Overview of the CEC Business

Media Briefing

9th October 2014

About CEC Group

The Copperbelt Energy Group (the “CEC

Group”)

•A pan-Africa group business with cross-linked interests in the power and telecommunications sectors.

The Group comprises the following entities:

•Copperbelt Energy Corporation Plc (CEC Plc) and its subsidiaries;

•CEC Liquid Telecommunications Limited (CEC Liquid),

•Realtime Technology Alliance Africa Limited (Realtime Zambia),

•CEC Africa Investments Limited, and

•CEC Kabompo Hydro Power Limited

Strategic Focus:

•Increasing our scale in the areas of core competency in Zambia

•Diversifying into various forms of power generation in Zambia

•Investing in other geographies across Africa with private sector investment friendly policies

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CEC Group OperationsCEC Plc• Owns and operates circa 1000km of primary transmission

lines, 540km of optic fibre on power lines 41 high voltage

substations and 80MW embedded thermal generation

• Core business includes power distribution to mines on

Zambia’s Copperbelt, power wheeling in-country and

across the region, power transmission for national utilities

in Zambia and the DRC

• Member of the Southern African Power Pool

• Stable growth expected going forward from existing and

new customers

CECA• Currently wholly owned by CEC Plc

• Acquired the Abuja Electricity Distribution Company

(distribution) and Shiroro Hydro Concession (generation)

in Nigeria in 2013

• Strong pipeline of power projects in development in key

sub-Saharan Africa markets; including Namibia, Zambia

and Sierra Leone

• Ambition to exploit multiple sources of power generation

• Well positioned to capture growth opportunities in Africa

RTAA• JV with Realtime Technology Alliance Africa (Pty)

of Zimbabwe

• An Internet Service Provider focused on providing

solutions to corporates

• Provides high speed internet services and private

leased circuits

• Currently has approximately 45% of the corporate

market share in Zambia

CEC LIQUID• JV with Liquid Telecommunications Ltd, established

to build fibre networks in Southern and Central

Africa

• Wholesales national and international fibre

bandwidth capacity, terrestrial internet bandwidth

and lease of dark fibre for both short and long haul,

with access to submarine fibre cables

• Currently carries 90% of internet bandwidth in

Zambia

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Overview – CEC PLC4

Historical Background: Privatisation of Zambia Consolidated Copper Mines

(ZCCM) in 1997resulted into creation of CEC from ZCCM Power Division (ownership, management and name change)

Forerunners of CEC:

ZCCM Power Division (1982 – 1997)

Copperbelt Power Company (CPC) (post 1964)

Rhodesia Congo Border Power Corporation (inception in 1950’s to CPC)

Business Activities:

Utility with current operations on the Copperbelt Province of Zambia

Supply of power to mines [includes emergency / back-up power]

Domestic Wheeling: Power Transmission for ZESCO

International Wheeling: transport of power on behalf of SNEL (DRC), other SAPP Utilities and some mines in DRC

International Power Trading: purchasing/selling of power within SAPP

Shareholding

Copperbelt

Energy

Corporation

ZCCM-IH

(Govt.)

52%

20%

Employee

Share Scheme

Zambian

Energy

Corporation

Listed Shares

LuSE

Zambian Investors

&

“Standard Chartered PE”

CEC was listed on the Lusaka Stock Exchange in Jan 08.

28%4,000 Shareholders

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Current Asset Base

Infrastructure

Over 1000km of high voltage transmission lines (mostly 220kV and 66kV)

41 major substations

80 MW Gas Turbine Generation Capacity (including 8.8 litre fuel storage facilities)

540km of optic fibre on power lines

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Role of CEC (1)

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• 40-45% of national peak demand

• 50% of energy consumption [high load factor mining customers]

Power handling by CEC network:

Owner & Operator of Zambia-DRC

Interconnector:

• Critical for mining operations/investments

• N-1’ transmission design

• Substation control & SCADA system continuously upgraded with latest technology

• Emergency / back-up power arrangements in place for grid failure

• Extensive network and multiple sourcing of power attractive for high reliability operations

Emphasis on quality of supply:

• Critical part of SAPP central transmission corridor

• Existing 220kV Interconnector (250MW) operated since 1956

• New dual-circuit Interconnector under construction to upscale capacity to 550MW

Role of CEC (2)

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• ZESCO – currently main source of traded powerand potential to work together on generation andother projects through PPP models

• SNEL – joint operation of interconnector,provision of emergency power on gridinterruption

• Eskom – existing power trading opportunities withpotential for further trade if CEC develops hydrocapacity in future

• NamPower – partnership in development ofgeneration and transmission projects

• Potential role in Zizabona project

Key SAPP relationships:

Contractual Arrangements

CEC

ZESCO

• source of power supplied to mines

• Buyer of CEC wheeling services

DRC Mine Customers

• off–takers of SAPP sourced power

Zambian Mine Customers

• power off–take from CEC

SAPP Utilities

• Buyers of International wheeling services

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Short termPPAs throughSNEL

BSA

PSAs

WheelingContracts/SAPP Protocols

BSA = Bulk Supply AgreementPSA = Power Supply AgreementPPA = Power Purchase Agreement

