Joint Shariah Advisers and the Account Bank in relation to the Sukuk Murabahah.

Dato’ Zainal Abidin bin Putih who sits on the board of directors of TNB as Senior

Independent Non-Executive Director is also Chairman and Independent Non-Executive Director of CIMB Bank Berhad and Senior Independent Director of CIMB Group Holdings Berhad. CIMB Islamic Bank Berhad, CIMB Bank Berhad and CIMB Group Holdings Berhad are related corporations.

CIMB Islamic Bank Berhad

(i) it is a licensed Islamic bank and its appointment as the Joint Shariah Adviser for the Sukuk Murabahah is in the ordinary course of its business; and

(ii) the conduct of CIMB Islamic Bank Berhad is regulated by the Islamic

Financial Services Act 2013 and by its own internal controls and checks; Also, the board of directors of the Issuer is aware that the following measures have

been/will be taken to further mitigate or address the above potential conflicts of interest: (a) due diligence review pursuant to the Sukuk Murabahah will be or has been

undertaken by the solicitors for the Sukuk Murabahah.


218

As such, notwithstanding such potential conflict of interest situations, the board of directors of the Issuer is agreeable to proceed with the Sukuk Murabahah based on the present terms and conditions, after considering all the mitigating measures aforementioned.

G. Pöyry Energy Sdn Bhd After making enquiries as were reasonable in the circumstances, Pöyry Energy Sdn

Bhd has confirmed that it is not aware of any circumstances that would give rise to a conflict-of-interest situation or potential conflict-of-interest situation in its capacity as the Technical Adviser and Environmental Adviser in relation to the Sukuk Murabahah.

H. Aon Insurance Brokers (Malaysia) Sdn Bhd After making enquiries as were reasonable in the circumstances, Aon Insurance

Brokers (Malaysia) Sdn Bhd has confirmed that it is not aware of any circumstances that would give rise to a conflict-of-interest situation or potential conflict-of-interest situation in its capacity as the Insurance Adviser in relation to the Sukuk Murabahah.

I. Maybank Investment Bank Berhad

After making enquiries as were reasonable in the circumstances, Maybank Investment Bank Berhad has confirmed that it is not aware of any circumstances that would give rise to a conflict-of-interest situation or potential conflict-of-interest situation in its capacity as the Joint Lead Manager and Joint Bookrunners in relation to the Sukuk Murabahah.



219

APPENDIX 1 Base Case Cashflow Projections

CASH FLOW PROJECTION UNITS 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Capacity payments RM '000s 318,396 1,071,103 1,071,103 1,071,103 1,074,577 1,077,996 1,077,996 1,077,996 1,081,610 1,191,249

Energy payments RM '000s 589,028 1,858,726 1,968,063 1,922,639 2,174,929 1,967,655 2,200,439 2,305,020 2,381,951 2,433,252

Startup payments RM '000s 5,858 20,311 21,121 21,964 22,839 23,749 24,697 25,681 26,705 27,769

Total revenues RM '000s 913,283 2,950,140 3,060,287 3,015,706 3,272,346 3,069,400 3,303,131 3,408,697 3,490,266 3,652,271

Fixed operating costs RM '000s (88,555) (150,268) (154,523) (158,637) (163,647) (167,750) (172,900) (178,003) (183,951) (193,459)

Variable operating costs RM '000s (37,090) (72,689) (73,156) (77,562) (76,899) (81,705) (84,010) (84,840) (87,406) (98,828)

Fuel costs RM '000s (555,472) (1,761,318) (1,872,543) (1,837,471) (2,081,701) (1,890,480) (2,117,949) (2,224,061) (2,301,664) (2,354,550)

Total operating costs RM '000s (681,118) (1,984,275) (2,100,221) (2,073,670) (2,322,247) (2,139,935) (2,374,859) (2,486,904) (2,573,022) (2,646,837)

Working capita l / inventories RM '000s (408,210) (137,814) (66,409) 5,187 (70,713) (17,216) 26,436 (42,467) (27,784) (61,245)

Interest earned on cash balances RM '000s 38 5,145 2,969 588 600 602 600 600 600 602

Taxes paid RM '000s (0) - - - - - - - - -

MRA (funding) / release RM '000s (6,000) (8,000) (8,000) (2,000) - - - - - -

Cash flow before finance service RM '000s (182,007) 825,196 888,625 945,810 879,985 912,850 955,309 879,926 890,061 944,790

Senior finance fees RM '000s (825) (825) (825) (825) (825) (825) (825) (825) (825) (825)

