Safe

Clean

Reliable

Affordable

Sustainable

Development

Words We Live By Generating Power for Emerging Markets

Globeleq 2005 Annual Report to Stakeholders

Corporate Profile

Globeleq is an operating power company solely focused on the emerging markets of Africa, the Americas and Asia. We safely provide clean, reliable and affordable electricity, creating sustainable returns and supporting the development of the electric power sector in our markets. With assets valued at over $1.5 billion, Globeleq has investments in 19 power companies in 13 countries with a total of more than 5,000 megawatts (MW) in generation capacity, and one national power distribution company. The Company also has more than $250 million in commitments for new acquisitions and project development. Globeleq was formed in 2002 when CDC Group plc, the UK-based private equity investor in emerging markets, contributed both equity capital and its portfolio of power assets to the new enterprise. CDC, Globeleq’s sole shareholder, has $3 billion in net assets. Its investment in Globeleq is managed by Actis, the private equity fund manager specializing in emerging markets. Africa Sidi Krir (Operated by Globeleq) Azito Songas (Operated by Globeleq) Tsavo Power Umeme (Operated by Globeleq)

Egypt Cote d’Ivoire Tanzania Kenya Uganda

Natural Gas Natural Gas Natural Gas Fuel Oil Electric Distribution

683 MW 288 MW 180 MW 74 MW 270,000 Customers

Peru Dominican Republic

Hydroelectric/Natural Gas Fuel Oil/Coal

1,015 MW 634 MW

Dominican Republic Guatemala

Fuel Oil Fuel Oil

298 MW 234 MW

Bolivia Nicaragua Dominican Republic Jamaica Guatemala

Hydroelectric/Natural Gas Fuel Oil Fuel Oil Fuel Oil Geothermal

204 MW 71 MW 67 MW 60 MW 24 MW

Bangladesh Bangladesh India Sri Lanka Sri Lanka

Natural Gas Natural Gas Natural Gas Fuel Oil Fuel Oil

450 MW 360 MW 355 MW 51 MW 50 MW

Americas Edegel EGE Haina Compañía de Electricidad de San Pedro de Macoris Puerto Quetzal Power Compañía Boliviana de Energía Eléctrica (Operated by Globeleq) Empresa Energética Corinto Compañía de Electricidad de Puerto Plata Jamaica Private Power Company Orzunil Asia Meghnaghat (Operated by Globeleq) Haripur (Operated by Globeleq) Kondapalli Asia Power ACE Power

Employees

Asset Value ($ in millions) $2,000

Gross Revenue ($ in millions)

2,500

$600

$1,800 $1,600

$500

2,000

$1,400

$400

$1,200

1,500 $300

$1,000 $800

1,000

$200

$600 $400

500

$100

$200 $0

2002

December 2005

2003

2004

2005

0

2002

2003

2004

2005

$0

2002

2003

2004

2005

Letter from the

President

G

lobeleq is a bold experiment that has been a resounding success. Six years ago, when we began exploring the idea of creating a commercially viable power company operating solely in emerging markets,

we had a strong conviction, but no proof, that the concept would work. Today we have proof. Since 2002, we have been providing safe, clean, reliable, affordable supplies of electric power to developing countries in Africa, the Americas and Asia. In doing so, we are powering the economic development that is helping alleviate poverty, create hope and build a better future. Providing power is only part of the formula. Without commercial success, the experiment would have failed. Covering our costs and producing the returns necessary to build sustainable businesses in poorer nations was a challenge that we have faced and overcome. Our experiment is now a proven business success. As an operating company with a

Globeleq has succeeded for a number of reasons. We are

long-term commitment to the markets

guided in everything we do by a strong sense of purpose,

where we operate, Globeleq is much

shared corporate values, robust business ethics and a

more than an investor. Through active engagement with the customers, communities and governments we serve,

commitment to corporate responsibility built on a solid foundation of operating our businesses well. We enjoy

we have become a positive force in

the unwavering support of a committed shareholder

the lives we touch.

and we have struck an appropriate balance between the different imperatives of our business – to produce power

Robert Hart

that is clean and affordable, and to sell it at a price that

President and CEO

is sustainable. I am very proud of what we have accomplished. At a time when few, if any, companies or investors believed it was possible to launch a commercially viable power enterprise in poor countries, we saw tremendous opportunity. Since that time,

Globeleq President and CEO Robert Hart announced in late 2005 that he would transition from his dual role, continuing as the Founding Partner of Globeleq and focusing on key stakeholder relationships. In June 2006, the Board of Directors of Globeleq Ltd appointed Torbjorn Caesar, Globeleq’s Executive Vice President for Africa, to the position of Chief Executive Officer, effective July 1, 2006.

others have followed us, seeking to emulate our success. In doing so, they have provided proof that our vision for a commercially successful emerging markets power company is viable.

