Electricity Tariff Increase Water en Energiebedrijf (W.E.B.) Aruba N.V.

The roadmap to HFO reduction & renewable energy increase

Presented to Parliamentary Energy & Financial Committees Sept. 4, 2014

The roadmap to HFO reduction & renewable energy increase 2

Presentation contents

Accomplishments till now

Current realities

The road ahead

Financial state/outlook

The roadmap to HFO reduction & renewable energy increase 3

Accomplished till now

W.E.B. Aruba N.V.’s strategy for 2005–2013:

Total investments for 2005-2013 of Afl. 450 Million.

Total HFO reduction of approx. 40% or Afl. 160 Million/year.

Realized renewable penetration of 17%.

The roadmap to HFO reduction & renewable energy increase 4

6,180 6,166 6,227

5,635

5,296

4,922 4,992

4,172

3,791

3,543

3,716

$36.13

$46.27

$51.99

$77.66

$55.40

$73.13

$99.02 $102.83

$97.13 $97.51

$-

$20

$40

$60

$80

$100

$120

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

HFO

Pri

ce in

USD

/Bb

l

HFO

Co

nsu

mp

tio

n in

Bb

ls/D

ay

HFO Bbl/Day HFO (all-in) Price

RECIP 124 MW RECIP 2

24 MWSWRO1

8,000m3

WP Vaderpiet30 MW

RECIP 3 & WHRB44 MWSWRO2

24,000m3

Accomplished till now

40% reduction in HFO Consumption while prices increased with 170%

The roadmap to HFO reduction & renewable energy increase 5

Current realities

Increase Fuel Oil expenses

Increased handling fees from US$ 2.40 to 6.50 (by Valero).

Change of invoicing method to delivered price (by Valero).

Higher Fuel Oil consumption (WEB), due to:

• Equipment not operating at optimal efficiency levels.

o Increased wind energy production

Drop in electricity sales combined with a high peak demand.

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Current realities

Correlation between monthly tariff vs. Fuel Oil pricing 2005 - 2014

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Current realities

RELIABLE AFFORDABLE SUSTAINABLE

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Current realities in Afl. in Millions & Ratio's Norm 2013 2014 2015 2016 2017 2018

Cash at end of period - before increase (15.0) 3.7 (20.4) (42.5) (68.2) (77.8) (87.5)

Net profit before tax 18.0 (3.1) (1.8) (7.5) (8.0) 1.6 (1.2)

Debt Service Coverage Ratio 1.30 0.92 1.34 1.14 1.11 1.25 1.26 Equity Ratio 0.50 0.49 0.48 0.46 0.43 0.45 0.47 Current Ratio 1.00 1.18 1.16 0.96 0.79 0.72 0.68

The year-to-date result up to July 2014 + the forecasted trend provide the following outlook, if the tariff is not increased:

Current realities

Outlook is negative: Insufficient funds to fund operation and future investments Poor financial performance resulting in yearly losses Non-compliance with financial covenants – unable to obtain financing

The roadmap to HFO reduction & renewable energy increase 9

The road ahead

Strategy WEB Aruba for 2014–2018:

Further reduce dependency on Heavy Fuel Oil.

Enhance production plant automation with Intelligent

Generation Management System (IGMS)

Introduce Energy Storage solutions

Further implementation of affordable renewable technologies

The roadmap to HFO reduction & renewable energy increase 10

The road ahead

Strategy WEB Aruba for 2014–2018:

Investments for 2014-2018 of Afl. 211 Million.

Realize an extra HFO reduction of approx. 20% or Afl. 80

Million/year.

Increase renewable penetration from 17% to approx. 40%.

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The road ahead

60% HFO reduction compared to 2005

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Financial outlook

Tariff adjustment required! The adjustment is based on the following assumptions:

Income/expenses:

Reduced electricity sales for 2014, 2015 and 2016

Reduced operating expenses

Investments:

Delayed Windpark Urirama

Delayed SWRO III (fixed plant)

The roadmap to HFO reduction & renewable energy increase 13

Increase Electricity tariff to ELMAR as of October 1st, 2014. The financial impact is as follows:

Based on actual figures up to July 2014 and forecasted figures for remainder of the years.

Cashflow in Afl. in Millions Norm 2013 2014 2015 2016 2017 2018

cash at end of period - before increase (15.0) 3.7 (20.4) (42.5) (68.2) (77.8) (87.5) cash at end of period - after increase (15.0) 3.7 (19.5) (19.3) (23.2) (13.0) (2.8) cumulative increase in cashflow 1.0 23.2 45.1 64.7 84.7

Financial outlook in Afl. in Millions & Ratio's Norm 2013 2014 2015 2016 2017 2018

Net profit before tax 18.0 (3.1) 5.4 20.4 19.3 28.9 26.0

Debt Service Coverage Ratio 1.30 0.92 1.49 1.71 1.66 1.67 1.73 Equity Ratio 0.50 0.49 0.49 0.50 0.51 0.56 0.61 Current Ratio 1.00 1.18 1.22 1.23 1.17 1.23 1.35

Financial outlook

Cashflow in Afl. in Millions Norm 2013 2014 2015 2016 2017 2018

cash at end of period - before increase (15.0) 3.7 (20.4) (42.5) (68.2) (77.8) (87.5) cash at end of period - after increase (15.0) 3.7 (19.5) (19.3) (23.2) (13.0) (2.8) cumulative increase in cashflow 1.0 23.2 45.1 64.7 84.7

Norm 2013 2014 2015 2016 2017 2018

Net profit before tax 18.0 (3.1) 5.4 20.4 19.3 28.9 26.0

Debt Service Coverage Ratio 1.30 0.92 1.49 1.71 1.66 1.67 1.73 Equity Ratio 0.50 0.49 0.49 0.50 0.51 0.56 0.61 Current Ratio 1.00 1.18 1.22 1.23 1.17 1.23 1.35