Sukuk profi t payments RM '000s (25,675) (552,768) (549,985) (540,401) (528,318) (517,397) (500,460) (485,045) (469,512) (454,083)

Working capita l faci l i ty (WCF) interest RM '000s - (17,008) (16,480) (575) (481) - - (1,357) (275) (351)

Sukuk principal payments RM '000s - - (165,000) (240,000) (210,000) (300,000) (265,000) (285,000) (285,000) (370,000)

WCF drawdowns / (repayments) RM '000s 208,051 141,949 (350,000) - - - - - - -

Cash flow after finance service RM '000s (456) 396,544 (193,664) 164,008 140,362 94,629 189,024 107,698 134,449 119,532

Cash available for distributions RM '000s - - 218,919 140,546 163,796 59,087 224,517 95,340 146,834 119,587

Cash balance RM '000s 16,045 412,588 5 23,468 34 35,575 82 12,440 55 -

MRA balance RM '000s 6,000 14,000 22,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000

FSRA minimum requirement RM '000s 281,253 339,437 364,203 343,518 383,961 349,536 373,042 349,726 357,675 505,814

FSCR with cash, post-distribution (as defined in PTC) n.a. 2.09x 2.01x 1.50x 1.55x 1.50x 1.52x 1.50x 1.51x 1.64x


220


Capacity payments RM '000s 1,444,674 1,444,674 1,448,432 1,452,129 1,478,723 1,542,007 1,545,916 1,549,761 1,549,761 1,549,761

Energy payments RM '000s 2,305,310 2,589,349 2,717,967 2,819,668 2,864,057 2,724,631 3,229,257 3,107,390 3,283,490 3,448,535

Startup payments RM '000s 28,878 30,029 31,226 32,470 33,766 35,112 36,512 37,966 39,481 41,056

Total revenues RM '000s 3,778,861 4,064,051 4,197,625 4,304,267 4,376,546 4,301,750 4,811,684 4,695,117 4,872,732 5,039,351

Fixed operating costs RM '000s (202,710) (209,060) (215,414) (222,025) (229,719) (237,241) (245,308) (252,392) (260,313) (267,980)

Variable operating costs RM '000s (94,553) (97,463) (98,435) (101,364) (106,508) (109,572) (110,057) (114,979) (120,045) (130,622)

Fuel costs RM '000s (2,237,488) (2,515,009) (2,641,775) (2,742,966) (2,790,964) (2,661,572) (3,151,325) (3,037,141) (3,212,642) (3,377,679)

Total operating costs RM '000s (2,534,751) (2,821,531) (2,955,625) (3,066,356) (3,127,191) (3,008,385) (3,506,689) (3,404,512) (3,593,000) (3,776,281)

Working capita l / inventories RM '000s (28,581) 30,580 (52,405) (30,557) (19,484) 48,017 (88,271) (35,487) 36,717 (81,682)

Interest earned on cash balances RM '000s 600 600 600 602 600 600 600 602 600 600

Taxes paid RM '000s - - - (52,016) (222,501) (241,905) (255,535) (262,951) (272,128) (281,588)

MRA (funding) / release RM '000s - - - - - - - - - -

Cash flow before finance service RM '000s 1,216,129 1,273,701 1,190,195 1,155,940 1,007,970 1,100,077 961,789 992,768 1,044,920 900,399

Senior finance fees RM '000s (825) (825) (825) (825) (825) (825) (825) (825) (825) (825)

Sukuk profi t payments RM '000s (426,653) (388,457) (348,983) (308,526) (268,001) (229,694) (184,431) (140,788) (91,700) (33,746)

Working capita l faci l i ty (WCF) interest RM '000s - - (1,624) (319) (265) (1,632) (1,660) - - (1,755)

Sukuk principal payments RM '000s (655,000) (635,000) (680,000) (665,000) (575,000) (725,000) (660,000) (740,000) (755,000) (770,000)

WCF drawdowns / (repayments) RM '000s - - - - - - - - - -

Cash flow after finance service RM '000s 133,651 249,419 158,763 181,270 163,879 142,926 114,874 111,155 197,395 94,073

Cash available for distributions RM '000s 88,135 294,936 140,642 138,095 225,175 95,495 162,305 70,225 238,326 94,073

Cash balance RM '000s 45,517 - 18,120 61,296 - 47,431 - 40,931 - -

MRA balance RM '000s 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000 24,000

FSRA minimum requirement RM '000s 471,722 498,733 473,595 402,039 449,495 392,602 405,428 375,876 401,933 404,393