Robert Hart President and CEO

2005 Annual Report

Safe

At Globeleq, we operate under the premise that our safety record should, and can, be perfect – that all accidents are preventable. We have set very high standards to protect our employees and the people we serve, committing to globally recognized best practices for the operations of our power assets and benchmarking our safety performance against the best-run electric power companies in the world. Our targets are very aggressive, but we believe they are achievable.

At our power generation plants, which are the largest part of our business, we are matching or exceeding the industry benchmarks – a credit to our strong focus on safety and the efforts of the people in each plant. Baseline safety assessments allowed us to rank the plants against the benchmarks, analyze incidents and identify key risk areas. Using our corporate health and safety management system as a framework, plant managers have built systems appropriate to their locations. To enhance safety performance, they apply a continuous improvement cycle of planning, implementation and adjustment.

Management is very committed to

In March 2005, we took over operation of Uganda’s national power distribution

doing a good job in terms of safety

company and immediately began to address a new set of safety issues associated

and the environment. We conduct

with power distribution operations. We launched an educational campaign to raise

monthly meetings with employees.

safety awareness and knowledge among employees and the public alike, provided

Everyone participates and feels free

employees with safety tools and equipment, and began to repair or replace the

to speak up about any problems.

deteriorated infrastructure of poles, wires, transformers and substations. The situation, while still challenging, is improving.

Ahmed Said Health, Safety and

To support the continuous improvement of our health and safety performance

Environment Coordinator

across the company, regular follow-up reviews will be conducted at all Globeleq

Sidi Krir, Egypt

facilities. By comparing this updated information with the results of the baseline assessments, we will be better able to evaluate the effectiveness of our health and safety management system, advancing toward our goal of achieving a perfect safety record.

2005 Annual Report

2005 Annual Report

Globeleq is committed to providing the cleanest source of affordable power appropriate to each market in which we operate. In addition to complying with all applicable laws and regulations, we follow World Bank guidelines and consider the environmental impact of our business.

We begin looking at the environmental performance of assets before we acquire them, assessing any required modifications and factoring the cost into our purchase decisions. Once we complete the acquisition, we set environmental standards and develop a plan.

In operating our facilities, we go beyond simply meeting the minimum requirements and strive for continuous improvement. Because a power plant running at peak efficiency will minimize fuel usage and deliver the best possible environmental performance, we focus first on running our plants well and continuously seek ways to improve efficiency.

A strong link exists between clean

In 2005, we made the commitment to seek internationally-recognized certifi-

operations and efficient operations.

cations for environmental and occupational health and safety management at

A plant that is running at peak

all of the plants we operate. In May 2006, Sidi Krir in Egypt became the first

efficiency will also deliver the best

Globeleq plant to receive the ISO 14001 certification for environmental manage-

possible environmental performance.

ment programs and OHSAS 18001 certification for health and safety management

Our commitment to providing the

programs. We are supporting the other Globeleq-operated plants as they work

cleanest source of affordable power is

toward their certifications.

built on the foundation of efficient plant operations.

As Globeleq continues to grow, the development of new power plants will play a much larger role in its future. New plants like Kallpa in Peru – the first develop-

Bob Moss

ment project initiated by Globeleq – enable us to incorporate environmental con-

Corporate Environmental

siderations into design, construction and the selection of technology as well as

Manager

operations. Kallpa will meet all local laws and regulations, and applicable World Bank guidelines for environmental performance.

Selection of fuels, a key determinant of environmental performance, requires a careful balance between several factors. We start the decision process by identifying all available fuel alternatives. We then conduct an analysis of environmental impacts, anticipated costs and availability of supply for each alternative and select the fuel that will provide power that is both clean and affordable.

Globeleq Ltd

Clean

Reliable

In Globeleq’s markets, where one generating facility may represent 25 to 30 percent of a nation’s power supply, the reliability of a single plant is a much larger issue than in countries that generate and consume more power. An unplanned outage may well affect an entire country, merit coverage on the front page of the newspaper or even inspire a visit from the nation’s leader.

Keeping plants running presents additional challenges where spare parts and specialized services are not always immediately available. Despite the challenges, Globeleq has set and achieved very high reliability targets. While the relatively young age of our gas plants plays a role, the plants’ excellent performance is also a credit to the programs we have in place to drive operational improvements.

Every two years, we take a detailed, overall look at each of the plants we operate. These assessments, conducted by teams that include Globeleq’s Engineering and Operations group and representatives from other operating facilities, highlight sound practices, recommend changes, and drive and measure improvements. We completed assessments of our assets in Tanzania and Bangladesh during 2005, with Bolivia and Egypt slated for 2006.

In emerging markets, where system

In 2005, Globeleq launched the Operational Excellence program, which includes

planning and development may be

employee skills assessments, a plant-specific review of procedures, the development

inadequate, it is not sufficient to

of key performance indicators and identification of the activities that impact the

focus only on keeping individual

indicators. Periodic reviews assess improvements and identify opportunities to

plants running. Globeleq is actively

make the facility even more reliable.

engaged in the larger issues that are critical to reliable power supplies. We offer our assistance to governments in long-term planning and lend our expertise to help them make the best decisions for their people.

