Using Coal in ZimbabweThe

A presentation by Pan-african Energy Resource

at the Zimbabwe Coal Indaba in Johannesburg 30th of March 2012

Pan-african Energy Resource

P.E.R. Group Ventures (Pvt). Ltd. African Energy Resource) was

created in 2006 for the sole purpose of building a 2000 MW power plant in Zimbabwe.

P.E.R.’s partners are all professionals , since 2006, they have dedicated an important part of their lives to promote the Lusulu Power Plant

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EDF Blénod Power Plant

Entrepose Contracting, part of the Vinci group, is specialised in the design and construction of complex projects in energy and environmental sectors in general.

From delivering turnkey projects, the Group is constantly developing its expertise in conceptual engineering, process design and contracting in sensitive environments.

Entrepose Contracting places particular emphasis on standards compliance in terms of Quality, Health & Safety and Environmental Management (QHSE accreditations), and possesses unique

how enabling it to meet the most stringent requirements in terms of the highest performance

Entrepose Contracting have agreed to give a written guarantee on the performance of the EDF transferred plants.

Entrepose Contracting

Hiolle IndustriesHiolle Industries group is quoted on the Paris Stock Exchange. It gathers twenty companies that are specialised in industrial electricity, industrial piping, industrial maintenance, metal control, thermal treatment, etc.

Hiolle industries is regularly appointed by Major Manufacturers such as Alstom, Siemens, General Electrics etc. to set up

Hiolle industries is a world leader in industrial transfer. They performed the biggest transfer ever, moving Usinor plant (35,000t) from France to China.

Hiolle Industries has been appointed by EDF to transfer their existing Coal fired Power Plants.

Transferring Usinor, one of the major European Steel Plant, to China

Zimbabwe

Project of a 2000MW Coal fired Plant in Lusulu, Zimbabwe

Since 2006 P.E.R. with their associates Arup, ProConsult International, Hiolle Industries and Entrepose contracting (Vinci Group) have gathered experience in developing fast track power solutions using EDF existing equipment.

They can offer a whole range of possibilities where whole plants are already “in stock”, ready to be moved.

All plants are fully refurbished. They are from major manufacturers and offer the highest efficiencies.

They offer similar life span and the same guarantees as brand new plants provided by the EPC Contractor.

Plants

As France is going almost all Nuclear and coal is reaching very high prices in Europe, Electricité De France (EDF) decided to transfer their best Thermal Power Plants.

These Plants have backed-up Nuclear Plants, therefore they have never been used at full capacity. Some of them have been used for 60,000 hours only (8 years of their useful life).

Hiolle Industries have been exclusively chosen by EDF to transfer these Plants.

Alstom, one of the worlds major manufacturers of Power Plants in association with Entrepose will check, scan, Xray all parts of each transferred plant. When necessary, parts will be revamped or changed before Plants are transferred.

-built, each EDF transferred plant will be 85% new.

Zimbabwe projected Demand for Electricity

Low case scenario

low case scenario, the annual demand for power is projected to grow at an average rate of 6 percent per annum over 2011-21 from 9,592 GW/h in 2011 to 17,178 GW/h by 2021. This translates into a peak capacity of 1621 MW in 2011 to 2903 MW in 2021. For the year 2014 the total import bill would be about $196 million at an import price of 7.00 US cents per

The total export income from surplus power for the year 2021 would be about $585 million at an import price of 9.00 US cents per kWh.

high case scenario, the annual demand for power is projected to grow at an average rate of 10 percent per annum over 2011-21 from 9,592 GW/h in 2011 to 24,880 GW/h by 2021. This translates into a peak capacity of 1621 MW in 2011 to 4204 MW in 2021. For the year 2014 the total import bill would be about $315 million at an import price of 7.00 US cents per

During the year 2021 the total import bill would be about $287 million at an import price of 9.00 US cents

Pricing PolicyThe standard Zimbabwe tariff structure in place at present distinguishes between residential users who pay a fixed charge and a variable increasing block charge based on the level of consumption. The first 50kWh per month for all resident users is subsidized at one US cent per kWh. Low demand non-residential users pay a mix of a fixed rate and flat variable rates.

High demand non-residential users pay acombination of fixed and capacity charges and a variable seasonal price. The value of off-peak and standard charge are very low in comparison with the average tariff of 6.5 US cents per kWh.

Existing pricing policy calls for setting tariffs on a plus basis.

In 2009, the average end-user tariff for ZESA was estimated at 6.5 US cents per kWh, while the economic cost of service provision was estimated at 9.8 US cents per kWh.