FSCR with cash, post-distribution (as defined in PTC) 1.50x 1.51x 1.50x 1.50x 1.56x 1.48x 1.51x 1.50x 1.50x 1.53x


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Capacity payments RM '000s 1,483,712 1,320,865 1,320,865 1,320,865 1,325,093 602,885 - - - -

Energy payments RM '000s 3,185,264 3,851,069 3,685,114 3,909,103 4,111,325 2,005,986 - - - -

Startup payments RM '000s 42,693 44,393 46,165 48,005 49,919 23,300 - - - -

Total revenues RM '000s 4,711,668 5,216,327 5,052,144 5,277,974 5,486,337 2,632,171 - - - -

Fixed operating costs RM '000s (272,439) (279,207) (287,735) (297,251) (300,194) (116,182) - - - -

Variable operating costs RM '000s (129,436) (127,836) (133,360) (139,401) (140,717) (62,739) - - - -

Fuel costs RM '000s (3,126,362) (3,774,929) (3,620,142) (3,843,357) (4,043,759) (1,973,021) - - - -

Total operating costs RM '000s (3,528,238) (4,181,972) (4,041,237) (4,280,009) (4,484,671) (2,151,942) - - - -

Working capita l / inventories RM '000s 110,165 (102,358) (44,215) 43,603 (99,740) 1,171,340 - - - -

Interest earned on cash balances RM '000s 600 602 600 600 600 299 - - - -

Taxes paid RM '000s (270,488) (234,666) (229,572) (226,469) (226,432) (98,980) - - - -

MRA (funding) / release RM '000s - - - - - 24,000 - - - -

Cash flow before finance service RM '000s 1,023,708 697,933 737,720 815,700 676,093 1,576,888 - - - -

Senior finance fees RM '000s - - - - - - - - - -

Sukuk profi t payments RM '000s - - - - - - - - - -

Working capita l faci l i ty (WCF) interest RM '000s (1,438) (1,926) - - (2,119) - - - - -

Sukuk principal payments RM '000s - - - - - - - - - -

WCF drawdowns / (repayments) RM '000s - - - - - - - - - -

Cash flow after finance service RM '000s 1,022,269 696,007 737,720 815,700 673,974 1,576,888 - - - -

Cash available for distributions RM '000s 1,022,269 696,007 737,720 815,700 673,974 1,576,888 - - - -

Cash balance RM '000s - - - - - - - - - -

MRA balance RM '000s 24,000 24,000 24,000 24,000 24,000 - - - - -

FSRA minimum requirement RM '000s - - - - - - - - - -

FSCR with cash, post-distribution (as defined in PTC) n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.


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APPENDIX 2 Summary of Sources and Uses of Funds of the Project


Uses of funds RM '000s %

EPC Costs 8,225,379 67.4%

Cost Overrun Contingency 204,444 1.7%

Other Hard Costs 442,267 3.6%

Development Expenses 211,413 1.7%

Pre-operating expenses 532,341 4.4%

Consumables 434,893 3.6%

Hedging Costs 162,797 1.3%

Financing Costs 1,973,666 16.2%

Inventory 200,158 1.6%

W/C & Reserve Accts 6,000 0.0%

Pre-COD2 Operating Cash Flows (189,749) -1.6%

Project Cash Balance - 0.0%

Total 12,203,611 100.0%

Sources of funds RM '000s %

Ordinary Shareholder Capital 5,000 0.0%

Redeemable Preference Shares 3,218,611 26.4%

Senior Sukuk 8,980,000 73.6%

Total 12,203,611 100.0%


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APPENDIX 3 Assumptions of Base Case Cashflow Projections

Principal Assumptions The Projections, which have been approved by the Board of Directors of the Issuer, have been prepared using a set of assumptions that include hypothetical assumptions about future events and management actions which cannot be confirmed and verified in the same way as past results and that are not necessarily expected to occur. Actual results are likely to be different from the prospective financial information since anticipated events frequently do not occur as expected and the variation could be material. Even if the events anticipated under the hypothetical assumptions occur, actual results are still likely to be different from the projections since other anticipated events frequently do not occur as expected and the variation may be material. Projections are subject to significant economic, competitive and other uncertainties beyond the control of the Project, and therefore should not be relied upon as showing financial outcomes that are likely to occur in practice. Capital Expenditure Assumptions i. The capital expenditure for the Plant is comprised of the following costs:

The foreign currency components of the EPC Contract are detailed below:

