2012ANNUALREPORT

Naturally Evolving. Powerfully Growing.

The Custodian of the Two Holy MosquesKing Abdullah Bin Abdulaziz Al-Saud

His Royal HighnessPrince Salman Bin Abdulaziz Al-Saud

Crown Prince, Deputy Prime Ministerand Minister of Defense

ContentContent

Shareholders 14

Board of Directors 16

Board of Directors’ Report 19

How We Work 26

Our Business 28

Business Risk Management 32

Financial Highlights 40

Leadership Statement 8

Our Vision, Our Mission 11

Corporate Responsibility andSustainability 50

Health, Safety and EnvironmentalPerformance 52

Assets Performance Report 58

Project Companies and Subsidiaries 63Corporate Governance 80

Strategy for Growth 46

8 9ACWA Power International Annual Report 2012 Leadership Statement ACWA Power International Annual Report 2012 Leadership Statement

While 2012 has been yet another adventurous year at ACWA Power, it will become permanently etched in our history as the year the Company grew significantly beyond the comfort zone of our home, the Kingdom of Saudi Arabia and the region we are part of, the GCC. During 2012 ACWA Power successfully ventured into projects in the new geographic regions of North Africa and Southern Africa, both well beyond the GCC region and at the same time broadened our portfolio of oil and gas fired plants by embracing not just one but three world class renewable energy projects.

In Bulgaria, we acquired the 60 MW photovoltaic plant Karadzhalovo, the largest PV plant in Europe. In Morocco, ACWA Power was awarded the 160 MW Concentrated Solar Power (CSP) plant, the largest in the world using this technology. In South Africa the Company was awarded a 50 MW CSP plant with 9 hours of storage; the longest period of storage of electricity produced by any solar project and enables the plant to dispatch renewable energy generated during the day and throughout the night. While we were yet to achieve financial close on the two CSP projects by the end of 2012, we are confident that both will achieve close soon and will be well into construction by mid-2013.

Another major achievement of 2012 was to expand our client base beyond Governments and Government-related organizations by embarking on yet another foreign pursuit to become an electricity provider to Vale, the second largest global mining

conglomerate in the world, by developing a coal fired 300 MW captive plant in Mozambique. This project has enabled us to not only penetrate a target market, but also to further extend our fuel portfolio and operational experience into coal. Early in 2013 we also look forward to adding another major mining company to our growing list of customers and this time via a project in South Africa.

In Kingdom of Saudi Arabia also, we had much to keep us occupied. Quite apart from keeping our portfolio of operating assets spinning, we have been ensuring that Qurayyah IPP, the 4000MW Combined Cycle Gas Turbine (CCGT) plant under construction stays on schedule and have continued to keep focused on bringing the first unit of the 1200MW oil fired power plant at Rabigh that is being constructed by the Joint Venture of SEPCO III and Dongfang to commercial operation which alone is an achievement worthy of celebration. We have also been active on the development front; with the expansion of Petro Rabigh IWSPP having moved to a stage where a Limited Notice to Proceed has been awarded to the EPC Contractor to commence construction to double the existing plant providing electricity, steam and water to the Petro Rabigh integrated petrochemical complex.

In the last few months of the year we have submitted two extremely important offers; one for the 1800 MW oil fired Rabigh II IPP to SEC and the other to ARAMCO for captive Co-Generation facilities at three sites to produce electricity and steam to support the operation of ARAMCO’s refineries at

these sites. During the last six months of the year we have also been preparing an offer in response to the procurement notice issued by the Municipality of Makah for the first renewable electricity IPP tender in the Kingdom. The review of activities in the GCC cannot be complete without reference to achieving financial close and commencing construction on the Barka 1 expansion project, a desalination plant using Reverse Osmosis technology in Oman which is being undertaken at record speed.

But the year also brought its share of disappointments; the repowering proposal we had put forward at the invitation of the Ministry of Electricity in Jordan at the Hussain Thermal Power plant which had to be abandoned due to the deferment by the off taker; and the Kirikkale 850MW CCGT project in Turkey, which even though was always going to be a very challenging effort given the target that we had set ourselves; to structure limited recourse project finance debt for a merchant power plant; something that had not been achieved before, where just as we closed the financing we are left with having to scramble to keep the project on track due to an entirely unexpected problem of our development partner facing financial difficulties on their conventional construction activities which in turn has placed this project at risk. Given that we are not short on tenacity, we will keep pushing forward.

Acquisitions and Project Finance, Accounting, Consolidation and Tax also had a very busy year by stretching boundaries in each area of activity. Record worthy achievements were made in progressively reducing the cost of raising equity capital, refinancing equity bridge loans, reducing risk by implementing truly pace setting interest rate swaps and currency hedges, reducing the cost of insurance and on strengthening our balance sheet. In the area of risk management and corporate governance, we have continued to make progress by not just conducting audits but by implementing corrective action where deficiencies are identified.

Our performance during 2012 demonstrated that we have matured into a fully operational company capable of developing, constructing and operating green field projects; acquiring and integrating existing operational assets and performing outside our country of origin. At year end, our portfolio of gross contracted assets comprised 13,000MW of power generation and 2.36 Mm³/day of desalinated water production. The overall result was a significant increase in our asset portfolio’s revenues. Our fourth financial year achieved income from main operations of SAR 587,669 thousand and a net income of SAR 330,865 thousand.

In the area of corporate social responsibility the one effort of all others that we can be most

proud of is the Higher Institute for Water & Power Technologies (HIWPT) which ACWA Power funded the establishment of and which opened in September 2011. One hundred and five trainees completed their first year of the 2 year program in July 2012. As this group of 105 students goes into their second year, a new intake of 480 students has joined the second year program. Given that the institute is only at its second year of operation, we can take pride in helping 585 people predominantly from the rural areas of Saudi Arabia receive the essential training to equip them to embark on a life that will not only give them gainful employment but which also in turn will contribute to the socio-economic development of the country.

2012 also saw ACWA Power taking the next step in the journey of shareholder development. Our group of eight very larger private shareholders was joined by two new ones but this time from the public sector. Sanabil Direct Investment Company, the investment arm of Saudi Arabia's sovereign wealth fund, Public Investment Fund (PIF), and the Public Pensions Agency of Saudi Arabia have now become shareholders through a capital increase exercise currently underway; increasing the paid up capital of the firm to a level in excess of Saudi Riyal 5.35 Billion. The broadening of the shareholder base of ACWA Power through this level of private public partnership provides another major pillar for the company to anchor its foundation for the next phase of our growth and development.

As we look into 2013, we expect to have yet another exciting year. Keeping our portfolio in an efficient operational state, bringing on line new assets, achieving financial close and commencing construction on a string of new projects, bidding and winning more projects and possibly acquiring even some existing assets and integrating them into our portfolio has all become part of our routine life. The real challenge for 2013 will be that of ensuring the vision and mission are understood by all and strategies and actions are implemented consistently with the correct intent in a controlled manner as we grow from a local entity to an international utility, all with rapidly increasing number of staff.

Thus ACWA Power’s focus in 2013 will very much be to continue to strengthen the organization to move beyond “individuals” and “teams” to build an institution where processes and procedures that we instinctively apply are memorialized for all to follow and for risk mitigation and management to become our routine; very much our way of life. While not seeking to stifle our culture of innovation, energy and enthusiasm, we will increase collaboration, discipline and rigor in all what we do. The organizational changes that will be implemented in the first quarter of 2013 are very much aimed at helping ACWA Power to master this challenge.

Mohammad Abdullah AbunayyanChairman

Paddy PadmanathanPresident & CEO

Leadership Statement

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The ingenuity and entrepreneurship of the private sector makes available electricity and desalinated water in a reliable manner to support social development and economic growth of nations.

To provide electricity and desalinated water in a sustainable manner at the lowest possible cost in our target countries.

Our Vision

Our Mission

ACWA Power International Annual Report 2012 Our Vision & Mission

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Planning means Achieving.In life, there are decisions to makein which long-term vision is essential.

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Shareholders

Founded in 2003 as Arabian Company for Water & Power Development. Diversified investments in infrastructure, utilities, manufacturing, mining, development of privately-owned industrial cities, real estate, facilities management and logistics.

Al Muhaidib Group

Formed in 1950 in Dammam with a presence across the MENA region. Concentrates on construction, engineering, manufacturing, food, retail, financial and service industries.

Founded byAl-Rajhi Group as an SPV for strategic investments.A significant Saudi Arabian business conglomerate that has a diversified portfolio including the largest Islamic financial institution in the world.

MADA Group

Al-Mutlaq Group based in Riyadh since 1960 with a large stake in several sectors including manufacturing, furniture retail, agricultural equipment, automotive components and industrial heat exchangers.

Omar Kassem Alesayi Group was founded 64 years ago in Jeddah and has interests in real estate, civil engineering, construction, hotels and malls, electronics, clothing, manufacturing and the automotive sector.

Al-Toukhi Commercial Group established in 1970 in Al-Khobar with a focus on oil and gas, construction, architectural and interior design, engineering consultancy, distribution of building materials and pharmaceutical products.

Badad International Company founded in Jeddah 23 years ago with investments in the building materials market, manufacture of plastic products and the fast food and leisure sector.

Al-Quraishi Group was established in Jeddah in 1934 to provide financial services. Diversified into building materials, real estate, industrial maintenance, textiles, furniture, and the manufacture of prayer carpets.

Note: The structure does not describe the legal status of the entities and excludes shareholders with less than a 1% stake in ACWA Power International.

ACWA Holding

Established in Riyadh in 1960 with a focus on the water and power sectors, specializing in construction, operation, maintenance and contracting.

Abunayyan Group

StrategicSaudi Investors

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ACWA Power’s Board of Directors comprises seven respected businessmen with vast regional and international experience and solid reputations. The five members from the 2009 Board were joined by Mr. Salah Brahimi and Mr. Izzaddin Idris who took up the positions of Independent Members of the Board in March 2010 and November 2010 respectively.

Ahmed Sulaiman Al-Rajhi,Board Member

Chairman of the Boards of Al-Arrab Contracting, The Land Holding Company, Injaz Real Estate, Gulf Packaging Industrial and the Chamber of Commerce & Industry - Industrial Committee, Central Province, Saudi Arabia and Board member of Riyadh CSR Committee.

Rasheed A. Al-Rasheed,Board Member

President & CEO of ACWA Holding, Member of the Saudi Organization for Certified Public Accountants, Member of Saudi Economics Organization and Family Business Organization in the Gulf Cooperative Council.

Tariq M. Al-Mutlaq,Board Member

Managing Partner and Board Member of Almutlaq Group, Chairman of the Board of Shuaa Capital (Saudi Arabia), and Sorouh International, Vice Chairman of the Arabia Insurance Company and Board member of several petrochemical and financial organizations.

Mohd Izzaddin Idris,Board Member

Group MD/CEO of UEM Group Berhad, Deputy Chairman of PLUS Expressways Berhad and previously CFO/ Senior VP (Group Finance) of Tenaga Nasional Berhad, Malaysia.

Salah Brahimi,Board Member

President & CEO, GMI, Multiple Board affiliations (WSS, FN); Expert & Advisor, EU PRPs.

Mohammad Abdullah Abunayyan,Chairman

President & CEO of Abdullah Abunayyan Group of Companies,Board member of several large joint stock companies in Saudi Arabia and member of the Advisory Board of the Saudi Supreme Economic Council.

Sulaiman A. K. Al-Muhaidib,Board Member

Chairman of the Board of A. K. Al-Muhaidib & Sons Group of Companies and Chairman of Savola Group. He is also a Board member of the Saudi British Bank, Al-Toukhi Company for Industry & Trading, Council of Competition Protection and The Centennial Fund.

Board of Directors

ACWA Power International Annual Report 2012 Board of Directors ACWA Power International Annual Report 2012 Board of Directors

18 19ACWA Power International Annual Report 2012 Board of Directors’ Report

Dear Shareholders,

The members of the Board of Directors are pleased to present the Board of Directors Report and Audited Financial Statements of the International Company for Water and Power Projects ("ACWA Power") for the year ended 31 December 2012.

1. General

International Company for Water and Power Projects (the “Company”) is a Saudi joint stock company established pursuant to a ministerial resolution numbered 215 dated 2 Rajab 1429H (corresponding to 5 July 2008) and registered in Riyadh, Kingdom of Saudi Arabia under commercial registration number 1010253392 dated 10 Rajab 1429H (corresponding to 13 July 2008).

The Company and its project companies (Collectively the" group") are engaged in development, construction, acquisition, leasing, operation and maintenance of power generation, steam production and desalinated water production and the sale of electricity and desalinated water, and other related or auxiliary businesses activities complimentary to it.

2. Financial Results

For its fourth fiscal year starting 1 January 2012 and ending 31 December 2012, the group recorded a noteworthy financial performance resulting from the positive performance of the project and O&M companies owning and operating power generation and steam and desalinated water production plants. As a result, the Company has achieved income from main operations of SAR 587.67 Million and a net income of SAR 330.87 Million.

3. Key Accomplishments

In the areas of development, acquisition, construction and operation noteworthy accomplishments include:

• CEGCO: On 29 February 2012, ACWA Power acquired greater control of Central Electricity Generating Company (CEGCO) by acquiring a 25% stake in ENARA Energy Investment PSC (ENARA), which owns 51% of CEGCO, from Malakoff Corporation Bhd (Malakoff) of Malaysia. Thus increasing ACWA Power’s control of CEGCO.

• QIPP: Hajr for Electricity Production Company (HAJR) met all the conditions precedents to achieve financial close under the senior credit facilities on 24 April 2012, making available US$ 2.05 billion of senior credit facilities to fund the the 3,927 MW QIPP project. The project, is being developed on a BOO basis. It is the third of its type, and the largest IPP tendered by SEC which represents another major development in the Saudi power sector to help meet the rapidly increasing power demand in Saudi Arabia.

• ACWAPowerConsortiumPreferredBidderofBOKPOORT CSP IPP in South Africa: On 21 May 2012 a consortium led by ACWA Power was announced as preferred bidder to develop the 50 MWe BOKPOORT CSP Independent Power Project located in Northern Cape Province, 600 km west of Johannesburg in the Republic of South Africa. The newly developed project will generate power byusing Concentrated Solar Power “CSP” parabolic trough technology in South Africa. The BOKPOORT CSP project is a Greenfield Independent Power Project (IPP) to be developed as part of South Africa’s renewable IPP program. The project will be developed on a BOO basis. BOKPOORT CSP IPP will be equipped with the largest thermal storage size ever adopted for a

Board of Directors’ Report

20 21ACWA Power International Annual Report 2012 Board of Directors’ ReportACWA Power International Annual Report 2012 Board of Directors’ Report

similar operational size and is among the most efficient solar plants in the world operating in this class of capacity and technology yielding a record high generation in excess of 200 GWh/year to support the power grid of South Africa.

