Consorcio Transmantaro S.A.
Index I. ISA Group Overview II. Peruvian Transmission sector overview IIII. CTM - Power Transmission Network IV. CTM credit highlights V. Financial information 1
I. ISA Group Overview 2
Business INTELLIGENT ELECTRIC POWER TELECOMUNICATIONS MANAGEMENT OF REAL – VIAL CONCESSIONS TRANSMISSION SHIPPINGOF TIME SYSTEM � Planning, coordination � Over than 40,500 circuits � 25,466 km in operation. and supervision of the SIN of transmission lines in � 907 km of toll road � Represent 6.1% of operation in Colombia. operation. infrastructure in operation. revenues. � Represent 2.4% of � Represent 69.1% of � Represent 22.4% of revenues. revenues. revenues. Source: Company information and public filings for the period ended March 31, 2014 3
Presence Source: Company information and public filings for the period ended March 31, 2014 4
II. Peruvian Transmission sector overview
Peru power sector Overview Power market rules Peru power sector segmentation � Vertical separation of activities � Generation: Competitive Generation Transmission Distribution End-user � Transmission: Regulated monopolies � Distribution: Regulated monopolies � Coordinated system operation based on efficiency principles and cost minimization � Open access to transmission and distribution Generation networks Transmission Distribution Competitive � � Regulated monopoly � Regulated monopoly � Non-regulated users: � Competition to obtain � Open access to � Differentiated client classification and price Freely agreed prices concessions (public networks regimes Regulated users: � projects) � Regulated tariffs: Public auction or � Open access to networks Regulated clients contracts with � Regulated and non-regulated clients � Regulated transmission � Competition: Non- regulated prices tariffs regulated clients � Negotiated prices for competitive activities and regulated tariffs (based on efficient End-users: costs) for which competitive market � Regulated: Regulated tariffs operations cannot be performed and/or are � Non-regulated optional users not possible or recommended (greater than 0.2MW and smaller than 2.5MW) � Non-regulated users (greater than � Regulation promotes private investment and 2.5MW): Free price negotiation competition � Large users (free users greater than 10MW): Short term market Source: CTM company information. 6
Power sector interrelations Regulator / oversight � Transmission plan � Oversight � Regulation � Tariff regulation � Concessions � Claims � Tariff regulation � Market administration Coordinator � Oversight � Transmission planning � Operations coordinator Users � Service Power Companies (Generation, transmission Comité de Operación Económica and distributions) del Sistema � Concessions � Concessions � Regulation � Regulation � Transmission plan � Regulation � Concessions Regulation � Investment promotion Credible, stable and well respected regulatory framework Source: CTM company information. 7
Constructive and transparent regulatory framework Organization Description � i) Defines national energy policies, ii) Regulates environmental matters applicable to the sector and iii) Oversees licenses, authorizations and concessions � Private Investment Promotion Agency � System operator responsible for the dispatch of all generation units and main transmission lines that are part of the SEIN (1) � Coordinates the SEIN’s functioning in order to optimize � Constructive and operations while maintaining the security of the system transparent regulation � Proposes necessary expansions and reinforcements of the SEIN’s transmission system to the MINEM � Manages the short-term market transactions (acts as clearing � Established track- house) record � Does not have any legal or economic dependence on public or government entities � Overall investor � Regulatory entity that controls and enforces compliance with friendly framework legal and technical regulations � Regulates tariffs and manages the bidding processes held by distribution companies to purchase capacity and energy � Monitors and regulates the environmental requirements of power generators in the country � Consumer protection agency CTM enjoys strong and constructive relationships with regulatory agencies (1) National Interconnected Electricity Transmission System of Peru. 8
Peru power sector overview Transmission Transmission sector overview Location of Peru’s power transmission assets � Regulated monopoly: Economies of scale business � Open access � Concession required � Centralized planning by the COES � Expansion plan approved by MEM � Guaranteed System: Transmission lines considered in centralized plan Tariff defined based on bids � Include return on investment and O&M costs � � Complementary System: Transmission lines implemented by private parties’ decision Guaranteed � Installations included in the Transmission Plan and System built as a result of a public bid Paid by all customers (end users) � Complementary Installations included in the Transmission Plan that � System are built as a result of a private decision � Additionally, all installations not included in the transmission Plan. Tariff determined by the regulator and paid only by users of that system Total Cost CT = aVNR + COyM � aVNR � Annuity of the Replacement Value (12%) through a 30 year period COyM Operations and Maintenance Cost � Key differentiating factors � Revenues in US dollars � Stable regulatory framework Legal stability agreements � Tax stability agreements � Source: CTM company information and Document of Energy Subsector 2012. 9
Lowest risk profile within the power sector The transmission segment has the most stable and predictable cash flows in the entire utilities space Generation Transmission Distribution Segments Volume Risk Environmental Risk Construction Risk Operations Risk Counterparty Credit Risk Regulatory Risk Higher Risk Medium Risk Low Risk Very Low Risk Lowest Risk Transmission segment offers the best risk / return profile in the power sector and one of the most attractive risk / return profiles in the entire market 10
Transmission sector legal framework Legal classification of transmission lines (pre and post 2006) Guaranteed Transmission System (SGT) Complementary Transmission System (SCT) Main Transmission System Main Transmission System (SPT) (SPT) Secondary Transmission System Secondary Transmission System (SST) (SST) Before After New framework Legacy framework July 23, 2006 (Law 28832) Overview of transmission assets legal classifications New framework Guaranteed Transmission System (SGT) Complementary Transmission System (SCT) � New assets built as a result of a auction process according to � All transmission lines that form part of the investment plan that the transmission plan were not awarded via auction process as well as individual party � Compensation assigned to all the end users in the system initiative lines � BOOT type contract (30 year) � Private contracts � Example: Zapallal – Trujillo � Example: El Platanal – Chilca Main Transmission System (SPT) Secondary Transmission System (SST) framework Legacy � As stipulated by LCE (Law of Electrical Concessions) � Under LCE framework � For existing installations (operating prior to 23 July, 2006) � For existing installations (operating prior to 23 July, 2006) � Example: Mantaro – Socabaya � Example: CTM does not have SST lines Source: CTM company information. Note: Main transmission system lines (SPT) include Mantaro – Socabaya, Guaranteed Transmission System lines (SGT) include Chilca – La Planicie – Zapallal, Trujillo – Chiclayo, Zapallal – Trujillo, Talara – Piura, Pomacocha – Carhuamayo and Machupicchu – Abancay – Cotaruse. Complementary transmission lines (SCT) include Independencia – ICA, El 11 Platanal – Chilca, CTM – Miski Mayo, CTM – Kallpa (CC Chilca), CTM – Kallpa, CTM – Egenor, CTM – Fenix, CTM – Termochilca and CTM – Cotaruse.
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