Uses of funds RM '000s %

EPC Costs 8,225,379 67.4%

Cost Overrun Contingency 204,444 1.7%

Other Hard Costs 442,267 3.6%

Development Expenses 211,413 1.7%

Pre-operating expenses 532,341 4.4%

Consumables 434,893 3.6%

Hedging Costs 162,797 1.3%

Financing Costs 1,973,666 16.2%

Inventory 200,158 1.6%

W/C & Reserve Accts 6,000 0.0%

Pre-COD2 Operating Cash Flows (189,749) -1.6%

Project Cash Balance - 0.0%

Total 12,203,611 100.0%

EPC Costs Breakdown By Currency Price

USD Component USD737,053,000

JPY Component JPY55,926,005,000


224

The foreign exchange rates applied on capital expenditure are detailed below:

ii. The sources of funds for the above capital expenditure are:

Projected Equity Contributions The Sponsors’ equity contribution is projected to be injected into JEP in accordance with the following profile:

Financing Assumptions i. The debt facilities of JEP will comprise the issuance of Sukuk Murabahah

amounting to RM8.98 billion at a targeted rating of AA- with profit rates ranging from 5.05% to 6.80% per annum.

ii. It is expected that the Sukuk Murabahah will consist of thirty-six (36) tranches, with tenures ranging from five and a half (5½) years to twenty-three (23) years.

iii. The payment of periodic distribution amounts will be made on Profit Payment

Dates falling on 15 April and 15 October, with the first payment commencing on 15 April 2016. The payment of principal obligations will be made on Profit Payment Dates falling on 15 April and 15 October, with the first payment commencing on 15 April 2021.


2013 to 2014 2015 to 2044

3.250 RM/USD 4.300 RM/USD

0.031 RM/JPY

0.031 RM/JPY to

0.036 RM/JPY

USD Denominated Costs

JPY Denominated Costs

Sources of funds RM '000s %

Ordinary Shareholder Capital 5,000 0.0%

Redeemable Preference Shares 3,218,611 26.4%

Senior Sukuk 8,980,000 73.6%

Total 12,203,611 100.0%

EQUITY CONTRIBUTION UNITS TOTALS Pre-Issuance2015

Post-Issuance2016 2017 2018 2019

Ordinary shareholder capita l RM '000s 5,000 5,000 - - - - -

Redeemable preference shares RM '000s 3,218,700 1,398,200 (1,398,200) - 239,100 1,543,700 1,435,900

Total equity contribution / (redemption) RM '000s 3,223,700 1,403,200 (1,398,200) - 239,100 1,543,700 1,435,900


225

Operating Assumptions i. The Projections are based on the following operating assumptions:

ii. Revenue for JEP is primarily derived from the Capacity Payments and Energy

Payments to be received as stipulated in the PPA and supplemental PPA. The respective rates for Capacity Rate Financial (“CRF”), Fixed Operating Rate (“FOR”), and Variable Operating Rate (“VOR”) are presented below:

The FOR and VOR will be adjusted by multiplying the prevailing rate by 1.04 every 48 months under the terms of the PPA.

iii. Coal prices will start at RM254.26 per tonne in the First Contract Year and will be escalated throughout the projection period in accordance with the projections presented in the following table:


Unit 1 Unit 2

Plant Net Capacity 1,000MW 1,000MW

Plant Operating Heat Rate 8,909kJ/kWh 8,909kJ/kWh

PPA Contracted Heat Rate 9,106kJ/kWh 9,106kJ/kWh

Plant Load Factor 100% 100%

Plant Capacity Factor 85% 85%

Tariff Units Rate

CRF Tier 1 (from 15-Jun-2019 to 14-Sep-2028) RM/kW/mth 37.448870

CRF Tier 2 (from 15-Sep-2028 to 14-Sep-2033) RM/kW/mth 52.428419

CRF Tier 3 (from 15-Sep-2033 to 14-Sep-2039) RM/kW/mth 56.173306

CRF Tier 4 (from 15-Sep-2039 to 14-Jun-2044) RM/kW/mth 46.300000

FOR RM/kW/mth 7.180401

VOR RM/kWh 0.006660


226

iv. Operating expenses are assumed to comprise of fuel expenses, fixed

operating expenses, reimbursable expenses, and the CESS fund contribution. The average escalation rate applied on fixed operating expenses and reimbursable expenses is approximately 3%.

v. Fuel expenses are calculated as coal price multiplied by the amount of coal consumed for the generation of the net electrical output. Fuel expenses are assumed to be a pass-through cost to TNB, at the Contracted Heat Rate.

vi. Fixed operating expenses include fixed operations, equipment and

maintenance costs relating to the Operation and Maintenance Agreement (“OMA”) with REMACO as the Plant operator, as well as insurance, general and administrative expenses, Jetty land lease rental, license fee, and other fixed expenses that fall outside the scope of REMACO.

vii. Reimbursable expenses are included within the scope of REMACO under the

OMA. These relate to scheduled maintenance and overhauls required for the Plant.