• Karadzhalovo PV IPP, Bulgaria: ACWA Power announced on 28 June 2012 it partnered with an affiliate of First Reserve Energy Infrastructure Fund and Clean Energy Transition Fund, a fund managed by Crescent Capital to acquire the Solar Photovoltaic (PV) Plant located in Karadzhalovo, Bulgaria. The PV plant operates within the parameters of the Renewable Energy Act of Bulgaria that was enacted in May 2011 whereby a Feed in Tariff (FiT) framework was established with a 20-year fixed tariff for plants operational by a given date. The plant rated at a capacity of 60MWp is expected on average to produce 81,000 MWh per annum. Karadzhalovo PV IPP has been in operation since March 2012 and is already dispatching electricity to the Bulgarian power grid. The off-taker is the state National Electricity Company (NEK) of Bulgaria. The project is funded with equity and debt capital. Debt was funded on a non-recourse basis by three financial institutions; International Finance Corporation, the private sector affiliate of the World Bank; Overseas Private Investment Corporation of the USA and UniCredit of Italy. The solar plant is owned by a company in which ACWA Power has the 42% controlling interest.

• ACWAPowerBarka:

o 10MIGDWaterExpansionProject: On 17 July 2012 ACWA Power Barka SAOG was granted a “Letter of Award” by Oman Power and Water Procurement Company SAOC (OPWP) for the expansion of its existing water desalination capacity by 10 MIGD (45,460 m³/day). The ex-pansion project is an Independent Water Project (IWP) developed on a BOO basis. The Water Purchase Agreement (WPA) and other project agreements for the expansion of its existing water desalination capacity by 10 MIGD (45,460 m³/day) were signed on 29 August 2012 by the Chairman of OPWP, H.E. Saud Bin Nasser Al Shukaily, and the Chief Executive Officer, Mr. Nadeem Rizvi, of ACWA Power Barka.

o Completion of 10 years without a Lost Time Incident: On 2 May 2012 ACWA Power Barka announced the completion of 10 years without a Lost Time Incident. ACWA Power Barka has received numerous local, regional and international awards and recognitions in every aspect of business; however this accomplishment of one decade without a Lost Time Incident (LTI) is without a doubt the most significant.

o RO 73.32 Million refinancing and RO 16.6 Million financingforexpansionproject:ACWA Power Barka SAOG successfully refinanced its existing debt of USD 190.39 Million (RO 73.32 Million) using the proceeds of new non-recourse debt facilities arranged by Bank Muscat SAOG, National Bank of Oman SAOG and Arab Banking Corporation BSC. In addition to the foregoing, ACWA Power Barka also raised new non-recourse RO denominated debt of USD 43.1 Million (RO 16.6 Million) for funding its expansion project comprising the 10 MIGD (c. 45,460 cubic meters per day) reverse osmosis based water desalination facility. ACWA Power, the major shareholder of ACWA Power Barka, played a key role as developer, investor and operator in nurturing the transaction.

• Ouarzazate IPP:

o ACWAPowerConsortiumNamedPreferredBidder of USD 1 Billion Ouarzazate CSP in Morocco: On 24 September 2012 a consortium led by ACWA Power was announced as the preferred bidder to develop the USD 1 Billion 160 MW Ouarzazate CSP IPP located approximately 200 KM south of Marrakesh. The 160 MW Ouarzazate CSP Project is a greenfield IPP to be developed as the first project for the Moroccan Agency for Solar Energy (MASEN) in a series of several planned developments at the Ouarzazate Solar Complex. The first plant within this complex will be the 160 MW Ouarzazate CSP Project with 3 hours of thermal energy storage to be developed on a BOOT basis. ACWA Power had initially submitted the prequalification documents on the 4th of October 2010 together with 18 other consortiums. ACWA Power was the lead developer of one of only 4 consortiums prequalified by MASEN on the 24th of December 2010. The transaction was managed in a transparent manner by MASEN under the tight scrutiny of the World Bank and other international financing institutions (IFIs).

o MASENandACWAPowerSignPPAforUSD1Billion Ouarzazate CSP IPP: On 18 November 2012 under the Patronage of His Majesty King Mohammed VI, the Moroccan Agency for Solar Energy (MASEN) and the winning consortium, led by ACWA Power signed the Power Purchase Agreement (PPA) for the value of USD 1 Billion, for the sale of the net electricity output of the Ouarzazate CSP IPP with the capacity of 160MWe.

• ACWA Power Takes Full Ownership of NOMAC: On 2 October 2012 (effective from 1 January 2012) ACWA Power successfully completed the transaction of acquiring from Sogex Oman, its 35% share of the First National Operation and Maintenance Company (NOMAC), originally a joint venture between Sogex Oman Company LLC

and ACWA Power. The transaction was based on a share purchase agreement with Sogex Oman and with the completion of this transaction ACWA Power has become the 100% owner of NOMAC. Today NOMAC is responsible for the operation of a portfolio with a contracted capacity of 10,127 MW of power generation.

Other noteworthy achievements include:• Restructuring: over the course of 2012 the

company embarked on a review of the corporate structure. The purpose of the exercise was to identify and record the key activities within ACWA Power’s main business processes; to ensure they are embedded in the relevant job descriptions; and to relook at the organization structure to make sure it is scalable going forward and that it meets all the criteria laid down for effective and efficient working. The implementation of the new structure is to take place during the first quarter of 2013.

• Augmenting senior staff: During 2012 ACWA Power strengthened some of its key functions with seasoned experts by recruiting professionals in areas such as legal projects, legal corporate, finance, business development, internal audit, technology, strategy and insurance.

• InternalAudit&RiskManagement:During 2012 ACWA Power created an in-house group wide internal audit and risk management function with a decentralised set up, which is responsible to provide ACWA Power and the group entities independent, objective assurance and consulting service by way of performing risk based internal audits that are designed to add value and to improve effectiveness of accounting, financial, operations and other controls as an aid to management to achieve its goals of maximizing efficiency and productivity and to ensure that it complies with approved Company procedures, standards of business conduct, meet regulatory requirements, and leading practices to achieve its business and corporate goals. The function also provides risk management services to ACWA Power and group companies on establishing risk management framework, policy and procedures using principles of ISO 31000 standard.

• International Offices: During 2012 ACWA Power established 2 new regional international offices; one in South Africa and one in Morocco. Each office will be responsible for all activities within its geographical region and has been staffed with seasoned professionals in their respective fields. As of the end of 2012, ACWA Power has offices and on the ground representation in the UAE, China, Turkey, South Africa, Morocco, Jordan and Oman in addition to its corporate office in Saudi Arabia.

• Awards: While ACWA Power is proud to have delivered numerous award winning transactions in 2012 it was recognized by Project Finance Magazine as the Middle East Sponsor of the year in a ceremony which took place in Dubai on 27 February 2013.

4. Board of Directors

The Board is composed of seven (7) directors:• Mr.MohammadA.Abunayyan(Chairman)• Mr.SulaimanA.K.Al-Muhaidib• Mr.AhmedSulaimanAl-Rajhi • Mr.RasheedA.AlRasheed• Mr.TariqM.Al-Mutlaq• Mr.SalahBrahimi• Mr.MohdIzzaddinIdris.The BOD held four (4) board meetings during the period 1st January 2012 to 31st December 2012 to monitor the Company’s progress, policies and procedures, in addition to the strategies put forth by the management in developing new projects in the targeted geographical regions. During these meetings the BOD approved budgets to ensure the on-going operation of the Company. The BOD received a total sum of SAR 875,000 as remuneration for their services for the period of 1st January 2012 to 31st December 2012.

5. Audit Committee

The audit committee of the Board is comprised of three (3) members:• Mr. Khalid Al-Solai (Chairman)• Mr. Rasheed A. Al Rasheed • Dr. Ahmed Al-Meghames (resigned)• Mr. Khalid Al-Khowaiter

The Audit Committee held four (4) meetings during the period 1st January 2012 to 31st December 2012 at which they reviewed financial policies followed by the Company to affirm conformity to international standards, in addition to providing the BOD with a clear picture of the Company’s financial position. The Audit Committee received a total sum of SAR 205,000 as remuneration for their services for the period of1st January 2012 to 31st December 2012.

6. RiskManagementOversightCommittee (RMOC)

The Risk Management Oversight Committee (RMOC) held two (2) meetings during the period 1st January 2012 to 31st December 2012. It is a fully delegated committee of the Board and performs its functions in accordance with its terms of reference drawn in compliance with the Code of Corporate Governance approved by the Board. The Committee supports the Board to monitor the risk environment for the Company and provide direction for the activities to

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mitigate, to an acceptable level, the risks that may adversely affect the Company’s ability to achieve its goals. The committee consists of four members, Chairman being an independent member of the Committee: 1. Mr. Mohd. Izzaddin Idris (Chairman)2. Mr. Khalid M. Al-Solai 3. Mr. Paddy Padmanathan 4. Mr. Mrinal Sengupta

7. Board Investment Committee (BIC)

The Board Investment Committee is a standing Committee of the Board deriving powers under full delegation of responsibility from the Board of Directors. BIC consists of five (5) members who are appointed by the Board and attended the meetings. The BIC held a total of seven (7) meetings from the period 1st January 2012 to 31st December 2012.

The primary purpose of the BIC is to consider matters and give its directions, rules and approvals on the matters designated to it by the Board and including the matters relating to approving the investments in projects, investment guidelines, strategic business plans and related decisions on behalf of the Board of Directors of the Company:1. Mr. Mohammed A. Abunayyan (Chairman)2. Mr. Ahmad S. Al-Rajhi 3. Mr. Tariq M. Al Mutlaq 4. Mr. Salah C. Brahimi 5. Mr. Mohd. Izzaddin Bin Idris

8. Related Party Transaction Committee (RPTC)

The Related Party Transaction Committee met once during 2012. It is constituted by the Board and is performing its functions in accordance with its terms

of reference drawn in compliance with the Code of Corporate Governance approved by the Board. The Committee supports the Board to review and approve matters and transactions that involve related party transactions and conflict of interest within the company. Any approval or rejection given by sub-committee of the Board is considered as having been given by the Board themselves. The committee consists of three members, Chairman being an independent member of the Committee:1. Mr. Mohd. Izzaddin Idris (Chairman) 2. Mr. Tariq Al Mutlaq3. Mr. Salah C. Brahimi

9. Acknowledgement

The Board of Directors express their gratitude to The Custodian of the Two Holy Mosques, His Royal Highness the Crown Prince and to His Excellency the Minister of Water and Electricity, for their continued support of the power and water sector and offer their thanks to all government officials and relevant authorities for their continued cooperation with the Company. We also take this opportunity to thank the management and our employees for their dedication and commitment to position and maintain ACWA Power as a leader in this sector, not only in Saudi Arabia, our home, but also in each and every one of our target geographic regions.

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Alignment with Nature.Agreement with Energy.Considering all our business surroundings, commitments and objectives.

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How We Work

Greenfield Competitive Bid, Acquisition, Due Diligence,

Technology Appraisal, Owner’s Specifications, HSE Standards, Partners EPC & OEM, Financing Cost Model, Bid & Transaction Management, Bid Submission,

Acquisition Completion

Planning,Talent Development &Retention, Governance, ERM, Ethics,

HSE, CR&S, Accounting, Management, Reporting

Construction & Commissioning, Transition, Operations & Maintenance,

Revenue, Compliance, Risk & Insurance, Assurance, Performance Monitoring

Sustainable Portfolio

Performance

SocioEconomic

Development

Strategy&

Mission

Growth&

Development

26 ACWA Power International Annual Report 2012 HowWeWork 27ACWA Power International Annual Report 2012 HowWeWork

28 29ACWA Power International Annual Report 2012 Our Business ACWA Power International Annual Report 2012 Our Business

Our investments achieved remarkable performance during the year with six fully operational assets in Saudi Arabia, one in Oman and nine in Jordan. We also completed the acquisition of a controlling interest in Karadzhalovo PV Solar IPP in Bulgaria on 28 June 2012 and their post acquisition results are part of the consolidated financial statements. The year saw a notable performance of our operations and maintenance (O&M) subsidiary, NOMAC. The operations stabilized and business has continued to achieve sustainable and profitable operations. The overall result was a significant increase in our asset portfolio’s revenues.

Greenfield Development and Acquisitions

More than thirty viable opportunities were explored and several actively pursued during 2012 by our Business Development team. ACWA Power led a team which bid and won the tender launched by the MASEN in Morocco for the 160MWe Ouarzazate CSP IPP. The project is the largest in the world using this technology.

The Power Purchase Agreement (PPA) was signed during November 2012.

In June this year, ACWA Power concluded a deal to acquire the controlling interest in a 60 MWp Solar Photovoltaic (PV) Plant located in Karadzhalovo, Bulgaria, the largest PV Plant of its kind in Europe. Also in 2012, the consortium led by ACWA Power was awarded to develop the 50MW BOKPOORT CSP IPP in South Africa.

On 29 August 2012 Oman Power and Water Procurement Company SAOC (OPWP) and ACWA Power Barka, a subsidiary of ACWA Power signed the Water Purchase Agreement (WPA) and other project agreements for the expansion of its existing water desalination capacity by 10 MIGD (45,460 m³/day).

ACWA Power is an independent water and power developer whose primary business is the production of electricity and desalinated water at the lowest possible cost. ACWA Power has positioned itself as a holding company of subsidiaries, joint ventures and associated companies that own and operate single assets or groups of facilities. Our core activities of business development and asset management are undertaken by teams of international and local professionals with competence in, inter alia, finance, technology, commercial and contract law, construction and operation and management of assets. The Company actively controls and assures its interests in its shareholdings through approval of senior staff and representation on the Boards of Directors of our subsidiaries and joint ventures and via our corporate asset management team.

ACWA Power’s 2012 performance demonstrates that the Company has transitioned into an international business with a commensurate level of organizational maturity. Business development activities have continued at full pace with the nature and range of prospects expanding both geographically and technologically. The core business areas of Business Development, Finance and Project Finance and Asset Management were strengthened by hiring highly experienced and competent professionals. Internal business management processes and systems were augmented with emphasis being given to financial, corporate governance and business development functions.

Our Business

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Power from Renewables

ACWA Power has committed to 10% of its power capacity being in renewable power by the end of 2018. The majority of this renewable energy portfolio will come from solar power due to the immense solar resources in the MENA and Southern African regions. During 2012, we built a short list of feasible and fundable projects in several of our target markets. In addition to the 50MW CSP project in South Africa and a 160MW CSP project in Morocco won by ACWA Power during 2012, the list includes CSP and PV opportunities in Jordan and the Kingdom of Saudi Arabia. We continue to play an integral role in shaping the Saudi Arabian renewable energy sector (a market that is estimated to be in excess of 15 GW in the coming 10 years) by lobbying the authorities and supporting research and development.