Operations - Asset Management

2X20MW AT LUANO; 10MW AT MACLAREN

20 MW AT BANCROFT AND

10MW AT KANKOYO

246KM OF 220KV LINES;

678KM OF 66KV LINES AND

30KM OF 11KV LINES

173 TRANSFORMERS

AND 545 CIRCUIT

BREAKERS AND ASSOCIATED SWITHGEAR

• CEC is a mature utility with a wide variation in the asset age/condition

• Asset management strategy critical

Operations - Asset Management

• Life Cycle approach to Asset Management:

• Condition based approach where supported by current technology

• Time based approach in some cases

Maintenance strategy:

• Maximising the utilisation of system equipment

• Investing in modern asset management processes/tools

• Asset Renewal: replacement/refurbishment of equipment in line with best practice to manage life cycle costs

• Over US$ 15m spend per annum

Asset Utilisation:

Customers/Demand Forecast12

Wheeling Demand

(MW)

ZESCO 250

Frontier Mines 22

SAPP 50 – 200

(a) Supply Contracts -Mines (b) Wheeling Customers

(c) International Power trading

PPA Demand

(MW)

DRC Mines 95*

*Power sourced from SAPP

PSA Demand

(MW)

Expected Growth

(MW)

Konkola Copper Mines 230

Mopani Copper Mines 190 25 (2016 – 2018)

CNMC Luanshya Copper

Mines

50

Non-Ferrous Copper Mines 27 50 (2016 – 17)

Chambishi Metals 22

Lubambe Zambia Ltd 18 80 (2017-18)

Chibuluma Mines 3

China Copper Mine 1 4 (2014)

Customers/Demand Forecast13

Power Supply Contracts – Zambian Mines

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Key Network Expansion Projects

•Expansion works complete to meet Mopani Copper Mines Plc’snew Synclinorium shaft. Three additional 30 MVA 66/11kV transformers installed

Nkana Substation:

•Capacity expansion with additional 120MVA transformer to meet growing demand in the Northern AreaLuano Substation:

•Capacity expansion with transformer upgrade from from 65MVA to 120MVA

Central Switching Station:

•Expansion by 60MVA 220/66kV to meet ZESCO Copperbelt distribution requirements

Luanshya MunicSubstation:

•90MVA 220/11kV Substation NFCA Luela

Tariff Principles/Issues

• ESI industry still grappling withacceptable means of setting tariffs

• The country needs to adopt morerobust tariff setting mechanisms

• Customers demanding moreefficiency and reliability

• Need to treat customers in onecategory equitably

• Extraordinary tariff adjustmentssuccessfully effected through industry-wide negotiations in 2008 (35%) and2011 (28%). As expected mines preferthis process

• Infrastructure modernisation and newgeneration stations driving tariffsupwards

• Energy Regulation Board (ERB)adopting more proactive approach tomigrating tariffs upwards – 2014 ERBled tariff increments have resulted incourt process commenced by minesagainst ERB

• Process will require perfecting followingsettlement of court process

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Power Investments - Zambia

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Generation:

Kabompo Gorge Hydro Scheme – 40MW (under development)

Luapula Hydro Schemes – up to 800MW (Feasibility Studies,

development subject to governmental consent)

Transmission:

Copperbelt – Luapula Trans-Pedicle Line (PPP model) – to support

evacuation of excess power from Luapula (planned)

Renewables:

Copperbelt Bio-mass Project (Feasibility)

Bio-Diesel Refinery (Operatoinal - Commissioned 2011)

Copperbelt 15MW Solar Project (Feasibility Studies)

Kabompo Hydropower Project

40MW capacity hydropower scheme in North-Western Province

Negotiations completed with Zambia Development Agency on Investment

Promotion & Protection Agreement, and with GRZ on Implementation

Agreement. Execution of both the IPPA and IA is imminent

All Environmental Impact Assessment (EIA) studies have been completed

and approvals granted by the Zambia Environmental Management Agency

(ZEMA)

Resettlement Action Plan approved by ZEMA

Limited scope of construction commenced under Sinohydro, and Early

Works about 80% complete. EPC Commencement planned for April 2015

Steady momentum on project financing activities leading to Financial Close.

Mandated Lead Arranger already appointed (Standard Bank)

Kabompo Hydropower Project -

Benefits

Creation of up to 1000 jobs during construction of the power station (2015 – 2017)

Economic empowerment through participation of local population in project development

activities

Employment of at least 44 Zambians to manage, operate and maintain the power plant from 2018

Rehabilitation of the 35km D273 road to gravel surface finish during construction and

bituminous surface finish at project completion

Potential to accelerate rural electrification in 5 chiefdoms, upon project completion, which are

traversed by the 110km long 33kV power transmission line for construction power

Potential growth for tourism in North-Western Province by utilizing the 35km2 lake to be created

following completion of the dam and promote already existing tourist attractions

Creation of two new townships, well planned urbanization in Mwinilung’a District and capacity

building of local population to exploit opportunities as far as practicable.

