Collaborative Private Sectorparticipation in South Sudan’sPower SectorPresentation by Pearl Uzokwe

Director - Governance and Sustainability,Sahara Group

CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of Sahara Group is strictly prohibited.

November, 2018

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His Excellency General Salva Kiir Mayardit is on a mission to transform South Sudan’s economy, through itsabundant natural resources, and has extended an invitation to the private sector to invest in the country’senergy industry.

“… Across the country we are blessedwith abundant natural resources …and high quality crude oil and naturalgas reserves. Petroleum is thefoundation of the economy today, andit will be the foundation of thedevelopment of a modern economytomorrow.”

– His Excellency General Salva Kiir Mayardit’s opening message from the 2017 Africa Energy Series South Sudan

report.His Excellency General Salva Kiir MayarditPRESIDENT OF THE REPUBLIC OF SOUTH SUDAN

SOURCE: Africa Energy Series: South Sudan, 2017.

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This presentation, in furtherance of His Excellency's invitation, seeks to propose the necessary sectoralpillars needed to attract and maintain private sector investment in South Sudan’s power sector.

The presentation discusses:• South Sudan’s power market relative to comparable markets in Sub

Saharan Africa.• Market conditions necessary to attract private sector participation into the

power sector:• Functional and strictly enforced regulatory and legislative structures.• Existent demand for power supply, and• Credible off takers

and,• A 3-phased development roadmap for South Sudan’s power sector,

focused on achieving sustainable market growth and improving significantly,electricity accessibility as efficiently as possible.

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Content

Growing South Sudan’s Power sector

Market Observations

Overview of Sahara Group

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South Sudan’s power market is facing significant infrastructural, demographical and financial constraintsthat are limiting sector growth.

Percentage of South Sudan population

without access to the grid

Per kilowatt hour cost of power supply

Number of Households on South Sudan’s

isolated grids

Number of isolated grids

Installed Generation

Capacity

Consumption per Capita

Sources:1. South Sudan Ministry of Energy and Dams2. UNDP, 2017

Key observations on South Sudan’s power market include:

LimitedCustomer Base

FinancingConstraints

InfrastructureLimitations

Affordabilityof Power

1

2

3

4

Regional Issues5

Key figures

• Insufficient generation, transmission anddistribution infrastructure.Ø Majority of industrial and commercial

customers rely on self generation.

• Significant financing constraints limit expansionof the power supply industry.

• Limited customer base makes full cost recoverydifficult to achieve.Ø Existing customers are upper income

residential and few businesses.

• Cost of supply of power is one of the highest inthe region.

• High hydro potential exists from the whiteNile.

• However, this is dependent on successfulnegotiation with neighbouring countriesregarding damming their water source.

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However, these challenges are similar to those faced by power markets like Rwanda’s, which are now thrivingas a result of private sector participation.

Case: Rwanda’s power sector growth

Rwanda Installed Capacity (MW) Rwanda Electricity access rate (%)

• Majority of Sector growth achieved over the last 8 years, drivenby private sector participation and increased sectoral reforms.

South Sudan can achieve similar,or even better, results in a shortertimeframe, provided the rightmeasures are put in place toattract private sectorparticipation.

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Generation| FirstIndependent

Content

Growing South Sudan’s Power sector

Market Observations

Overview of Sahara Group

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In spite of these sectoral challenges, opportunities still exist in South Sudan’s power sector, provided thegovernment of South Sudan can put in place the necessary measures to attract needed private sectorinvestment.

Key Pillars of Attractive Power Markets

• Development of a long term tariff plan, unbundling of the power sector and establishment of an independent regulator andviable offtaker enabled the Government of Nigeria to attract over $3 Billion of private sector investment in the sector in 2013.

• However, in our experience where a well developed process is not followed through it can often lead to market and / or sectordisruptions.

Case: Nigeria’s Power sector Privatization – Importance of setting and maintaining an investment attractive sector

• Shields investment recoverypotential from externalinfluence.

• Credible and unbiasedregulator, devoid of politicalinfluence.

Functioning Regulatory andlegislative structure

A

• A clear, unmet power needexists.

• Access to power demand mustexist.

Clear Unmet Power DemandB

• Off takers that are capable ofand willing to pay for power.

• Government interventionmay necessary in the shortterm to guarantee investorsof returns.

Credible OfftakersC

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Considering these pillars, a potential three-phased collaborative development approach for South Sudan’spower sector, aimed at sustainably developing the sector into a thriving and self-sustaining market includes:

Decreasing Cost of Power Supply

Increasing Private Sector participation

Phase 1: Base Market Phase 2: Intermediary Market Phase 3: UnbundledMarket

• Develop necessary transmission anddistribution infrastructure to expandmarket,

• Expanding base load generation,

• Develop regulatory, legal andinstitutional structures.

• Primary Offtakers: Government ofSouth Sudan (short term)

• Operating Models: Public-PrivatePartnerships (Build Operate Transfer etc.)

• .

• Improve energy mix of sector.

• Progressively transfer costs of powersupply to a more enabled customerbase.

• Introduce IPPs to improvecompetition in the market.

• Primary Offtakers: Utility Provider• Operating Models: Public-Private

Partnerships (Build Operate Transfer etc.)and IPPs.

• .