Asset Management

The growth in portfolio derived revenues was due to the strong performance of the facilities combined with the corporate team’s support and expertise on resolving billing, commercial and deemed availability issues. Technical consultancy was made available to subsidiaries and joint ventures and at site to improve heat rates and overall production efficiencies. Professional resources in the field of Health, Safety and Environment (HSE) where deployed to ensure compliance with national security requirements

and to implement our own HSE standards.

Efforts were concentrated on developing and implementing common standards and guidelines for implementation across the Group. An Operations and Maintenance standard based on international best practice was adopted and is used by both operational facilities and development projects to define ACWA Power’s minimum standards. The appointment of several new members to Asset Management provided additional expertise and knowledge to the team.

During 2012 Karadzhalovo PV solar project was successfully acquired and added to the steadily growing international portfolio of ACWA Power and the Plant is currently in commercial operation. Unit 1 of Rabigh IPP achieved ICOD status on 10th December 2012 and is in commercial operation. The construction of Unit 2 of Rabigh IPP is under final phase of commissioning. HAJR is also on

ACWA Power International Annual Report 2012 Our Business

track and construction is in full swing with 3 gas turbines already at site in place.

Several of our assets are maintained by our subsidiary NOMAC, an O&M service provider, and we have a robust assurance, monitoring and control presence to supervise risk management at an operational level. ACWA Power has successfully acquired 100% stake in NOMAC and it is under the full control of ACWA Power.

EmployeesandtheExecutiveManagement Team

The key contributors to ACWA Power’s success are the qualified, entrepreneurial, enthusiastic and highly committed professional teams. The Company is structured into six functional areas including Technology, Finance & Risk, Project Legal, Business Development, Asset Management and Corporate Services. The Executive Management team led by the President & CEO, who reports to the Board of Directors, comprises the leaders of each of the functions plus five other key leaders; Corporate Legal, Accounting & Tax , Human Resources, Corporate Responsibility & Sustainability and Corporate Communication.

Corporate Responsibility, Sustainability andHSE

ACWA Power launched its corporate responsibility program in 2008 and has kept it closely aligned with our regional issues and challenges. Our primary project for 2012 was the ensuring the professional management the Higher Institute of Water and Power Technology (HIWPT). HIWPT is a technical training institute to educate Saudi school leavers and encourage them to take up long term careers in the power and water sector. The college opened in September 2011 and as at the end of 2012 had about 585 trainees in the first year and second year program.

Our Health, Safety and Environment (HSE) management program continued to mature and bed down during 2012. At the start of 2011 we implemented a revised suite of leading and lagging HSE performance indicators based on international guidelines. We are pleased to be able to report that there were no fines or cases of HSE enforcement action across our portfolio of assets during 2012. Barka IWPP continued their outstanding HSE track record by announcing on 2 May 2012 the completion of 10 years without a Lost Time Incident. ACWA Power Barka has received numerous local, regional and international awards and recognitions in every aspect of business; however this accomplishment of one decade without an LTI is without a doubt the most significant.

ACWA Power International Annual Report 2012 Our Business

32 33ACWA Power International Annual Report 2012BusinessRiskManagement

DevelopmentThe identification and limitation of material risks during this first phase of our business cycle leads to a substantial reduction in risks over the whole life of the asset that is commensurate with the benefits. The key risks during this cycle are as follows:

Selection of contractor and technologyThe selection of a competitive Engineering, Procurement and Construction (EPC) contractor is fundamental to our winning strategy and is considered and evaluated against the right technology that can provide the optimized solution for the plant. To manage and mitigate contractor pricing and construction risk, we partner with competitive, experienced and creditworthy EPC contractors. When selecting the technology for a greenfield project, we go to great lengths to ensure that the chosen technology has an extensive history of operations and commercial service in the region, is suited to the plant and operational specifications supplied by the off-taker and provides on the whole the most viable solution for the transaction.

FundingandfinancingriskThe business, being in a capital intensive industry, requires significant amounts of corporate and project level borrowing or issuance of share capital to fund the equity and debt requirement for investments.

To fund the capital needs in projects, having an underleveraged balance sheet, we have the ability to raise debt or issue corporate notes secured against the available free cash flows from our businesses or access further share capital from the shareholders. At the project level we generally finance our debt needs by raising limited or non-recourse debt thus minimizing the exposure at the corporate level to the amount of equity invested in the project.

We do provide credit support to the project companies in the form of parent company guarantees, letters of credits and / or guarantees arranged from financial institutions to support the requirements of project development or equity contributions in the business (especially where the contribution is in the form of an Equity Bridge Loan "EBL"). Additionally, when we venture into merchant markets, we may be in

some cases required to provide credit support for our trading activities.

CounterpartyriskWe manage our credit exposure to our off-taker counterparties by entering into long-term off-take agreements with investment grade off-takers. Furthermore, most of our projects have invoice and termination payments guaranteed with credit support provided by the Ministry of Finance of the country. In relation to borrowings from or deposits with financial institutions, the exposure is limited to global or regional banks with investment grade rating. The management team regularly monitors the credit rating of such institutions.

Availability and selection of development partnersACWA Power develops projects as a lead or joint lead developer, by partnering with carefully selected strategic and financial partners. These partnerships enable us to share the project risks. Each partner is required to inject cash equity, or support its pro rata Equity Bridge Loon (EBL) with acceptable credit support or arrange a stand by letter of credit to back stop its commitment to inject future equity obligations. Regulations,compliance,legalandtaxstructuringWe are subject to changes in regulations that could affect our business especially with regard to adjustments in taxation policy, competition law, environmental, health and safety legislation and other regulations. Most of the projects are structured to offer protection against a change of law occurring in the country where the project is based, that could adversely affect financial performance.

Legal risks arise due to the Company’s activities and unintended or unexpected consequences from a violation of law, civil claims arising from litigation or any other disputes. We identify, manage, and monitor legal risks through our strong and experienced team of in-house legal counsels.

We develop tax efficient structures through multiple jurisdictions with the tax assumptions being on local tax regulations when the investments are made in the underlying

ACWA Power International Annual Report 2012BusinessRiskManagement

BusinessRiskManagement

Risk management is an inherent and integral part of our business. We manage it through various processes that have been set up to identify and assess the issues and then take action to reduce or mitigate the exposure and limit the potential unfavorable consequences. We are continually refining and improving our risk management strategies to achieve a fine balance between effective control and entrepreneurial spirit. At ACWA Power, we have implemented Enterprise Risk Management on the principles and guidelines given by ISO 31000

Risk Management standard. We are also in the process of establishing or extending principles and guidelines of risk management to our group companies.

Our key risks and opportunities arise from our main functions of development (includes green field, acquisitions covering the project finance aspects) and asset management. An overview of our priority business risks is presented in the following section which is aligned with our overall business cycles and model.

34 35ACWA Power International Annual Report 2012BusinessRiskManagement

established effective working relationships with the Original Equipment Manufacturers (OEM) across our fleet that enables us to keep abreast of innovation and technical advances and use their expertise for major equipment maintenance and inspections. NOMAC has further adopted an international best practice O&M standard and established standard operating procedure for each facility to reduce the risk of human failure. The integrated management system has been successfully recertified to three internationally recognized performance and quality standards, namely OHSAS 18001, ISO 9001 and ISO 14001. To further mitigate operational risks, NOMAC ensures that its employees have adequate operating knowledge and skills supported by training and structured career growth plans.

ACWA Power and NOMAC place special emphasis on the establishment of KPIs monitored relative to industry benchmarks, technical audits (internal and third party), materials management, maintenance planning, and data processing. An Enterprise resource planning (ERP) solution using the SAP platform has been implemented alongside the integrated quality assurance functions. Other major programs include operational procedures, plant performance monitoring and optimization, equipment condition monitoring and training. While the need for preventive maintenance remains, the emphasis is moving towards a predictive maintenance strategy to reduce the requirements for corrective maintenance.

The challenge to recruit experienced and trained technical personnel continues due to a highly competitive market and limited resource base. The establishment of the Higher Institute for Water & Power Technologies (HIWPT), our primary corporate responsibility project, will reduce this bottleneck of attracting local students for our future technical needs and will guarantee the achievement of our long term Saudi National employment targets.

Health,SafetyandEnvironmentInadequate HSE practices and management can lead to hazardous conditions, de-motivated staff and reduced economic performance of the plant. To control anticipated HSE risks, we specify stringent HSE management standards based on international standards for all EPC and O&M service providers. We have our own HSE team who undertake periodic inspections and audits to monitor the HSE management activities and performance. All our projects are designed to comply and operate within the local HSE

standards and requirements for air and water emissions, noise levels and soil contamination. All projects are subject to an Environmental and Social Impact Assessment which complies with both local and World Bank regulations.

Detailed HSE programs are implemented at every site and location. These programs focus on behavioural safety, safe working by implementation of PTW/LOTO procedures using SAP as the CMMS platform, investigation and root cause analysis. Effectiveness of HSE programs is continuously measured and improved through preparing and communicating SMART goals and objectives and monitoring the specific group wide HSE KPIs.

Greenfield, Acquisitions and Restructuring of Assets

Construction and CommissioningIn the construction phase, we ensure that the EPC contracts are structured to transfer the majority of the construction and design risks to the EPC contractor, and include protection against cost overruns, delays or performance shortfalls through liquidated damages. During the commissioning phase, the EPC contractor is expected to meet the performance targets of power output, availability and efficiency by complying with a comprehensive testing regime conducted before completion and at the time of handover by the EPC contractor to the project company. ACWA Power oversees and assists in appointment of key personnel for the newly formed project companies During construction and commissioning the major issues with progress, quality variations and compliance are closely monitored, advice provided and solutions discussed and followed up till closure.

Assets Management during construction & commissioning• Monitorandassesstheprojectconstruction

activities with a view to ensure compliance with schedule, specification, contractual agreements, budgetary provisions and safety requirements

• Assessandassisttheprojectcompaniesforthe resolution of technical, commercial and risk associated issues

• ReporttoACWAPowermanagement/BODabout performance of the contractors and project company management

• EnsuretimelyO&Mstaffmobilizationandtraining

ACWA Power International Annual Report 2012BusinessRiskManagement

projects. We continuously manage the risk of the possibility of a change in tax structures by selecting stable and internationally recognized jurisdictions as well as monitoring the changes in local regulations.

CountryandpoliticalrisksThe decision to invest in a project is highly dependent on the country and political risk assessment of that country and the region. This risk assessment is carried out by experienced people within the organization with the support of external consultants (where needed). This risk can be minimized but cannot be eliminated through the project’s life cycle. Where possible, we try and seek protection under the agreements for such risks. We do realize the importance of good relationships throughout the life of the project with our counterparties and ensure that this remains a key objective for the management and shareholders alike.

Asset Management

Asset Monitoring and AssuranceACWA Power’s long term sustainability hinges on our effective management of the operational risks and optimizing the income from our power generation and desalinated water production facilities. Therefore, one of our core business strategies is to add value by delivering competitive and reliable operations and maintenance services. Our Asset Management (AM) team monitors and controls ACWA Power’s assets with the objective of ensuring asset performance, safeguarding shareholders’ interests while meeting budgeted and contractual obligations. Legal and ethical operations are ensured by complying with applicable laws and

a commitment to social responsibility. Several facilities are managed by our subsidiary NOMAC, an O&M service provider, and therefore we have a robust assurance, monitoring and control presence to supervise risk management all the way through to the operational level.

We have established a schedule for undertaking technical audits of our O&M and Project company functions. This provides a regular source of detailed information and highlights improvement areas that are managed with comprehensive improvement action plans. This hands on approach has supported both ACWA Power and NOMAC in monitoring the implementation of improvement programs in a quantitatively and qualitatively manner. The periodic reviews also ensure that ACWA Power retains a balance of control over its commitments and deliverables under long term O&M Agreements.

Operations and MaintenanceOperational risk, particularly a reduction in availability, efficiency or capacity, is one of the most important issues faced by power and desalination facilities. ACWA Power has mitigated this risk by appointing NOMAC, on the majority of our projects. The O&M service provider has recourse under the O&M agreement and is compensated based on the projected fixed and variable costs which are indexed to domestic and international inflation rates. Cash flow could be negatively affected by a decline due to an increase in maintenance and operational costs arising from higher than projected wear and tear or unplanned outages. To mitigate this risk, we are committed to delivering international standards for O&M services supported by strong and experienced management. ACWA Power and NOMAC have

36 37

Operation Phase• Monitor,assessandimprovetechnical,

financial ,contractual and regulatory performance of the portfolio assets

• Audittheprojectcompaniesfortheimplementation of the ACWA Power O & M and HSE Standards

• Ensurelegal&ethicaloperationbycomplyingwith Agreements and applicable laws and ensure commitment to social responsibility.

• ReviewandfinalizeproposedAnnualbudgets and budgeted KPI’s submitted by Project company & O & M company before submission to BODs for approval

• Monitorperformanceoftheassetsagainstbaseline and budgeted KPIs ,analysis of evaluated plant KPIs against other plants in portfolio and benchmarks and performance of gap analysis & corrective actions

• Ensure Project companies and O & M companies establish, implement and maintain processes and procedures for the asset management and control of activities across the entire life cycles including reactive and proactive performance monitoring and improvement.

• Review/adviseonO&Mstrategy• Responsibleforassessing,developingand

implementing improvements, optimization and value enhancement opportunities for the asset

• Discussandresolveexpenditureissuesandbudgetary variations with relevant parties and, as necessary, refer major issues to CEO/BOD for direction and resolution

• ProvideadviceandsolutionstotheProjectcompanies and O & M companies

• Monitor performance of the Project companies and O & M c ompanies management and recommend changes and revision to the organizational structure, roles or responsibilities in order to meet Asset Management objectives

• Coordinatesuccessionplanningofkeypersons across assets and ensure career development and progression plans to reduce employee turnover in the Project companies

and O & M companies• Ensurefinalizationofserviceagreementswith

the Project companies

Changes in LawAs we operate regionally and globally outside our home country, our operations may be subject to significant varying government regulation and our business and results of operations could be adversely affected by changes in the law and regulations. This risk is mitigated by prompt and appropriate response to changes in law or regulation within the framework of the Agreements.

InsuranceAs we are in a highly capital intensive business, insurance is a vital requirement to protect assets against foreseeable risks. All the projects in our portfolio have comprehensive and detailed industry standard insurance packages throughout the construction and operational phases.

Fuel SupplyOur plants run on fossil-based fuels with most of the plants contracted on a tolling arrangement (wherein the fuel costs and volume risks are borne by the off-taker for the full term of the power and water purchase agreement). The fuel for the projects is supplied indirectly or directly by creditworthy suppliers and incremental costs of backup fuel are transferred to the off-taker. As per normal industry practices, the facilities are subject to heat rate penalties which are carefully monitored in order to avoid fluctuation in cash flows.