Period RM / tonne

Contract Year 1 254.26


























227

viii. A CESS Contribution to the Malaysian Government equal to one percent (1%) of the gross revenue received excluding the fuel payment revenue is assumed to be payable.

ix. A maintenance reserve target balance of RM24,000,000 per annum is

expected, in line with the requirements of the PPA.

Tax and Distribution Assumptions i. The corporate tax rate is assumed at the current Malaysian corporate income

tax rate of 24% per annum throughout the projection period and is to be paid at the end of each financial year.

ii. It is assumed that there will be no material disposals and write-offs of property, plant and equipment.

iii. Capital Allowances (“CA”) and Industrial Building Allowances (“IBA”) are

determined as follows:

iv. For the purposes of computation of Capital Allowances and Industrial Building

Allowances, 78% of the EPC Contract costs are assumed to qualify for Capital Allowances while the remaining 22% will qualify for Industrial Building Allowances.

v. It is assumed that JEP will be granted GST-registered status and allowed to claim input tax credits and charge GST output taxes effective from 1 April 2015. Therefore, input and output GST is assumed to be a flow-through and excluded from the Projections.

vi. The distribution of dividends is at the absolute discretion of JEP after fulfilling

all the obligations to the Sukuk-holders. vii. The maximum distributable dividend is expected to be the lower of net

dividend declarable from net income and cash available to pay dividends.


Category Initial

Allowance

Annual

Allowance

Plant & Machinery 20% p.a. 14% p.a.

Industrial Buildings 10% p.a. 3% p.a.


228

APPENDIX 4 Overview of the Site


229

APPENDIX 5 Site Plan of the Site

ISSUER

JIMAH EAST POWER SDN BHD (Company No. 1053111-D)

Pejabat Setiausaha Syarikat Tingkat 2, Ibu Pejabat Tenaga Nasional Berhad

No. 129, Jalan Bangsar 59200 Kuala Lumpur

Malaysia

JOINT PRINCIPAL ADVISERS / JOINT LEAD ARRANGERS

CIMB INVESTMENT BANK BERHAD (Company No. 18417-M) Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur

Malaysia

HSBC AMANAH MALAYSIA BERHAD (Company No. 807705-X) 15th Floor, North Tower

No. 2, Jalan Leboh Ampang 50100 Kuala Lumpur

Malaysia

JOINT SHARIAH ADVISERS

CIMB ISLAMIC BANK BERHAD (Company No. 671380-H) Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur

Malaysia

HSBC AMANAH MALAYSIA BERHAD (Company No. 807705-X)

15th Floor, North Tower


Malaysia

JOINT LEAD MANAGERS / JOINT BOOKRUNNERS

CIMB INVESTMENT BANK BERHAD

(Company No. 18417-M) Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur

Malaysia

HSBC AMANAH MALAYSIA BERHAD

(Company No. 807705-X) 15th Floor, North Tower


Malaysia

MAYBANK INVESTMENT BANK BERHAD

(Company No. 15938-H) 32nd Floor, Menara Maybank

100 Jalan Tun Perak 50050 Kuala Lumpur

FACILITY AGENT

CIMB INVESTMENT BANK

BERHAD (Company No. 18417-M) Level 13, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur

Malaysia

SUKUK TRUSTEE

AMANAHRAYA TRUSTEES

BERHAD (Company No. 766894-T)

Level 11, Wisma AmanahRaya No. 2, Jalan Ampang 50508 Kuala Lumpur

Malaysia

FINANCIAL ADVISER

HSBC BANK

MALAYSIA BERHAD (Company No. 127776-V) 15th Floor, North Tower


Malaysia

SOLICITORS TO THE JOINT LEAD ARRANGERS

AND THE JOINT LEAD MANAGERS

ADNAN SUNDRA & LOW Level 11, Menara Olympia No. 8, Jalan Raja Chulan

50200 Kuala Lumpur Malaysia

SOLICITORS TO THE ISSUER

ZAID IBRAHIM & CO

Level 19, Menara Milenium Jalan Damanlela, Damansara Town Centre

50490 Kuala Lumpur Malaysia