Exploring Energy Opportunities In India

NABC Conference

June 29, 2006

India’s Energy Sector - Present & Future

Coal, 55%Hydro, 26%

Oil, 1%Gas, 10%

Renewable, 5%

Nuclear, 3%

Fuel Sources, 2006 Per Capita Consumption of Electricity• 2004 - 2005: 606 kWh / year• Currently 56% of households in rural

areas are without electricity

124 GW

200 GW

Current

Goal by 2012

Power Generation in India61% Increase

83,094

95,583

101,666

113,868Energy

Demand

Met

Peak Energy

Demand

Met 13.1% Deficit

MW

10.7% Deficit

Indian Power Situation (April – May 2006)

MW

MW

MW

India needs more than $225 billion to finance energy projects from 2005 to 2012

• Geo-political issues limiting access to energy supply

• Power failures due to supply shortages

• ~ 32.5% in transmission & distribution losses– International average is approximately 8%

• Resource challenged State Electricity Boards– Inefficient and poorly maintained systems– Subsidized tariffs to residential / agricultural customers– Theft and uncollected bills

• Lack of integration between power grids

• Inadequate financing

• Environmental concerns

India’s Power Sector - Major Challenges

Way Forward in Land of Opportunity

• Address unrealized as well as unmet energy needs

• Find innovative ways to diversify fuel dependency and generate power at reasonable marginal cost

• Strengthen regional and national Transmission & Distribution grid to reliably move and meter supply where it is needed

• Overcome geo-political and other issues to secure and transport fuel from nearby countries within South Asia or other regions

• Meet the energy needs of the underserved markets in rural and urban areas to fuel GDP growth

• Take a patient and realistic view of the time and effort required to solve challenges and implement long-term solutions

Rationale for involvement • Underserved market• Creating and serving your own demand• Scalability and adaptability as a portfolio• Capitalization of a niche market

Strategies to employ• Offer decentralized sources of energy supply using untapped, local, renewable sources

including wind, solar and hydro• Potential to connect to grid in the future• Offer affordable energy efficiency and generation technologies and financing

Rural Electrification

Potential Opportunity

Domestic Product And Percentage Of Electrified Households

50% of Population

Country GWh Electricity Consumed 2005

India 519,398

Pakistan 71,454

Bangladesh* 16,333

Sri Lanka* 6,160

Nepal* 1,654

Bhutan* 250

Regional Energy Needs

Total Consumption Emerging Asia: 2,914 GWh

Total 2025 Demand In Emerging Asia: 7,552 GWh– Net increase in demand by 159%

*2003 Figures

The Night Sky In South Asia

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Potential Opportunities for Energy Imports & Exports

• Gas pipelines

• Transmission grids

• LNG shipping

• Rail transport

Typical Profile of Tara’s International Projects

• Ability to leverage Tara’s extensive experience in energy and water project finance, energy trading or retail distribution

• Allow Tara to be a first-mover in identifying and tapping smaller, fragmented opportunities in underserved, niche segments

• Projects requiring patient capital with higher overall returns

– A dynamic South Asian and American management team and investors/stakeholders that have cultural intimacy and experiences in India and the broader region

– Greater tolerance for sovereign risk – Realistic expectations– Long-term commitment

• Opportunity to form strong local partnerships at grass-roots level– In the U.S., Tara’s motto is “Supporting the Community” and “Supported by

the Community” – Ability to create an eco-system of support and cooperation with the local

stakeholders