TariffDue to the tolling nature of the agreements, all the projects in our portfolio have limited exposure to volumetric or price risk as they realize both capacity and production payments. The capacity payments are structured to meet a project’s capital investments, financing payments, fixed operation and maintenance (O&M) costs and the equity sponsor’s required rate of return. The production revenues are linked to the variable O&M costs that the project incurs. Typically, fixed O&M capacity and production payments are escalated at inflation over the life of the purchase agreement. ACWA Power will however be exposed to market forces on the determination of electricity and fuel prices and market demand as we invest in merchant markets. The open market wholesale prices for electricity are very volatile and often reflect the varying costs of different fuels. Any changes in the supply in the market or cost of fuel may impact the open market wholesale prices of electricity and in turn our profitability. For PV solar project contract, the Feed-in-Tariff has been provided by the off-taker.

EconomicandFinancialOur business is subjected to the various risks, including foreign exchange, inflation, and interest rate risks. The revenues of most of the projects, though received in local currencies (which are pegged to the USD), are indexed either fully or in majority to the exchange rate movement of the USD, thus resulting in protection against volatility of the exchange rate between the two currencies. Due to the dollarized nature of the cash flows, a removal of the peg between the

ACWA Power International Annual Report 2012BusinessRiskManagement

local currency and USD, would minimally affect the financial stability of our portfolio. The bulk of the O&M revenue of most of our projects is in USD or the relevant local currency and any movements in the USD currency against any other major currencies of the world have a low impact on the stability of cash flows. The fixed and variable revenues of most of the projects are typically divided into two components, namely domestic and international. Both revenue streams are indexed to the inflation rates of the respective countries and are thereby sheltered from exposure to inflation risk.

We model and select an optimal interest rate that results in the highest rate of return. Long term funding largely comprises of SAR and USD debt, linked to SAIBOR and LIBOR, respectively. To protect from interest rate volatilities, SAIBOR is 100% hedged on a rolling basis for periods of 5 years and LIBOR is substantially hedged (both using interest rate swaps) for periods replicating the tenor of the USD debt. Therefore, although most of the projects do not have any interest rate exposure currently, our ability to maintain the stable cash flow levels will depend on future SIBOR and LIBOR interest rates.

Organizational ManagementOur business is a people business and succeeds on the learning and knowledge gained by our people from transactions we undertake and the management of our businesses. We have organized our management team on an efficiency basis to ensure that each of the functional centers of technology, asset management, finance (project and corporate finance, accounting, tax, insurance, risk) and legal develop and retain expertise within their teams to support the main growth engines of business development and acquisitions.

StaffingandHumanResourceRiskWe hire and retain the best talent in the industry to steer our way to success. Finding and retaining the right staff is the key difference in winning on competitive bids or in providing operation and maintenance services. The implementation of our strategic plans can be hindered by the loss of key personnel or failure to recruit or retain key personnel. To mitigate this concern, in addition to succession planning, we provide competitive remuneration and bonus schemes. Our entrepreneurial environment results in our employees being constantly challenged to support their learning and on the job development.

Governance and Management ControlACWA Power has grown significantly over the last few years and we have established and maintained appropriate governance and management procedures. Our standards are based on local and international requirements and management approaches. We have continued to build and implement financial controls under the internationally accepted framework of Committee of Sponsoring Organizations (COSO) and have advanced during the year to conduct internal audits of various areas. Further details can be found in the section of ‘Corporate Governance’.

We have implemented an Enterprise Risk Management solution on the guidelines and principles suggested by ISO 31000 standard. A Risk Management Oversight Committee has been set with adequate representation of non-executive directors and Independent directors from the Board. The role and responsibility of the Risk Management Oversight Committee is to monitor the risk environment of the Company and to provide direction for the activities to mitigate, to an acceptable level, the risks that may adversely affect the Company’s ability to achieve its goals. The Committee facilitates continuous improvement of the Company’s capabilities around managing its priority risks.In addition, the Committee will support the Board efforts to monitor and evaluate, guidelines and policies to govern the process by which risk assessment and management is undertaken.

ACWA Power International Annual Report 2012BusinessRiskManagement

38 39

Conquering Challenges with Solid Solutions.Investing in energy is a key inspiration to reach safe valuable grounds.

40

Financial Highlights

Technology Accounting classification

ACWAPower

effective ownership

as of 31/12/2012

Power Capacity WaterCapacity

Total ACWA Powershare

Total ACWA Powershare

MW MW m3/day ‘000 m3/day ‘000

Operational Projects

Marafiq IWPPCombined cycle & MSF desalination

Joint venture 20.0% 2,743 549 800 160

Rabigh IWSPPConventional oil fired – Steam turbines and RO desalination

Associate 23.9% 360 86 134 32

Rabigh IPPConventional oil fired –Steam turbines

Joint venture 40.0% 1,204 482 - -

Shuaibah Expansion IWP

RO desalination Joint venture 29.75% - - 150 45

Shuaibah IWPPConventional oil fired – Steam turbines & MSF desalination

Joint venture 30.0% 900 270 880 264

Shuqaiq IWPPConventional oil fired – Steam turbines & RO desalination

Joint venture 34.0% 850 289 212 72

Barka 1 IWPP(Oman)

Combined cycle & MSF desalination

Subsidiary 41.9% 427 179 91 38

Bowarege RO desalination Subsidiary 64.8% - - 50 32

CEGCO (Jordan)Open cycle, Combined cycle, Steam, Hydro & wind

Subsidiary 40.9% 1,515 620 - -

ZBE Partners EAD (Bulgaria)

Photovoltaic (Solar) Subsidiary 42.0% 60 25 - -

8,059 2,500 2,317 643

Projects under construction

Qurayyah IPP Fuel (gas) Joint venture 17.5% 3,927 687 - -

Barka 1 IWPP (Expansion)

RO desalination Subsidiary 41.9% - - 45 19

3,927 687 45 19

Total 11,986 3,187 2,362 662

A summary of the Group’s financial performance during the year 2012 is set out below. The results and financial position are presented on consolidated basis (as per the consolidated financial statements).

We currently have operational investments with a total net power capacity of 8,059 MW and total net water capacity of 2.3 million m3/day spread over 18 plants, with another 3,927 MW and 45,460 m3/day capacities currently under construction. The majority of investments are under long term agreements with the

fuel price and supply risk assumed by a credit worthy off-taker. Our investments are presented in the following table with the respective accounting classification.

We undertake a full line-by-line consolidation for all projects over which we exercise full control (classified as subsidiary) and do an equity accounting (one-line consolidation) for the projects where we either have joint control or significant influence which are classified as a joint venture (“JV”) or an associate, respectively.

ACWA Power International Annual Report 2012 Financial Highlights 41

In order to deliver the business model of investing in assets in which ACWA Power has operational control and to do so in an efficient and value creating manner, the plant operations and maintenance activities undertaken by ACWA Power are structured through two subsidiaries; First National Operations and Maintenance Company Limited (“NOMAC”) in the Kingdom of Saudi Arabia and First National Company for Operation and Maintenance Services LLC (“Nomac Oman”) in the Sultanate of Oman. NOMAC and NOMAC Oman are involved in the operation of a portfolio of plants which together deliver 6,184MWs and 2.2 million m3/day.

The financial information presented in the consolidated financial statements has been prepared in accordance with accounting standards generally accepted in the Kingdom of Saudi Arabia. For the year 2012, we achieved an income of SAR 588 million from main operations and a net income of SAR 331 million. The drivers of the net income are services rendered (including development fee income), results of operations from our subsidiaries and our share of net income from joint ventures and associates.

Summary of the Group’s financial performance is as follows:

2012 2011

SAR million SAR million

Revenue 6,404 3,579

Gross Profit 521 586

Share in net income of joint ventures and associates 245 104

Income from main operations 588 487

Net income 331 280

Net cash from operating activities 635 260

Net cash used in investing activities (241) (687)

Net cash (used in) from financing activities (477) 552

Summary of the Group’s financial position is as follows:

2012 2011

SAR million SAR million

Bank balances and cash 490 473

Current assets 3,190 3,769

Non-current assets 6,876 6,447

Total liabilities 5,983 6,116

Total equity 4,083 4,100

Tangible net worth 3,139 3,022

ACWA Power International Annual Report 2012 Financial Highlights

42 43

Revenue is driven by the availability of the power and water facilities and dispatch of electricity and desalinated water by operational facilities, and operation and maintenance services and development fees.

Electricity sales increased significantly during the year driven largely by CEGCO’s full year operational results which was acquired in July 2011. CEGCO produces approximately 52% of the electricity requirement of Jordan. Major component of CEGCO’s revenue relates to its recovery on account of fuel costs of approximately SAR 4.9 billion (2011: SAR 2.3 billion) which are under a pass through arrangement with the off taker. Further, acquisition of ZBE Partners EAD (Bulgaria) completed during the year has also contributed in increased revenue from electricity sales. If we exclude the revenue of pass through fuel at CEGCO, the 2012 electricity sales will be SAR 0.8 billion and contribute 54% of the overall revenue of Group (Water sales would then be 17% and Services 29% of the revenue).

Developments and acquisitions

During 2012, ACWA Power acquired a 42% controlling stake in a Bulgarian Photovoltaic (PV) Solar Plant located in Karadzhalovo, Bulgaria. This PV plant operates within the parameters of the Renewable Energy Act of Bulgaria that was enacted in May 2011 whereby a Feed in Tariff (FiT) framework was established with a 20-year fixed tariff for plants operational by a given date. The plant rated at a capacity of 60 MWp is expected on average to produce 81,000 MWh per annum. The plant is operating since March 2012 and achieved commercial operation in June 2012. The plant is dispatching electricity to the Bulgarian power grid and off-taker is the state National Electricity Company (NEK) of Bulgaria.

During 2012, ACWA Power purchased additional net stakes in its subsidiaries CEGCO and NOMAC of 12.75% and 25%, respectively. Further, subsequent to 2012, ACWA Power has been awarded the rights to develop the Rabigh IPP II project (approximately 1,800 MW thermal fuel powered plant).

Results of CEGCO, NOMAC, Bowarege and Barka are consolidated into ACWA Power whereas results of associates and JVs are recorded under the equity method. The results of consolidated businesses above reflect the results of these businesses after minority interests.

Compared to year 2012, CEGCO’s previous year results are significantly lower due to high year end provisions made against accounts receivable balances. Further CEGCO’s current year results were positively impacted by significant exchange gains on account of exchange rate movements arising on yen-denominated loans. Additional stake acquired during the year has also improved the net results. Similarly in case of NOMAC, the results were driven by fewer scheduled major maintenances and outages compared to last year. Further additional stake acquired during the year has also improved the net results. The deteriorated results on BARKA are on account of relatively low availabilities and increased scheduled operation and maintenance costs.

Operating Costs

Operating costs comprise development expenses incurred for projects that have achieved financial close and fixed and variable operation and maintenance costs incurred at the consolidated businesses. Operating costs of the projects generally comprise chemicals, fuel, salaries and wages, routine and annual plant maintenance, consumables and spares, insurance, development fees, plant depreciation and amortization,

ACWA Power International Annual Report 2012 Financial Highlights

Revenue

2012 2011Services

SAR 445 M(12%)

ElectricitySAR 2,864 M

(80%)

Water SAR 270 M

(8%)

ServicesSAR 424 M

(7%)

ElectricitySAR 5,720 M

(89%)

Water SAR 260 M

(4%)

NET INCOMESARin Million

CEGCO NOMAC BOWAREGE BARKA SHARE OFPROFIT FROM

ASSOCIATES & JV’S

22

4938 42

245

104

69

2725

(4)

2012 2011

replacement costs of membranes and other equipment, environmental health and safety expenses, outsourced labor and manpower costs incurred in the operation and maintenance of the asset portfolio.

Significant increase in operating costs for the year is driven by CEGCO where the business operations are for the full year in comparison to previous year where it was acquired in July 2011. Within the operating costs, a considerable part relates to fuel cost from CEGCO (that is on a pass through arrangement in revenue) which amounts to approximately SAR 4.9 billion (2011: SAR 2.3 billion).

Income from Joint Ventures and Associates

The chart represents the performance of significant projects with respect to Group’s effective holding and does not include upstream consolidation eliminations

The increase in income from joint ventures and associates is on account of Rabigh IPP, where commercial operations commenced within the year and project cost under-run income was earned, and Shuaibah IWPP, where the improvement was largely driven by reduced finance cost on account of equity bridge loan settlement in early 2012.

Other costs

Other costs mainly include general and administrative expenses and provisions and write-off of development cost of discontinued projects. General and administrative expenses are made up of staff costs, office costs, telecommunication and internet, utilities, general repair and maintenance, general insurance, travel and subsistence, legal and professional charges, directors’ remuneration and provision for doubtful debts.

Other income

Other income mainly comprises service fee charged to projects, recovery of finance cost from project companies and profit on fixed deposits.

Finance costs

Financial charges are largely driven by interest on long term loans of ACWA Power and its consolidated businesses. Commission on letters of credit and guarantee issued by the financial institutions mainly arise from the commitments of ACWA Power on its various investments in project companies and development projects.

Cash Distributions and Dividends

ACWA Power receives cash distributions from its businesses in various forms including dividends, management and technical services, development fees and various other services.

Debt and Capital Structure

ACWA Power’s capital structure mainly comprises of equity injections from shareholders and medium term corporate loans. The senior loans at the respective projects are without recourse to the respective shareholders. Equity related loans are typically at the project company level but are guaranteed by the project company shareholders.

The shareholders of ACWA Power funded, directly and indirectly, a loan of SAR 74.8 million to fund the equity bridge loan of the Rabigh IPP Project and within 2013, this shareholder loan will be converted into share capital of ACWA Power.

Post year end, ACWA Power issued 89.4 million equity shares to Sanabil Direct Investment Company (“Sanabil”) and Saudi Public Pension Agency (“Saudi PPA”). Consequently, Sanabil and Saudi PPA now own 13.72% and 5.71% respectively of the issued share capital of ACWA Power.

ACWA Power International Annual Report 2012 Financial Highlights

2011

2012

Dividend from JVs & Associates

SAR 103 M (27%)Other

cashflows SAR 231 M

(60%) Dividend from subsidiariesSAR 48 M

(13%)

Dividend from subsidiariesSAR 32 M

(12%)

Dividend from JVs & Associates

SAR 95 M(36%)

Other cashflows SAR 137 M

(52%)

SHARE OF PROFITfrom Associates & JV’s

SARin Million

2012 2011

RabighIWSPP

RabighIPP

MarafiqIWPP

ShuqaiqIWPP

ShuaibahIWPP

Others

2219

2923

28

95

87

33

8

57

29

NetIncomefromBusiness

44 45

Operating Infrastructure.Working with a consistent excellence and state-of-the-art energy results in growth.