The price of electricity in Zimbabwe is low in comparison to tariffs set by a number of other

Regional Average Zimbabwe

DomesticCommercial

Industry

0

2.5

5

7.5

10

Average Power Tariffs (US$ Centes per kW/h)

Zimbabwe is positioned as the hub of the SADC region.

The Zimbabwe coal reserves of the Lusulu / Lubu / Lubimbi basin alone are said to be 85% to 90% thermal quality. The reserves of thermal coal alone can probably sustain a 50,000MW installed capacity for 100 years.

Site 1 is located next to Lake Kariba and allows the cooling to be done directly without cooling tower. It is the engineers preferred solution.

Site 2 is located right on Lineband Lusulu mine. In this case coal transport will be seriously simplified but the plant will need a cooling tower or an aero-refrigerant system.

Site 3 is located on the edge of Liberation Lubu mine. In this case coal transport will be simplified as well but the plant will need at least a cooling tower as the water, more abundant than in site 2 will not allow direct cooling.

Site 1, the preferred site, is surrounded by coal reserves.

It is located 25 km from Binga.

A 90 km 330 to 720 kV line must be constructed to link the power plant to Hwange.

A 60 km coal conveyor will link Lusulu to the project site. It crosses several coal fields.

This aerial photo-montage shows what the 2000 MW project will look like when completed

Chimneys

Dust extractors

Crushers

Boilers

Turbo-alternators

Main Transformers

Sub-station

All parts will be checked, scanned or Xrayed. New and revamped parts are fully Guaranteed.

TypicalE.D.F. 2X250 MW Plant

Spare Parts availability

Storing Strategic Spare Parts and having a fast access to other parts is crucial in running a Power Plant.

As E.D.F. is decommissioning their coal fired Power Plants, a vastamount of brand new Spare Parts is now available at a fraction of the price.

Compared construction timesbetween a transferred and a new 500 MW Plant

0

72 months

Transferring an EDF Plant allows to save up to 36 months on the whole schedule.

18 36 5430 to 36 months

54 to 72 months

It takes 30 to 36 months to renovate, transfer and rebuild an E.D.F. Plant

It takes 54 to 72 months to build an equivalent high quality new Plant

Advantage due to early power productionfor the first 500 MW phase

In SADC economic environment the minimum profit per Kwh produced from 2012 by a 500 MW transferred Plant is at least 2.00 Euro cents.

In these conditions the minimum yearly expected profit is 70 Million Euros for each 500 MW transferred Plant

As a transferred Plant is ready around 30 months before a New one. The expected financial advantage due to early power production is 175 Millions Euros.

Typical Section of a Boiler

Feasibility studies, Decommissioning, Transfer & Construction

Studies, Project Management, other feesPlant refurbishment, Industrial transfer

Civils and Buildings

CAPEX

Euros 000

27,430168,500156,810

352,740The total evaluation of the whole first 500 MW phase

454.15 Million EurosThis is 0.908 Million Euros or 1.23 Million US$ per

New Plant405.00 M. Euros

Construction & Other costs

212.00 M. Euros

Construction & Other costs

184.24 M. Euros

Transferred Plant168.50 M. Euros

Capex Advantage264.26 M. Euros

between a transferred and a new 500 MW

With a minimum expected profit of 2.00 Euro cents per Kw/h and a production starting 30 months in advance, the total expected financial advantage due to early production is at least 175.00 Million Euros (as seen in #15).

The Capex advantage of transferring a 500 MW E.D.F. Plant is 264.00 Million Euros (as seen in #17).

As soon as the transferred plant starts, the total financial advantage in transferring a 500 MW EDF Plant instead of building a new one is 439 Million Euros, for an initial investment of 352.70 Million Euros.

All preliminary studies show that, regardless of the location, the expected Internal Rate of Return (IRR) is always 25% and above.

Champagne sur Oise, 500MW, ready to be transferred

Compared accumulated profitsbetween a transferred and a new 500 MW plant

At Year 6,when a New Plant starts producing,

The EDF Transferred Plant Profit advantage is already

75 Million Euros

At Year 14,when the EDF Transferred Plant

is fully paid for, the Profit advantage is around

290 Million Euros

At Year 20,the Profit advantage is around

450 Million Euros

employees are necessary to run an EDF power

Necessary Manpower to run each 500 MW transferred Plant

Management and Engineers: 7

Security management: 1

Power Plant technicians: 80

Maintenance: 105

General technicians: 25

Administration: 8

Security: 24

Thank you for your attention