Telecommunications Investments

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CEC fibre network spans over 770km –

presence in Lusaka, Copperbelt, Lumwana,

Kabwe, Livingstone, Solwezi, Chirundu

Focus so far on investment in metropolitan

areas and optic fibre network build

Realtime JV in 2009 to provide retail telecoms

services

JV Agreement with Liquid Telecom in

February 2011 to form CEC Liquid Telecom

for optic fibre investment

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CEC Africa Investments (CECA)

Incorporated in February 2013 with a mandate to develop, invest in and

operate power infrastructure across Sub-Saharan Africa

To be the leading indigenous African power developer, providing solutions to

Africa’s power infrastructure challenges through strategic partnerships and a

shared vision

Invest in and operate 10,000MW of generation from multiple sources

including hydro, thermal, solar and other renewables

Objective is to distribute electricity to a catchment area of at least 50 million

people

Develop parallel business opportunities including:

o Transmission and Distribution (substation/transmission design)

o Generation (Green Technologies/generation management services)

CEC Africa Investments – Projects

Operating and in Development

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Abuja Electricity

Distribution

Company

CECA holds a 75% stake in KANN Utility Company Limited, which has acquired a 60% interest in

Abuja Electricity Distribution Company (‘AEDC’) through a process of international competitive tender.

AEDC supplies power in Kogi, Abuja, Niger and Nasarawa States in which more than 10.5 million people

live. AEDC currently has around 600,000 customers with scope to significantly grow its customer base

Shiroro Hydro

Power Plant

Concession

Acquired a 20% interest in North South Power, which has a long term concession to operate the 600MW

Shiroro Hydro Plant in Niger State. This project was also secured through international competitive

tender administered by the Bureau of Public Enterprises, as was the case with AEDC. The plant is largely

in good working order, and currently provides around 15 - 20% of the grid connected power capacity

available in Nigeria. The plant has a long term Power Purchase Agreement with the Nigerian Bulk

Electricity Trader, which is a Nigerian Government owned company that procures power on behalf of

the distribution companies including AEDC

Kudu Gas Power

Joint Development Agreement with state utility, NamPower, and Kudu Power Limited in place for

development of 800MW-1,050MW combined cycle gas-to-power project. CECA will take up 30% equity

in the project (for USD112 million) and CEC Plc will off-take up to 300MW. Strong Namibian

government support for the project

Arandis Power

An acquisition of a 60% interest in Nishati Investments Limited, which owns Arandis Power, the

developer of a 120MW hybrid HFO and renewable generation plant in Arandis, Namibia. Development

Agreement is in place. Complements the Kudu Gas Power project

CEC Africa Sierra

Leone

A Power Purchase Agreement with Government of Sierra Leone in place for a 20 year concession to

build and operate a 128MW thermal power project to be constructed in three phases, commencing in

2015 and final phase completion expected in 2017. Environmental and social impact assessment studies

already underway. Ranks among largest private sector investments to come into Sierra Leone

Corporate Social Responsibility

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Committed to sustainable business growth with social responsibility

Specific programmes include:

Support to University of Zambia School of Engineering

Over $700,000 spent from2009 to 2013, refurbished and equipped lecture theatres,

Seconded senior CEC staff

Constructing two fully-fledged demonstration substations

Raised further funding for comprehensive laboratory refurbishment,

General teaching infrastructure support

Financial and material support to Power Dynamos Football Club

Stadium refurbished and re-commissioned in 2010

Support of young people through various sports

Rural development - developing school / clinic and training facility in Kabompo Gorge

Hydro Power project area

Social and economic infrastructure development and support

Funded construction of US$500,000 bridge in Kitwe establishing new intra city linkages

Currently implementing Kitwe street lighting project worth about US$350,000

Construction of school infrastructure and support to educational development for

underprivileged children directly and through partnerships

Our People – Our Greatest Asset

A workforce of 387

About one third hold

university/college degrees;

Key areas of professional competency

include

Engineering

Finance, accounting and

economics

Legal

Equal opportunity employer with very

low staff turnover

Committed to continuous development

and training support to staff

Support for executive development

47%

13%

11%

25%

4%

CEC Workforce by Qualification

Technician/Artisans Technologists

Semi-skilled/Unskilled University Graduates

Post Graduates

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24Celebrating with Zambia “at 50” –

adding Value to the National Economy

CEC has celebrated its existence for 60 years

Continues to add value to Zambia’s economy and is keen to expand its contribution

Empowered over 4000 Zambians through direct and indirect ownership of shares in

CEC Plc through the Lusaka Stock Exchange

Successful enterprise seen as a model for privately owned and managed power utilities

in Africa

Leading Zambian investor, developer and operator of energy infrastructure in Africa

CEC is a major contributor to Zambia’s economic and social development

Tax compliant (recognized and awarded by Zambia Revenue Authority)

Additional revenue to Government through regular payment of dividends

Utilizing local capital markets to raise funds

Regional power trading through the Southern African Power Pool (SAPP)

Employment creation

Social investment

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Thanks for Listening!25