46 47ACWA Power International Annual Report 2012 Strategy for Growth ACWA Power International Annual Report 2012 Strategy for Growth

The rapidly expanding electricity and water market of Saudi Arabia remains our primary focus. Power and desalinated water is produced almost entirely by plants fuelled with non-renewable fuels. The abundance of solar energy and commercially viable wind and geothermal energy has now been recognized and has opened up significant new opportunities for the diversification of the fuel mix and increasing the efficiency of utilization non-renewable resources. Our prominent position in the renewable sector will bear fruit as the country looks to renewable energy to fill at least a part, and possibly a significant portion, of the rapidly growing demand for electricity.

Saudi Arabia is the world’s third largest per capita consumer of water. It produces one quarter of the desalinated water in the world, which accounts for approximately one quarter of the country’s total water demand. The government anticipates this demand will grow on average by 10.7% per annum for the next six years, with total demand for desalinated water projected to be 10 Mm³/day by 2020. While plants co-owned and operated by us currently deliver 2.1 Mm³/day, the state owned desalinated water producer SWCC, still produces approximately 3 Mm³/day. Subject to government approval, the private sector is looking forward to the opportunity to acquire strategic equity interest in this existing capacity.

StabilityOur strategy for growth is anchored on a platform of stable and profitable assets which are performing above and better than target levels. The Asset Management team supports the swift resolution of billing and commercial issues and stabilizing earnings and returns. Emphasis continues to be placed on containing costs within budgets and formalizing standard accounting and reporting practices across the entire fleet of facilities.

ACWA Power has developed and implemented an Enterprise Risk Management (ERM) system with a scope that includes our subsidiaries and joint ventures. We have commenced the roll-out of our ERM standards into our subsidiaries and joint ventures specifically focusing on assets under construction (Rabigh IPP and Qurayyah), in operation (Shuqaiq IWPP) and the activities of our O&M subsidiary (NOMAC). HSE performance continues to be assured by our HSE team who undertake periodic inspections and audits. The monthly monitoring and reporting of HSE performance continues and performance is well within targets.We pride ourselves on the good relationships we have with our stakeholders, supply chain and subsidiaries.

Keeping in close communication and contact with our partners is an ongoing objective to ensure we build trust and cooperation. The provision of technical support, consulting services and training events to our extended team and associates will be carried on to maintain and improve standards and share experiences.

Corporate GovernanceACWA Power had adopted a code of corporate governance in 2009 based on the guidelines suggested by the Saudi Capital Market Authority and further benchmarked to other codes suggested by international bodies or regulatory authorities such as Dubai Investment Financial Centre, the UK Corporate Governance Code (formerly the Combined Code) and the Securities and Exchange Board of India’s Corporate Governance Code. The ACWA Power code entrenches the principles of transparency and fair administration. The governance structure establishes the Board of Directors with adequate independent directors. The Sub-committees of the Board have adequate representation of independent members with independent Chairpersons leading the audit committee, risk management committee, and related party transaction committee. The Company has a code of conduct and business ethics policy, which are comprehensive sets of tenets to which all employees are required to comply. Lastly, ACWA Power has a strong control of governance and management over its group of companies.The fundamentals of good corporate governance has strengthened the confidence among private and family owned conglomerates who are our shareholders so that they have forgone their operational involvement and instead have taken reliance in ACWA Power’s management, reporting and governance structures.

Growth During 2012 we re-examined original growth targets from 2009 and amended them according to a set of new targets. The new targets focus on the original regions ACWA Power stipulated in 2009 with the addition of one Eastern European country, Bulgaria. The focus will remain on our home country of Saudi Arabia in addition to MENA, Southern Africa and Turkey. ACWA Power completed 2012 with a much more diversified fuel mix to include HFO, LCO, Solar PV, Solar CSP and Coal which contributed to our technology mix. Within the strategic objectives is to increase the fuel and technology mix to include a wider array of fuel sources and technologies especially in renewables . We can confidently report that we remain on course to expand our portfolio by 2018 to include a suite of plants with an electrical dispatch capacity of 38,000MW, of which at least 3,800MW will be from renewable sources, and 5 Mm³/day of desalinated water. We continue to expand operations across a wider geographical footprint beyond our domestic market of the Kingdom of Saudi Arabia. Our pre-requisites for entering new markets remain the same, those being; a stable socio political foundation, strong economic fundamentals, a robust legal framework coupled with a track record of honouring contracts.

We place a high premium on the host country’s respect of the value the private sector brings to power generation and desalinated water production and their support of private ownership and operation of critical infrastructure and assets.

The sustained growth in demand for electricity and desalinated water in each and every country in the MENA and Levant regions offers us a stable platform to implement our growth strategy. Our target markets in the near term remain the GCC, Jordan, Egypt, Morocco, Turkey and southern Africa. We have identified new opportunities in each of these target countries and are either preparing offers or have commenced development work.

The majority of our current portfolio comprises fully contracted assets with government owned entities as long term off takers of the electricity and desalinated water. We are however interested in including a small component of merchant capacity into our portfolio and are progressing with our Turkish partner to develop an 850MW CCGT plant which will be our first merchant facility. We have also commenced development of a 300MW coal fired power plant for a world class but privately owned mining company in Mozambique which will be our first coal fired facility.

Strategy for Growth

48 49

Results Exceeding Expectations.Loyalty to elevating our society’s standards reaching superior heights.

50 51

Corporate Responsibility and Sustainability

ACWA Power’s Corporate Responsibility and Sustainability (CR&S) program matured during 2012 as the key projects were consolidated and several new initiatives launched. Our objective remains to provide leadership and guidance on sector issues by pushing best international practices throughout our supply chain.

During 2011, ACWA Power established a technical training institute to educate Saudi school leavers and the project remained as our primary corporate responsibility project for 2012. The Higher Institute for Power and Water Technologies (HIWPT) is achieving its goal of encouraging young Saudis to take up a long term careers in the power and water sector. The trainees have been specifically drawn from the environs surrounding each of ACWA Power’s facilities in order to stimulate and support regional socio-economic development.

The Institute, located north of Jeddah in Rabigh, operates as a not-for-profit college that has been licensed by the Technical Vocational Training Corporation (TVTC). More than 585 trainees are currently enrolled in the two-year program and are being accommodated in on-site hostels. The curricula focus on providing industry specific vocational operator and technician training so that ACWA Power's subsidiaries and other sponsors who have regionally distributed facilities can employ and retain them for long term careers close to their homes. Other CR&S projects and initiatives undertaken during 2012 included the distribution of more than 6,000 copies of ACWA Power’s graphical Safe Construction booklets in Arabic, English, Hindi and Chinese and the commissioning of a follow on publication dedicated to Operational Safety. A project is under way out relating to Labour practices and Human Rights to align ACWA

ACWA Power International Annual Report 2012 Corporate Responsibility and Sustainability

Power’s policies and procedures with the Global Reporting Initiative (GRI) and ILO best international practices. ACWA Power continued to support sector conferences and academia including:• SaudiWater&PowerForum• KingAbdullahUniversityforScienceand Technology (KAUST) – KAUST Industrial Advisory Board (KIAB) and Center Industry Affiliates Program (CIAP)• EmiratesEnvironmentalGroup• GlobalWaterIntelligence• ArabForumforEnvironmentandDevelopment (AFED)

CEGCO, which operates in Jordan, has established a corporate responsibility program that covers blood donation campaigns; supporting of charitable and volunteer societies looking after orphans, the destitute and people with special needs; supporting national road safety initiatives like the “Ideal Driver Program” and organizing an annual medical day in remote areas and governorates with voluntary participation from private sector doctors and pharmacies. Support is also provided for scientific research and scientific conferences organized by Jordanian universities and vocational associations and enabling training programs at CEGCO sites for Jordanian students from universities and colleges.

Towards the end of the year, ACWA Power employed the international consultancy, AccountAbility to

complete a stakeholder engagement assessment and benchmarking project. The results from internal stakeholders indicate that Marketplace, Economic and Workplace issues are material concerns that require activate management while Social, Governance & Ethics and Environmental issues are of a lesser importance. The project outcomes are currently being used to develop a stakeholder engagement strategy and plan based on the AA1000SES standard. Looking to a sustainable future, besides carbon management and renewables the most significant CR&S issue is attracting, developing, and retaining professional staff to support our rapid local and international growth is a major challenge – this is a common challenge to all professional industries.

In addition, the Middle East suffers from a chronic shortage of nationals with the necessary technical and professional skills to operate and maintain industrial facilities. The scarcity of competent and trained personnel spans all levels from semi-skilled apprentices, artisans, and technicians all the way up to the management and executive level. This shortage is further exacerbated in the regional private sector due to the preference given by candidates to seek jobs in government and semi-government organizations.

ACWA Power is addressing this issue by actively supporting tertiary educational facilities such as the King Abdullah University for Science and Technology (KAUST) and by establishing a vocational power and water training institute near Jeddah.

ACWA Power International Annual Report 2012 Corporate Responsibility and Sustainability

52 53

Our Health, Safety and Environment (HSE) management and performance during 2012 was a mixture of progress and reconfirmation of areas that need further enhancement and support. We continued with the HSE KPIs established in 2011 and the summary of 2012 performance data is contained on page 54. Traffic light colour coding has been applied to indicate targets that have been missed due to poor performance (red), targets missed but performance is on track (amber) and targets that have been achieved (green).

The overall positive trends and improvements in HSE performance were regrettably weakened by a spate of reportable injuries at two specific facilities. An uncompromising audit has been undertaken of the two facilities and significant revisions to the safe practices and systems have been implemented to avoid reoccurrence. The early trends indicate that there has been a step change in performance.

There were neither any reported fatalities during 2012, nor any fines, penalties, legal actions or convictions.

There were seven reportable dangerous occurrences and 8 environmental incidents for which remediation was done on-site without any off-site damage. The combined reportable injury rate (RIR) for the two construction sites was zero which is significantly better than the UK and European construction sectors of 0.30 (incidents per 200,000 hours worked). The operational facilities’ combined reportable injury rate of 1.51 was higher (and hence more accident prone) than the sector benchmark of 0.25. The considerable effort of all our employees, managers and HSE team in supporting our commitments to HSE is demonstrated by the volume of HSE related committee meetings, induction, toolbox talks, awareness and training sessions. This resulted in our Riyadh office retaining its milestone of one million man-hours worked without a lost time incident. Nine facilities had LTI free years with Barka IWPP, Shuaibah IWPP, Shuaibah Expansion IWP, Shuqaiq IWPP, Rabigh IWSPP, Marafiq Jubail IWPP all recording more than 1 million man hours without a lost time incident. Both construction sites recorded zero reportable injuries with man-hours worked exceeding 1 million several times over.

There were several notable HSE projects and achievements during 2012 including NOMAC Saudi Arabia and NOMAC Oman’s Integrated Management Systems (IMS) retaining certification to the ISO 14001 environmental management, ISO 9001 quality management and OHSAS 18001 health & safety management standards. This means that the majority of our portfolio is still operating with externally certified management systems. Barka IWPP continued its safety record and has now operated for 10 years without an LTI and Risha Power Station, in Jordan, completed its third consecutive year accident free.

Health, Safety and EnvironmentalPerformance

ACWA Power International Annual Report 2012Health,SafetyandEnvironmentalPerformance ACWA Power International Annual Report 2012Health,SafetyandEnvironmentalPerformance

Renewables and Carbon FootprintACWA Power’s most material CR&S challenge (and opportunities) are related to carbon management and renewable power. Key to progress is to firstly diversify the fuel mix and embed a suitable level of renewable energy to fulfill electricity demands, and second to increase the efficiency of use of fossil fuels, which will inevitably be needed to meet the demand. We also support the conversation to manage demand for electricity by encouraging the introduction of tariffs that reflect cost of production.

We acknowledge that the elephant in the room for the international power industry is carbon. All pollution reduction plans have a hierarchy of control that starts with avoid/eliminate and then moves onto reduce. Carbon emission reductions plans, from a power producer’s perspective, must start by avoiding emissions which is achieved by harnessing renewable energy sources. ACWA Power is avoiding emissions by fast tracking the development of our renewables portfolio and by investing in initiatives such as the Desertec/Dii project, a private industrial consortium whose objective is to create a market for renewable energy from the deserts. We are tackling the second step of reducing carbon emissions by increasing conversion and thermal efficiencies, thereby reducing the carbon intensity of electricity and water. Our newest gas fired combined cycle plant at Qurayyah in Saudi Arabia has a world class performance of 390gCO2/KWh which is exceptional. Furthermore, as our facilities are comparatively new, the overall carbon intensity of our fleet is significantly better than old coal and oil based power plants. Going forward, we will continue to strive for the most efficient conversion of carbon into water and power as it inherently provides simultaneous commercial and environmental benefits.

We have embedded a renewable action plan into our business strategy which means that we are aiming for an asset portfolio containing between 5 and 10% of renewables. This has resulted in the commitment to develop plants that deliver at least 2,000 MW of electricity generated by renewable energy over the next decade. At the beginning of 2012 we had2.5 MW of renewable energy in our portfolio of 13,000 MW of gross contracted capacity. During this year we have added a 60 MW photovoltaic plant in Bulgaria; a 160 MW CSP plant in Morocco; and a 50 MW CSP plant in South Africa. We have submitted an application for prequalification to develop 850 MW wind power capacity in Morocco, the outcome

of which we are awaiting with confidence and so we are well on the way to achieving our target. Given that renewable plants tend to be smaller in capacity, we are learning to deal with new technologies and how to efficiently handle the simultaneous development of multiple projects.

We have been broadening the fuel mix of our asset portfolio to include not just one but three world class renewable energy projects. In Bulgaria, we have acquired a 60 MW photovoltaic plant, the largest in Europe. In Morocco, we have been awarded a 160 MW Concentrated Solar Power (CSP) plant, the largest plant using this technology in the world and in South Africa we have been awarded a 50 MW CSP plant with 9 hours of storage – this is the longest storage of any solar project and enables the plant to dispatch renewable energy generated during the day and throughout the night.

CarbonEmissionsACWA Power calculated its carbon (CO2) emissions in accordance with the scope boundaries and guidance published by the GHG Protocol and the GRI. Operations and entities over which ACWA Power has significant influence or control are included within the organizational boundary. Emissions have been derived from a combination of working assumptions, measurements and calculations. The indirect emissions arising from production and use of products are not applicable and those arising from the purchase and use of capital goods and services are considered immaterial. The emissions inventory for 2012 and a 2011 -2012 summary are tabulated on page 55.