• Open market to private sectorparticipation.

• Position regulators to serve asintermediaries between stakeholders.

• Primary Offtakers: Utility Provider, EndUser

• Operating Models: Public-PrivatePartnerships (Build Operate Transfer etc.)and IPPs.

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Impact

A sustainably growing powersector driven and sustained bySouth Sudan’s human andnatural resources, and with thesupport of the private sector.

The success of the proposed roadmap will depend on key enablers including …

Key Enablers

Sustainable Funding• Potential set up of a Sovereign Wealth Fund vehicle to drive the

needed infrastructure growth.• Sustainable alternative to debt financing.

1

Institutional Capacity Building• Identify institutional capacity needs, design capacity building

programs, engage in practical implementation and strategy basedtraining and development of local content.

2

Strong Regulatory Institutions• Provide necessary legal structures to ensure that the sector can run

devoid of undue influence.

3

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In demonstrating our readiness to collaborate with South Sudan on its development agenda, Sahara group,through its power arm, Sahara Power Group, has signed an MOU with the Ministry of Electricity and Damsto support infrastructural and institutional development in the power sector.

Key Highlights of the MOU

• Sahara Power Group (SPG) and the Ministry of Electricity andDams will collaborate on the set up of a modular power plantof up to 500MW and necessary transmission anddistribution infrastructure to ensure adequate base load powerfor South Sudan and improved electricity access.

• SPG will ensure set up and operation of the plant and willprovide the needed financing for the project.

• SPG will also provide assistance in establishing the GridCode, such that the operational framework and standard ofexisting power infrastructure shall be enhanced.

• In addition SPG agrees to work with the Ministry of Electricityand Dams to bolster its regulatory framework, maintain andattain internationally accepted standards, comply with healthand safety regulations and protect consumers.

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Distribution |Ikeja Electric

Content

Growing South Sudan’s Power Sector

Market Observations

Overview of Sahara Group

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§ Business operations across the energy value chain include upstream,midstream, downstream, power, real estate and infrastructure with amulti-billion dollar revenue stream

Business Operations

§ Sahara Group deploys its deep knowledge and insight into the African energy & infrastructure sectors to seek outentrepreneurial opportunities based on which it develops market leading businesses.

§ Although the group’s current focus is on emerging markets, its vision is to become “the provider of choicewherever energy is consumed.”

Strategy

4,000+ employees globally

Upstream

Power Generation Power Distribution Infrastructure

DownstreamMidstream

Sahara Group, a leading vertically integrated energy and infrastructure conglomerate founded in 1996, andheadquartered in Dubai…

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Business operationsValue chain activity

by location

Upstream

Midstream

Downstream

Power

Infrastructure

SwitzerlandSingapore Tanzania UAE ZambiaUgandaGhanaCote D’Ivoire NigeriaCameroon Guinea Malta Senegal Netherlands

Isle of Man

Cote d’Ivoire

Nigeria

Geneva,Switzerland

UAE

Singapore

Sahara’s Operational Locations

Ghana

TanzaniaZambia

UgandaCameroon

Guinea

Malta

Senegal

Netherlands

Kenya

Mozambique

DRC

South Sudan

LebanonIraq

Venezuela

Upcoming Locations

…with a global business focus on developing markets, and operations in over 38 countries across Africa,Asia, The Middle East and Europe.

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*Sources:2016FinancialStatements,2016SustainabilityReports

Sahara Power Group

Ikeja Electric Egbin Power PLC. First Independent Power

Electricity Distribution Power Generation Power Generation

qMajority OwnershipqEmployees: c.3,000qCustomers: 800kqAllocation: 15% Nat’l OutputqTransmission:11,000kmqMeters Deployed: 70,000+ qDTs Metered: 8,500+

q Majority Ownershipq Employees: c.400q Installed Capacity: 1320MWq Configuration: 6x220MW

Hitachi Turbinesq Operation Mode: Dual Fired

Gas, Closed Cycle & LPFO

q Majority Ownershipq Installed Capacity: 466MWq Locations:

1.Afam I (180MW)2.Eleme (75MW) (under const.)3.Omoku (150MW)4.Trans Amadi (136MW)

q Operation: Simple Cycle Gas

…five power plants across five locations with 1861MW with potential for generation into the sub region through the West Africa Power Pool…

…the most innovative Distribution Company in Nigeria with the largest and most diversified customer base. IE is a standout DISCO…

… and the largest vertically integrated privately held Utilities company in Nigeria and in Sub Saharan Africa.

Our Power Business

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At Sahara, our passion forinvesting in emerging markets hasdefined our growth anduniqueness over the years ... It isan integral part of our DNA andwe will continue to give our time,efforts and resources tocollaborating with otherdeveloping markets to remain trueto this purpose.

Sahara group is willing to collaborate with the government of South Sudan in realising its ambitions of asustainable private sector inclusive energy industry that can contribute positively to the growth of itseconomy.

© Copyright 2018. Sahara Group Limited, Lagos, Nigeria. All rights reserved.

Recipients are not permitted to duplicate the information provided in this Document and to communicate thereceived information to any third party without the prior written consent of Sahara Group Limited.

The Document is incomplete without reference to, and should be viewed solely in conjunction with the oral briefingprovided by Sahara Group Limited.