All facilities have operated within their contractual and permitting conditions during 2012 and the carbon emissions demonstrate the efficiency of ACWA Power’s new facilities in converting heavy fuel oil and natural gas into electricity and desalinated water. Carbon emissions during 2012 resulting from operations and activities over which ACWA Power has management control and/or influence and minority shareholdings (the system boundary) totaled 11 MtCO2 of which 99.97% arose from the company’s investments in power generation and water desalination production facilities. Corporate operations and activities accounted for approximately 3,759 tCO2 of direct and indirect emissions of which 52% are attributable to air travel.

54 55ACWA Power International Annual Report 2012Health,SafetyandEnvironmentalPerformance

ACWAPower’sCarbon(CO2)Emissionsfor2012

SummaryofACWAPower’sCarbon(CO2)Emissions:2011and2012

Category DescriptionLocation/

SourceScope

%Owner-

ship

CO2 Emissions(tonnes)

ACWAPower’sAllocation

ACWAPowerCorporate

CO2 (tonnes) % CO2 (tonnes) %

Company vehicles

Leased cars Company 1 100% 338 338 0.003% 338 9.0%

Purchased Electricity

Leased offices (DXB, RUH. Beijing)

Upstream 2 100% 347 347 0.003% 347 9.2%

Purchased Electricity s

NOMAC-offices

Upstream 2 100% 822 534 0.008% 822 21.9%

Purchased Water

Leased offices (DXB, RUH)

Upstream 2 100% 5 5 0.000% 5 0.1%

Waste generated

DXB and RUH offices

Upstream 3 100% 10 10 0.000% 10 0.3%

Employee Commuting

DXB and RUH offices

Upstream 3 100% 292 292 0.003% 292 7.8%

Business Travel

DXB and RUH offices

Upstream 3 100% 1,946 1,946 0.018% 1,946 51.8%

Investments Barka IWPP Downstream 3 41.9% 1,522,026 637,729 5.79% - -

InvestmentsShuqaiq IWPP

Downstream 3 34.0% 5,482,061 1,863,901 16.94% - -

InvestmentsShuaibah Exp. IWP

Downstream 3 30.0% 195,374 58,612 0.53 % - -

InvestmentsShuaibah IWPP

Downstream 3 30.0% 9,611,221 2,883,366 26.20% - -

Investments Barges Downstream 3 64.9% 67,265 43,621 0.40% - -

Investments Rabigh IPP Downstream 3 40.0% 215,661 86,264 0.78% - -

Investments CEGCO Downstream 3 40.9% 5,235,058 2,142,709 19.47% - -

Investments -Purchased Electricity

CEGCO - HO Amman

Upstream 3 40.9% 348 142 0.001% - -

Investments - Minority shareholder

Marafiq Downstream 3 20.0% 10,689,539 2,137,908 19.43% - -

Investments - Minority shareholder

Rabigh IWSPP

Downstream 3 23.9% 4,801,062 1,147,454 10.43% - -

Totals 37,823,374 11,005,466 3,759

Total Production from Operational Facilities

ACWAPower’sportionbasedon individual shareholding

2011 2012 2011 2012

Electricity delivered GWh 44,895 49,372 12,262 14,265

Water delivered Mm3 735 747 204 206

CO2 emissions arising from Electricity & Water Production

M tonnes CO2 34.5 37.8 9.8 11.0

CO2 emissions arising from ACWA Power's business operations

tonnes CO2 2,627 3,759 2,627 3,759

ACWA Power's business operations as percentage of total emissions

% 0.027% 0.034%

ACWA Power International Annual Report 2012Health,SafetyandEnvironmentalPerformance

ACWA Power is addressing its carbon emissions by working towards meeting the existing target of 5% of energy production to be from renewable energy by 2015, monitoring and supporting operational facilities

to maintain and improve thermal efficiency and vigorously encouraging video-conferencing to avoid air travel.

2011HSEPerformanceTargets (per location)

HSEPerformance (per location type)

2012 GroupHSE

Performance

2011 GroupHSE

Performance

Location Type OfficeProd-uction Facility

Const-ruction

SiteOffices

Prod-uction

Facilities

Const-ruction Sites

Total Total

No. of sites by type 13 14 2 20 20

Personnel

Number of people - - - 340 2,185 6,595 9,120 10,131

Hours worked - - - 769,190 5,424,702 27,328,284 33,522,176 22,849,562

Health, Safety & Environment

Fatalities 0 0 0 0 0 0 0 1

Reportable Injuries 0 0 0 1 34 0 35 14

Occupational Diseases 0 0 0 0 0 0 0 0

Dangerous Occurrences 0 0 0 1 3 4 7 1

Minor & 1st aid injuries 0 0 0 1 105 71 177 16

Environmental incidents 0 0 0 0 4 4 8 0

HSE Near misses 17 961 984 1,962 1,704

HSEPerformance

Hours worked without reportable injury 250,000 1,000,000 1,000,000 2 6 2 10 4

Reportable Injury Rate 0.19 0.25 0.3 0.26 1.25 0 0.21 0.13

Reportable Incidents 0 0 0 2 41 8 51 16

Reportable Incidents rate 0.20 1.00 1.00 0.52 1.51 0.06 0.30 0.14

HSE Notices 0 0 0 0 0 0 0 0

HSE penalties and fines (USD) 0 0 0 0 0 0 0 0

HSEManagement

HSE Committee meetings 4 12 12 30 103 119 234 229

HSE inductions, toolbox talks and awareness sessions

- - - 312 8,830 6,262 15,404 4,908

HSE training sessions - - - 23 535 173 731 608

HSE Tours, Inspections and Audits 12 52 52 107 2,746 1,396 4,237 3,347

HSE Emergency Tests, Drills & Practices 1 2 2 4 29 20 51 61

Notes: •HSEdataincludesRabighIWSPPandMarafiq–JubailIWPPeventhoughACWAPowerdoesnothaveacontrollingorleadshareinthese projects. •ThedatafortheQurrayahIPPprojectunderconstructionisforhalfyear.

SummaryofHSEperformance

56 57

Prosperity for Everyone.Commitment to keep a higher level of achievement and making great outcomes.

58 59

Assets Performance Report

ACWA Power International Annual Report 2012 Assets Performance report ACWA Power International Annual Report 2012 Assets Performance report

Asset 2012 Performance

The 2012 performance of ACWA Power’s asset portfolio continued the progress of previous years’ and convincingly demonstrated the assets’ worth and value. The fleet delivered 49,372.01 GWh of electricity, 747 Million m³ of desalinated water and 9.82 Million tons of steam to offtakers and clients. Based on ACWA Power’s project specific shareholding, the Company’s share was 14,265.4 GWh of electricity, 206 Million m³ of desalinated water and 2.352 Million tons of steam. Safety standards and carbon emissions were within legal requirements and comparable to international guidelines throughout the period (see HSE section).

This performance cements ACWA Power’s position as the largest regionally owned independent developer, owner and operator of power and water desalination facilities.

Three facilities, Marafiq Jubail IWPP, Shuaibah IWPP and Shuqaiq IWPP, provided 71% of the portfolio’s power while 74% of water production come from two plants, namely Marafiq Jubail and Shuaibah IWPP.The efforts of the Asset Management team was focused on these three facilities that has been realised with stable and, where required, improved performance.

Overall electricity delivered categorized by facility

Overall water delivered categorized by facility

Rabigh IWSPP, 4.9%

SIWPP, 14.6%

Marafiq, 41.1%

SQIWPP, 14.8%

Barka IWPP, 5.5%

CEGCO, 14.9%

Karadzhalovo, 0.09%

Rabigh IPP, 4.2%

Barges, 1.9%

RAWEC, 4.0%

SEPCO, 7.0%

SIWPP, 37.5%

Marafiq, 36.6%

SQIWPP, 8.9%

Barka, 4.0%

Availability performance achieved budget and contractual obligations for all but a few facilities that suffered major outages. Shuqaiq IWPP’s power availability was 98% and 97% for water which significantly exceeded budgeted forecasts. CEGCO’s and Barka1 IWPP’s overall availabilities were outstanding with both portfolios surpassing contractual

performance targets. Jubail Marafiq IWPP and Hussein Thermal Power Station of CEGCO had significantly restricted availabilities due to steam turbine and gas turbine generators and steam turbine generator failures respectively. Overall water availability was 93% against a target of 94% which was partly a knock-on effect of the power unit outage at Jubail Marafiq IWPP.

RatioofcapacityofHeavyandLightFuelOiltoNaturalGasfiredpowerplants

RatioofElectricityproducedfromnaturalgasandfueloils

Breakdownofwaterdesalinationcapacity

Natural Gas, 44%

Heavy and Light Fuel oil, 56%

Electricity produced from natural gas, 36%

Electricity produced from fuel Oils, 64%

Multi-Effect Distillation, 38%

Reverse Osmosis, 19%

Multi-Stage Flash, 43%

60 61ACWA Power International Annual Report 2012 Assets Performance report ACWA Power International Annual Report 2012 Assets Performance report

ACWAPower-AssetPortfolio-OverviewandSummaryofPerformance

Facility Location PCOD / Acquisition

Project Cost US$ billion

ACWA'sShare Operator Fuel

Power and Desalination Technologies

Contracted Capacity 2012 production ACWAPower'sshareof2012production

Electricity(MW)

Water(m3 / day)

Steam (tons/hr)

ElectricityDelivered 2012 GWh

WaterDelivered 2012 M m3

Steam Delivered 2012 M tons

ElectricityDelivered 2012 GWh

WaterDelivered 2012 M m3

Steam Delivered 2012 M tons

Bowarege Yanbu, Saudi Arabia Q3 - 2008 0.11 64.85% NOMAC Diesel

Diesel Generators with Reverse Osmosis

- 50,000 - - 14.42 - - 9.35 -

Rabigh IWSPP Rabigh City, Saudi Arabia

PCOD Jun 2008 1.151 23.90% RAWEC Heavy Fuel Oil

Steam Turbines with Reverse Osmosis

360 134,000 1,230 2,430.28 29.95 9.82 580.8 7.16 2.35

Shuaibah Expansion IWP

South of Jeddah, Saudi Arabia

PCOD Nov 2009 0.233 29.75% NOMAC Electricity Reverse Osmosis - 150,000 - - 52.60 - - 15.65 -

Shuaibah phase III IWPP

South of Jeddah, Saudi Arabia

PCOD Jan 2010 2.45 30.00% NOMAC Arabian Light

Crude oil

Steam Turbines with Multi stage Flash

900 880,000 - 7,196.68 280.35 - 2,159.0 84.11 -

Marafiq Jubail IWPP

Jubail Industrial city, Saudi Arabia

PCOD Oct 2010 3.36 20.00% JOML Natural Gas

Combined Cycle Gas & Steam Turbines with Multi Effect Distillation

2,743 800,000 - 20,267.51 273.36 - 4,053.5 54.67 -

Shuqaiq IWPPNorth of Jizan, Saudi Arabia

PCOD May 2011 1.831 34.00% NOMAC

ArabianHeavy Crude oil

Steam Turbines with Reverse Osmosis

850 212,000 - 7,323.21 66.32 - 2,489.9 22.55 -

Barka 1 IWPP

North of Muscat, Sultanate of Oman

PCODJun 2003 AcquiredAug 2010

0.415 41.91% NOMAC OMAN Natural Gas

Combined Cycle Gas & Steam Turbines with Multi stage Flash

427 91,000 - 2,698.25 30.06 - 1,130.8 12.60 -

CEGCO Several sites across Jordan

Acquired July 2011 0.282 40.93% CEGCO Natural Gas,

HFO and LFO

Various including steam, gas and wind turbines

1,515 - - 7,338.16 - - 3,003.5 - -

Karadzhalovo Solar PV

Plovdiv, Bulgaria

Acquired June 2012 0.171 42.00% NOMAC -

Sun Edison Solar Photovoltaics 60 - - 45.12 - - 18.9 - -

Rabigh IPP (under commissioning)

Rabigh City, Saudi Arabia

PCOD scheduled for April 2013

2.506 40.00%ROMCO - NOMAC - KOWEPO

Heavy Fuel Oil Steam Turbines 1,204 - - 2,072.81 - - 829.1 - -

Quarayyah IPP(under construction)

South of Dammam, Saudi Arabia

PCOD scheduled for July 2014

2.85 17.50% NOMAC Natural GasCombined Cycle Gas & Steam Turbines

3,927 - - - - - - -

Total 15.359 11,986 2,317,000 1,230 49,372.02 747.06 9.82 14,265.5 206.09 2.35

62 63

Project Companies and Subsidiaries

64 65

Location 60 km north of Muscat, Oman

Services supplied to Muscat

Fuel Natural Gas

Power 427 MW

Configuration Combined Cycle (Gas and Steam)

Desalinated Water 91,000 m3/day

Desalination process Multi-Stage Flash (MSF)

Project Cost SAR 1,556 M, USD 415 M

CommercialOperational Date Q2 2003

Acquisition Date August 2010

ACWA Power Share 41.9%

Contract Type & Term PWPA-BOO 15 years

Operator NOMAC Oman

Barka 1 is the first IWPP developed as part of the privatization program of the Sultanate of Oman. The plant began commercial operations in June 2003 and a majority stake was acquired by ACWA Power in August 2010. The facility contributes 12% of the electricity and 17% of the desalinated water in Oman.

ACWA Power Barka continued to maintain an outstanding safety record and completed over 10 years of operations without a lost time accident.

ACWAPowerBarka1IWPP

Rabigh IWSPP is owned and operated by the Rabigh Arabian Water and Electricity Company (RAWEC); a Joint Venture between Marubeni Corp, JGC Corporation, ACWA Power, Itochu Corporation and Petro Rabigh. The project was constructed under an EPC contract by Mitsubishi Heavy Industries and consists of a conventional thermal power with five118 MW steam turbines, nine 470 t/hr steam generators, three wet limestone Flue Gas Desulphurization (FGD) units and sixteen 504 m3/hr Reverse Osmosis (RO) trains. Reliability and availability has significantly beaten forecasts from the start of production at PCOD in June 2008.

The FGD system uses a limestone forced oxidation system which incorporates air injection to produce oxidised gypsum resulting in sulphur emissions decreasing from approximately 2,200 to 72 ppm. During full load, the facility consumes 600 tons/day of locally sourced limestone and produces 1,200 tons of gypsum that is sold to the adjacent Arabian Cement Company for cement production.

Location Rabigh, Western Saudi Arabia

Services supplied to Petro Rabigh Petrochemical complex

Fuel Heavy Fuel Oil

Power 360 MW

Configuration Steam Turbines

Desalinated Water 134,000 m3/day

Desalination process Reverse Osmosis (RO)

Steam 29,520 tons/day

Project Cost SAR 4,315 M, USD 1,151 M

CommercialOperational Date Q2 2008

ACWA Power Share 23.9%

Contract Type & Term WECA-BOOT 25 years

Operator RAWEC (Owner Operator)

RabighIWSPP

66 67

LocationYanbu, 250 km north of Jeddah, Western Saudi Arabia

Services supplied to Yanbu and Medina

Energy Supply Electricity from diesel generators

Desalinated Water 2 x 25,000 m3/day

Desalination process Reverse Osmosis (RO)

Project Cost SAR 370 M, USD 110 M

CommercialOperational Date Q3 2008

ACWA Power Share 64.85%

Contract Type & Term WPA-BOO 3 years

Operator NOMAC

This facility is the world’s only fulltime commercially operational self-contained desalination plants that are mounted on transportable barges which enables them to be moved at short notice to locations that have an urgent seasonal need or water deficiency.

Bowarege is a joint venture between ACWA Power and Rakaa Saudia Power and Water. The offtaker for the 50,000 m3/day is the Saline Water Conversion Corporation (SWCC). Operation & Maintenance is undertaken by NOMAC with a staff compliment of 88. The barges are currently moored in Yanbu on the Red Sea providing desalinated water to the towns of Yanbu and Medina. The facilities have previously supplied services to Shuaibah and Jizan in 2008 and 2009 respectively.

After the re-location of the Barges from Shuqaiq to Yanbu site, the plant underwent a major transformation and production was increased from an average 47% at Shuqaiq to 90.36 % at the Yanbu site.

Bowarege won the prestigious Saudi Water & Power Forum’s award for innovation in 2011.

Bowarege

The Shuaibah Expansion Project was delivered in response to the Saudi Government’s need for a fast-track solution. The challenge was to provide an additional 150,000 m3/day of desalinated water to meet the accelerating demand in Jeddah. The project is located on reclaimed land adjacent to the Shuaibah IWPP and both plants use a common water discharge channel. The facility uses reverse osmosis technology with 2 passes (sea water and brine) and energy recovery equipment and systems.

Location 120 km south of Jeddah, Western Saudi Arabia

Services supplied to Jeddah

Energy supply Electricity

Desalinated Water 150,000 m3/day

Desalination process Reverse Osmosis (RO)

Project Cost SAR 874 M, USD 233 M

CommercialOperational Date Q4 2009

ACWA Power Share 29.75%

Contract Type & Term WPA-BOO 20 years

Operator NOMAC

Shuaibah ExpansionIWP

68 69

Shuaibah IWPP was the first IWPP developed following the Saudi government’s decision to open the market to private investment. The facility delivers water and electricity to a wide region including the cities of Makkah, Jeddah, Taif and Al-Baha.

Fuel utilization efficiency remained excellent throughout the year and the plant recorded lower actual fuel energy input compared to projected fuel energy input.

Location 120 km south of Jeddah, Western Saudi Arabia

Services supplied to Makkah, Jeddah, Taif and Al-Baha،

Fuel Arabian Light Crude

Power 900 MW

Configuration Steam Turbines

Desalinated Water 880,000 m3/day

Desalination process Multi-Stage Flash (MSF)

Project Cost SAR 9,188 M, USD 2,450 M

CommercialOperational Date Q1 2010

ACWA Power Share 30%

Contract Type & Term PWPA-BOO 20 years

Operator NOMAC

ShuaibahIWPP

Marafiq IWPP is the world’s largest power and desalination plant, located in Jubail industry city in the Eastern Province of Saudi Arabia.

The Project consists of 16 units of gas fired GE turbines with a net capacity of 2,700 MW and 27 desalination units manufactured by SIDEM, producing 800,000 m3/day of desalinated water. The plant is split into 4 operational blocks of two different designs. Three of the four blocks are power and desalination blocks, each of which comprises 3 gas turbines operating in a combined cycle with a single back-pressure steam turbine. Steam from the turbine exhaust is used to feed the desalination process. The fourth block is a ‘power only’ block and comprises three gas turbines operating in combined cycle with a reheat condensing steam turbine. The project was constructed by a consortium of EPC Contractors consisting of GE, HHI and SIDEM.

Marafiq IWPP is an excellent example of a successful public private partnership, where internationally respected water and power developers, GDF Suez and ACWA Power, combined with public utilities, Marafiq and Saudi Electricity Company (SEC) and Saudi Saline Water Conversion Corporation (SWCC), to make this project a reality.

Location Jubail, North eastern Saudi Arabia

Services supplied to Jubail Industrial City

Fuel Natural gas

Power 2,743 MW

Configuration Combined Cycle (Gas + Steam)

Desalinated Water 800,000 m3/day

Desalination process Multi-Effect Desalination (MED)

Project Cost SAR 12,600 M, USD 3,360 M

CommercialOperational Date Q3 2010

ACWA Power Share 20%

Contract Type & Term PWPA-BOOT 20 years

Operator JOML (Joint venture ofIPR-GDF Suez and NOMAC)

MarafiqIWPP

70 71

Shuqaiq Water and Electricity Company (SqWEC) owns and operates the Shuqaiq IWPP. It is the second phase of the Shuqaiq complex that produces water and power for the Assir region and the city of Jizan. This green field project included the design, construction and commissioning of three 340 MW oil fired power units combined with Reverse Osmosis desalination and potabilisation facilities. Shuqaiq IWPP provides a net electrical output of 850 MW in combination with a total capacity of 212,000 m3/day of desalinated water.

Shuqaiq IWPP achieved PCOD on the 1 May 2011 and plant performance continued to excel in terms of delivering better than contracted availability and heat rates.

Location 140 km north of Jizan, Southern Saudi Arabia

Services supplied to Assir Region, Jizan

Fuel Arabian Heavy Crude

Power 850 MW

Configuration Steam Turbines

Desalinated Water 212,000 m3/day

Desalination process Reverse Osmosis (RO)

Project Cost SAR 6,866 M, USD 1.831 M

CommercialOperational Date Q2 2011

ACWA Power Share 34%

Contract Type & Term PWPA-BOO 20 years

Operator NOMAC

ShuqaiqIWPP

The Rabigh IPP is under construction on the Red Sea coast at Rabigh, 160 km north of Jeddah. The engineering, procurement and construction contract is a joint venture between two Chinese companies; SEPCO III Electric Power Construction Corporation and Dongfang Electric Corporation.

The Rabigh IPP Project is a landmark project in the Middle East showcasing Chinese technology and an important integral part of the strategic and economic relationship between Saudi Arabia and China. Overall progress remains ahead of the plan. Project Commercial Operation Date is set for April 2013. The O&M contractor (ROMCO) has been involved since the early stages of construction through to commissioning and have completed a formal site training program delivered by the EPC Contractor.

Location Rabigh, Western Saudi Arabia

Services supplied to Western Regon-KSA

Fuel Heavy Fuel Oil

Power 1,204 MW

Configuration Steam Turbines

Project Cost SAR 9,397 M, USD 2,506 M

CommercialOperational Date Forecast Q2 2013

ACWA Power Share 40%

Contract Type & Term PPA-BOO 20 years

Operator ROMCO (Joint venture of KWEPCO and NOMAC)

Rabigh IPP

72 73

Location Eastern Province – KSA

Services supplied to Eastern Province - KSA

Fuel Natural Gas

Power 3,927 MW

Configuration Combined cycle

(Gas & Steam)

Project Cost USD 2.85 billion

Commercial Operational Date Q2 2014

ACWA Power share 17.5%

Contract Type & Term BOO (20 years) PPA

EPC Contractor Samsung C&T/ Siemens Major Subcontractor

OperatorNOMAC (Nominated Subcontractor: Siemens LTSA)

Qurayyah IPP, a greenfield project, is being developed on a BOO (build, own, operate) basis located on the eastern coast of Saudi Arabia with a net generation capacity of 3,927 MW. The design production capacity will make it once completed the largest IPP combined cycle gas-fired power plant in the world.

The Qurayyah IPP comprises six identical groups of equipment, delivering a net output of 654.5 MW. Each group comprises 2 Gas Turbines (GT), 2 Heat Recovery Steam Generators (HRSG) and 1 steam turbine. The Qurayyah IPP Plant is designed and will be constructed to comply with all applicable environmental laws, guidelines, regulations and standards as per World Bank, IFC and Saudi Presidency of Meteorology and Environment. The design has incorporated best in class efficiency measures that will result in a fuel effeciency of more than 52% and carbon emissions of less than 390 gCo2/Kwh. The PPA was signed on the 21st September 2011 and the NTP was issued on 2nd

December 2011.

Qurayyah IPP was recognized as a landmark transaction and won numerous awards including the Middle East IPP Deal of the Year (2011) from Project Finance magazine, published by Euromoney and the Best Project Finance Deal in 2011, from Euromoney’s Islamic Finance and “Best Power Deal” from EMEA Finance Magazine in its annual Project Finance awards.

QurayyahIPP

CEGCO is Jordan’s main power generator and is the second international market for ACWA Power, after Oman. CEGCO owns and operates a portfolio of facilities comprising of 9 operational plants which are powered by gas, fuel oil and wind. The total gross production capacity is 1,700 MW which is equivalent to

52% of the country’s current electricity consumption. CEGCO supplies the electricity under power purchase agreements to the National Electric Power Company (NEPCO), a government owned entity.

Facility Power (MW)Gross Configuration Commercial

Operational DateContract Type

and Term

Hussein Thermal 363 Steam turbines

1978 (Units 1,2,3)1980 (Units 4,5)

1981 (Unit 6)1984 (Unit 7)

BOO; PPA till2013 (Units 1,2,3, 6)

2012 (Units 4,5)2015 (Unit 7)

Aqaba Thermal 656 Steam turbines and (recovery hydro turbines)

1985 (Units 1,2)1996 (Units 3,4,5)

BOO; PPA till 2019 (Units 1,2)2030 (Units 3,4,5)

Risha Gas 150 Gas turbines1989 (Units 1,2)1994 (Units 3,4)

2005 (Unit 5)

BOO; PPA till 2019 (Units 1,2)2030 (Units 3,4,5)

Rehab Gas Turbine 357 Combined cycle gas turbines

1994 (Unit 1)1995 (Unit 2)2005 (CCGT)

BOO; PPA till 2014 (Units 1)2019 (Units 2)2021 (CCGT)

Marka 80 Gas turbines 1978 (Units 1,2)1980 (Units 3,4)

BOO; PPA till2013 (All units)

Amman South 60 Gas turbines 1984 (Unit 1)1995 (Unit 2)

BOO; PPA till 2013 (Units 1)2016 (Units 2)

Karak 20 Gas turbines 1982 BOO; PPA till 2013

Ibrahimiya Wind 0.32 Wind turbines 1984 BOO;Energy Sale without PPA

Hofa wind 1.125 Wind turbines 1986 BOO;Energy Sale without PPA

CEGCO

74 75

NOMAC delivers operational and maintenance (O&M) services of all but one of ACWA Power’s assets in Saudi Arabia. NOMAC operates 7 plants generating about 5,757 MW of power and 2.1 Mm³/day of desalinated water.

NOMAC’s philosophy is to operate and maintain all facilities according to their designs and to the highest standards and practices. NOMAC was able to meet these commitments across the group by actively participating in the commissioning and acceptance of new plant, preparing tailored on the job training programs for newly-recruited nationals, designing refresher courses for all staff and supporting the entire workforce with specialist services from the Head Office in Jeddah.

The management and technical teams maintain continual contact with original equipment manufacturers in order to keep up-to-date with technical information, innovation and transfer of knowledge. Preference is given to local suppliers to support and develop regional supply chains.

NOMAC has delivered several key improvements to ensure long-term success and to meet contractual obligations including:• Restructured the QHSE function and appointing a

dedicated General Manager for Quality Assurance to improve the implementation of quality systems consistently across sites and provide an internal ability to conduct technical audits;

• Implementation of an Integrated Management System;

• Certification under ISO 9001, ISO 14001 and OSHA

18001 quality standards; and• Implementation of an enterprise resource

management system (SAP) to provide for the systematic management of corrective and preventive maintenance, inventories, permit to work and human resource management.

Location Jeddah Head Office, Western Saudi Arabia

Services supplied toPower and Desalination facilities across GCC and Bulgaria

Established 2005

ACWA Power Share 100%

Operation & Maintenance Contracts

• Bowarege Desalination Barges• Shuaibah IWPP• Shuaibah IWP• Shuqaiq IWPP• Rabigh IPP (mobilization phase)• Marafiq IWPP• Qurayyah IPP• ZBE Partners EAD

Personnel 660

NOMAC

The Bokpoort CSP Project is owned by ACWA Power Solafrica Bokpoort CSP Power Plant (Pty) Ltd, a limited liability company established under South African Law with the majority shareholder being ACWA Power. It is a greenfield project being developed on a BOO (build, own and operate) basis located in the Northern Cape province of South Africa with a net generation capacity of 50 MW with 9 hours of thermal energy storage. Once completed it will be a CSP power plant with the longest amount of thermal storage in the world.

The Bokpoort CSP Project comprises a solar field, a power block, a thermal energy storage system and related infrastructure such as grid interconnection and water abstraction and treatment systemd. The solar field comprises loops of parabolic trough solar collector assemblies which will collect the heat from the sun. The solar collectors will be capable of heating the heat transfer fluid up to 393°C. The power block comprises a solar steam generator and a steam turbine delivering 50 MW (net). Thermal energy storage system consists of 2 tanks of molten salts and will provide approximately 9 hours of storage. The Bokpoort CSP Project is designed and will be constructed to comply with all applicable environmental laws, guidelines, regulations and standards as per World Bank, IFC and South African Environmental, Health and Safety regulations. The Bokpoort CSP Project was awarded preferred bidder status in May 2012 and the PPA, Implementation Agreement and Connection Agreements is expected to be signed in March 2013 and NTP will be issued within days thereafter.

Contract Type BOO (20 years post COD) PPA

Location

Grobblershoop 120 km south east of Upington (600 Km south west of Johannesburg) in Northern Cape province of South Africa

ACWA Power share 40%

Project Cost USD 565 million

Contractor

Spain’s TSK Electrónica y Electricidad, Acciona Infrastructuras, Acciona Ingeniería, Sener Ingeniería y Sistemas and Crowie Concessions (Pty) Ltd

O&M

Consortium comprising NOMAC (70%) and Invest in Africa Energy Services (Pty) Ltd (30%)

Gross capacity 54.5 MWe

Net Capacity 50 MWe

Thermal Storage 9 Hours

Technology Concentrating Solar Power “CSP”

Auxiliary Fuel Diesel

PCOD 2nd half 2015

BokpoortCSP IPP

76 77

ZBE Partners EAD, a joint stock company, incorporated under the laws of Bulgaria and registered with the Commercial Registry. The PPA contract was signed between ZBE Partners and National Electricity Company for period of 20 years. Karadzhalovo Solar Project is the largest PV plant installed in Bulgaria. Nominal capacity of Karadzhalovo PV project is 50 MWac which corresponds to 60.4 MWp.

The PV plant is divided into various PV blocks of variable capacity. Each PV block consists of a number of PV modules (solar sub arrays) groups in strings and connected to an AC/DC inverter transformer station. The inverter station is connected through an internal 20kV underground network in ring configuration which leads to a newly build 20/110kV PV plant substation.

Contract Type and Term BOO (20 years) PPA

Location Central southern Bulgarian region

ACWA Power share 42%

Project Cost USD 180 Million

Operator NOMAC/Sun Edison

Gross capacity 60.4 MWp

Technology Photovoltaic Technology

Acquisition Date June 2012

KaradzhalovoPV IPP

Ouarzazate CSP IPP is owned by ACWA Power Ouarzazate, a joint stock company established under Moroccan Law, a greenfield project, is being developed on a BOOT (build, own, operate and transfer) basis located in the south of Morocco with a gross generation capacity of 160 MW with 3 hours of thermal energy storage. The design generation capacity will make it once completed the largest IPP CSP power plant in the world.

The Ouarzazate CSP IPP comprises a solar field, a power bloc and a thermal energy storage system. The solar field comprises loops of parabolic trough solar collector assemblies which will collect the heat from the sun. The solar collectors will be capable of heating the heat transfer fluid up to 393°C. The power bloc comprises a solar steam generator and a steam turbine delivering 160 MW. Thermal energy storage system consists of 2 tanks of molten salts and will provide 3 hours of storage. The Ouarzazate Solar IPP Plant is designed and will be constructed to comply with all applicable environmental laws, guidelines, regulations and standards as per World Bank, IFC and Moroccan Ministry of Energy, Mines, Water and Environment (MEMEE). The PPA was signed on the November 2012 and the NTP will be issued in Q2 2013.

Contract Type BOOT (25 years) PPA

Location Ouarzazate 200 km south of Marrakesh

ACWA Power share 70%

Project Cost USD 1 billion

Contractor

Spain’s TSK Electrónica y Electricidad, Acciona Infrastructuras, Acciona Ingeniería, and Sener Ingeniería y Sistemas

O&M Consortium led by NOMAC

Gross capacity 160 MWe

Technology Concentrating Solar Power “CSP”

Auxiliary Fuel Diesel

PCOD 2nd half 2015

Ouarzazate CSP IPP

78 79

Solid Foundation.Operating with a set of business principles and corporate conduct as its most important element.

80 81ACWA Power International Annual Report 2012 Corporate Governance

Company Philosophy on Code of Governance

This Corporate Governance section covers the governance initiated and implemented at ACWA Power (“the Company”). The Company is committed to adhere to the highest standards of corporate governance. The Company is operating with a set of business principles and corporate conduct as its most important element. The Company believes in leading practices of corporate governance. These values are reflected in the leadership, management and day to day operations of the Company by the Board of Directors, the management and employees of the Company.

The Company’s philosophy of the Code of Corporate Governance is aimed to assist the top management in the efficient conduct of its business and fulfilling its obligations towards its stakeholders. The Code is applicable to the directors, management, employees and professionals associated with the Company and are intended to govern as a requirement for employment and govern the actions of everyone who works at the Company. The Code, among others, addresses the following:

1. Corporate governance system2. Board regulations3. Regulations for committees of the Board4. Disclosure requirement in reports5. Internal Control, Internal Audit and Risk6. Conflict of interest policy and Management regulations

7. Code of conduct and ethics policy8. Whistleblower policy9. Dividend policy10. Commitment policy

Board of Directors

The Board of Directors is structured with seven directors having an effective participation by four non executive directors and two independent directors with the Chairman of the Board having an executive function.

The Directors of the Company bring a rich experience of corporate governance, operations and maintenance, finance, business development and institution building. Their experience is complimented by their academic and professional qualifications in the field of administration, management, finance and engineering.

Four meetings of the Board of Directors were held during the year 2012. These meetings were convened by issuing proper notices along with the agenda and relevant working papers. The meetings were presided by the Chairman of the Board and the minutes of the meetings were appropriately recorded, circulated and approved.

The Company held its Annual General Meeting (AGM) of shareholders on 9th May 2012 for the year ended 31 December 2011. The AGM concluded with discussion on normal items of its business.

Corporate Governance

ACWA Power International Annual Report 2012 Corporate Governance

Director Category

Board Meetings held and attended during 2012 AGM

10th Mar. 26th May 10th Sep. 22nd Dec. 9th May

Mr. Mohammed Abdullah Abunayyan Executive Chairman P P P P P

Mr. Sulaiman A. Al-Muhaidib Non-Executive Director P P P P #

Mr. Ahmed Al-Rajhi Non-Executive Director P P P P #

Mr. Rasheed Al-Rasheed Non-Executive Director P P P P #

Mr. Tariq M. Al-Mutlaq Non-Executive Director P P P P #

Mr. Saleh C. Brahimi Independent Director P P P P #

Mr. Mohd. Izzaddin Idris Independent Director P P P # #

Legend: (P) Present; (–) Apologies; (#) Proxy

Audit Committee

The Audit Committee, constituted by the Board, is performing its functions in accordance with its terms of reference drawn in compliance with the approved rules of the Audit Committee and the Capital Market Authority (CMA) standards. During 2012, the Audit Committee adopted revised Audit Committee Charter which governs roles and responsibilities of the Audit Committee. Effective, 1st July 2012 a Group Internal Audit & Risk Management function was created that reports directly to the Audit Committee and administratively to the President & CEO of the Company.

During the year, internal audits were performed under a co-sourcing arrangement. Internal audits as planned were performed by outsourced internal audit firm and by the auditors from the Group Internal Audit & Risk Management function.

The Audit Committee consists of three members, Chairman being an independent member of the Committee. All the members have required knowledge and experience of accounting standards and commercial laws that enable them to perform their functions effectively.

The Audit Committee supports the Board in fulfilling its oversight and review function. The Committee reviews the Company’s adherence to policies, procedures, practices and compliance with laws and regulations. The Committee ensures that the financial statements

are prepared in accordance with the accounting standards generally applicable in the Kingdom of Saudi Arabia. During the year the Committee also reviewed internal audit reports issued on the following areas:

1. Bid Management2. Corporate Governance3. Corporate Social Responsibility & Sustainability4. Information Technology5. HR, Payroll & Administration The Audit Committee verifies that the Company’s internal control regulations are effectively applied and that sound accounting records are kept with appropriate supporting documents. The policies and measures of corporate performance were prepared and documented according to the required standards.

The management confirmed that there were no significant findings noted in the internal audit report which could affect the management of affairs of the Company and the internal audit did not detect any fraud in the areas audited by them during the year 2012. Further the management is not informed of any fraud which it might have known during the year and which could be informed to the internal auditors or the external auditors of the Company. Management is in the process to remediate other audit findings noted in the internal audit reports as per the agreed management action plan.

The table below presents the composition and category of directors and their attendance to the meetings of the Board of Directors and the AGM:

82 83

Member Category

Investment Committee Meetings held and attended during 2012

07th

Feb.26th

Feb.13th

May09th

Jul.16th

Oct.06th

Dec.22nd

Dec.

Mr. Mohammed Abdullah Abunayyan Executive Chairman P P P P P P P

Mr. Tariq M. Al-Mutlaq Member (Non Executive Director)

P P P P P P P

Mr. Ahmad S. Al-Rajhi Member (Non Executive Director)

P P P P P P P

Mr. Saleh C. Brahimi Member (Independent Director)

P P P P P # P

Mr. Mohd. Izzaddin Bin Idris Member (Independent Director)

P P P # # P #

Legend: (P) Present; (–) Apologies; (#) Proxy

Details of meetings held during the year and attendance by the members is as under:

Investment Committee

The Investment Committee is a standing Committee of the Board deriving powers under full delegation of responsibility from the Board of Directors. The Investment Committee consists of five members who are appointed by the Board and attended the meetings. The primary purpose of the Investment Committee is

to consider matters and give its directions, rules and approvals on the matters designated to it by the Board and including the matters relating to approving the investments in projects, investment guidelines, strategic business plans and related decisions on behalf of the Board of Directors of the Company.

ACWA Power International Annual Report 2012 Corporate Governance

Member Category

Audit Committee Meetings held and attended during 2012

26th Feb. 06th May 08th Sep. 10th Dec.

Mr. Khalid M. Al-Solai Chairman, Independent P P P P

Mr. Rasheed Al-Rasheed Member(Non-Executive Director)

P P P P

Dr. Ahmed Al-Meghamas (resigned on 10th Dec. 2012) Independent Member P – P N.A.

Mr. Khalid Al Khowaiter(joined on 26th Feb. 2012) Independent Member P P P P

Legend: (P) Present; (–) Apologies ; (N.A.) Not Applicable

Details of meetings held during the year and attendance by the members is as under:

The Audit Committee heard the views of the external auditors before forwarding the annual consolidated accounts of the Company for the year 2012 for approval to the Board of Directors.

NominationandRemunerationCommittee

Nomination and Remuneration Committee, constituted by the Board on 8th December 2012, performs its functions in accordance with its terms of reference drawn in compliance with the Code of Corporate Governance approved by the Board. Main duties of the Committee included recommending appointment of members to the Board, review of Board structure,

determine strengths and weaknesses in the Board, ensuring independence of the Board, proposing remuneration and review of succession planning of executive management, recommend total amount/pool of annual cash bonus and reviewing and approving the employee share based plan, policies and related provisions.

Related Party Transactions Committee

A Related Party Transaction Committee, constituted by the Board, is performing its functions in accordance with its terms of reference drawn in compliance with the Code of Corporate Governance approved by the Board. The Committee supports the Board to review and approve matters and transactions that involve

related parties transactions and conflict of interest within the Company. Any approval or rejection given by this sub-committee of the Board is considered as having been given by the Board themselves. The committee consists of three members, Chairman being an independent member of the Committee.

Member Category

Related Party Transaction Committee Meetings held and

attended during 2012

10th Sep.

Mr. Mohd. Izzaddin Idris Chairman (Independent Director) P

Mr. Saleh C. Brahimi Member (Independent Director) P

Mr. Tariq M. Al-Mutlaq Member (Non-Executive Director) P

Legend: (P) Present; (–) Apologies

Member Category

Nomination & Remuneration Committee Meetings held and

attended during 2012

8th Dec.

Mr. Ahmad S. Al Rajhi Chairman (Non Executive Director) P

Mr. Tariq Al Mutlaq Member (Non Executive Director) P

Mr. Chance Wilson Independent Member P

ACWA Power International Annual Report 2012 Corporate Governance

84 85ACWA Power International Annual Report 2012 Corporate Governance

Category Remuneration (SAR) Attendance Fees (SAR)

Board of Directors

Mr. Mohammed Abdullah Abunayyan* Executive Chairman – –

Mr. Sulaiman A. Al-Muhaidib Non-Executive Director – –

Mr. Ahmed Al-Rajhi* Non-Executive Director – –

Mr. Rasheed Al-Rasheed* Non-Executive Director – –

Mr. Tariq M. Al-Mutlaq* Non-Executive Director – –

Mr. Saleh C. Brahimi* Independent Director 300,000 12,000

Mr. Mohd. Izzaddin Idris* Independent Director 575,000 24,000

Committees of the Board

Mr. Khalid Al-Solai Chairman, Audit Committee 100,000 17,250

Mr. Ahmed Al-Meghames Member, Audit Committee 55,000 6,000

Mr. Khalid Al Khowaiter Member, Audit Committee 50,000 12,000

*Directors of the Board also representing as members of the Board Committees

Remuneration of Directors and Audit Committee Members

Each member of the Board and its Committee is entitled to a fee for each meeting attended during the year. Details

of remuneration and attendance fees paid to directors and audit committee members are given below:

RiskManagementOversightCommittee

A Risk Management Oversight Committee, a full delegated committee of the Board, is performing its functions in accordance with its terms of reference drawn in compliance with the Code of Corporate Governance approved by the Board. The Committee supports the Board to monitor the risk environment for

the Company and provide direction for the activities to mitigate, to an acceptable level, the risks that may adversely affect the Company’s ability to achieve its goals. The committee consists of four members, Chairman being an independent member of the Committee.

Member Category

Risk Management Oversight Committee Meetings held and

attended during 2012

8th Mar. 21st Sep.

Mr. Mohd. Izzaddin Idris Chairman (Independent Director) P P

Mr. Khalid M. Al-Solai Independent Member P –

Mr. Suntharesan Padmanathan Member (President & CEO) P P

Mr. Mrinal Kanti Sengupta Member (VP Assets Management) P P

Legend: (P) Present; (–) Apologies

ACWA Power International Annual Report 2012 Corporate Governance

The remuneration paid to the officers of the Company is commensurate with the role, responsibilities and skills required for the position based on a well laid down policy and process for determining remuneration linked with performance.

Regulatory Penalties

No penalties were imposed during the year on the Company by any Statutory Authority of the country where any office of the Company is located.

Communication to Shareholders

The Company effectively communicated with the shareholders during the year using all available means of communication. Quarterly financial statements reviewed by the audit committee and approved by the Board were distributed to the shareholders.

ProfessionalProfileofExternalAuditor

Ernst & Young is an established Big Four accounting firm having a permanent office in the USA. Ernst & Young, Riyadh, is the principal office that manages the audits for the Company and most of its subsidiaries and joint ventures. Total fees i.e. audit fees, fees for zakat filings, tax advices and other services payable to Ernst & Young during the year was SAR 1,169 thousand.

Kingdom of Saudi ArabiaRiyadh2nd Floor, Building 5Business Gate OfficeComplex, Airport RoadP. O. Box 22616Riyadh 11416Kingdom of Saudi ArabiaTel.: +966 1 283 5555Fax: +966 1 283 5500

United Arab EmiratesDubai22nd Floor, Nassima TowerSheikh Zayed RoadP. O. Box 30582DubaiUnited Arab EmiratesTel.: + 971 4 5090 555Fax: + 971 4 3859 625

ChinaBeijingTower B,Ping An InternationalFinancial CenterP. O. Box 2101Beijing 010027, ChinaTel.: +86 10 5979 2330Fax: +86 10 8438 1078

TurkeyIstanbulTesvikiye Palas,Tesvikiye Caddessi 23/2Nisantasi 34365Istanbul, TurkeyTel.: +90 212 259 33 66Fax: +90 212 259 33 67

South AfricaJohannesburg3rd Floor, Fredman Tower13 Fredman Drive,2196 SandtonJohannesburg,South AfricaTel.: +27 7651 53412

MoroccoCasablanca122, Boulevard d Anfa2000 Casablanca,MoroccoTel.: +212 522 485 589Fax: +212 522 221 392