Faisal Chaudhury Financial Controller Asia

2005 Annual Report

2005 Annual Report

Supplying power that is affordable is critical for Globeleq and must be carefully balanced against the other imperatives of our business. It is not enough to produce clean and reliable power if people in the markets we serve cannot afford to buy it.

Affordability can be viewed in several ways. Residential customers might look at how much of their disposable income it takes to pay for electric power in deciding if it is affordable. Businesses might measure affordability against the economic cost of not having power to run their operations. In sectors like education or healthcare, affordability might be gauged against the costs to society of illiteracy or disease.

Globeleq was founded on the pre-

The price at which consumers are willing and able to buy electric power is just

mise that economic development

one side of the affordability equation. Equally important is the cost at which a

and poverty alleviation would occur

producer can afford to sell the power. A producer’s definition of affordability

if we could produce and deliver safe,

must start with the recovery of all costs – the cost of fuel, operations and mainte-

clean, reliable, sustainable supplies

nance – and include a fair return on the capital invested. Any business that does

of electric power to emerging mar-

not recover all of its operating costs, including the cost of capital, will fail. A failed

kets at an affordable price – a price

power plant provides no power to anyone.

that provided for the recovery of all reasonable costs, including provisions

Every society has people who cannot afford to pay the full cost for their electricity;

for maintaining and growing the

this is especially true where we operate. Globeleq is committed to extending the

power sector. Our business activities

benefits of electric power to the broadest possible cross-section of society. To that

and engagement with stakeholders

end, we engage with governments, organizations and other stakeholders in each of

provide broad benefits, fostering

the markets we serve to create solutions that may include rate subsidies and, where

development of the emerging eco-

appropriate, charitable and public assistance programs.

nomies, communities and people we serve.

At Globeleq, we have built a commercially successful business by recognizing the trade-offs that exist in striking the balance needed to produce power our

Robert Hart

customers can afford to buy and we can afford to sell.

President and CEO

Globeleq Ltd

Affordable

Sustainable

While affordability requires a balance between the different imperatives of our business, sustainability encompasses all of them. By operating our businesses well, we achieve efficiencies that result in affordable power for customers and  fair returns for investors. That combination forms a solid foundation for a sustainable company.

But it takes more than operational excellence to weather economic cycles, survive political changes and succeed over the long term. We have built a successful, sustainable company through sound business practices based on very high standards of ethical conduct and corporate social responsibility.

In addition to reaching out to those affected by our operations and involving them in our plans, we are actively engaged with stakeholders in finding solutions to problems faced by the nations and communities we serve. We get involved in ways that transcend the bounds of our business and support projects to improve the quality of life.

At COBEE, we have kept a very

Compañía Boliviana de Energía Eléctrica (COBEE), one of the largest generators

clear distance and maintained

in Bolivia, embodies the qualities of a sustainable business. The first private com-

highly ethical behavior in everything

pany in Bolivia’s electric sector, COBEE has successfully served the needs of north-

related to the politics of the country.

ern Bolivia, including the capital city of La Paz, for more than 80 years. It has

We have always had an impeccable

remained private and profitable through economic cycles, political changes, a wave

record with regard to transparency,

of nationalization and a series of different owners. COBEE’s management credits

regulations and compliance with

ethics, efficient operations, sound business practices and independence from politi-

the law. In addition, we can offer

cal influences for COBEE’s long-term success.

some of the best prices for electricity because we are one of the most

In many ways, COBEE serves as a prototype for the sustainability that Globeleq

efficient companies. Those are the

intends to create in other operations which, despite their shorter histories, have

reasons why we are still around

great potential for long-term success. We are committed to developing that poten-

and why our business has always

tial everywhere we operate to build commercially successful, sustainable businesses.

been profitable.

Julio Lemaitre President and General Manager COBEE, Bolivia

2005 Annual Report

2005 Annual Report

Development is at the heart of Globeleq’s business and it is the underlying reason for everything we do. We are convinced that providing safe, clean, reliable, affordable and sustainable supplies of electricity will have a positive impact that extends far beyond the electric power sector, stimulating both economic and social development.

Sustainable community development

Because Globeleq entered the emerging markets at a time when good assets were

takes commitment from both sides.

available at attractive prices, we initially focused on acquiring operating assets rather

The community members must own

than developing new capacity. Key acquisitions continued in 2005 and early 2006:

the project, so the idea should come

• We increased our ownership of the 685 MW Sidi Krir power station in Egypt

from them. I look at their projects to

to 100 percent.

see what they have done, why they

• We entered the electricity distribution business in East Africa when our

are stuck and how we can help.

subsidiary Umeme took over operation of the national electricity distribution

We collaborate with local govern-

system in Uganda.

ments to make sure the project is

• We increased our presence in Bangladesh and entered other key markets with

in line with their development

the acquisition of several plants in South East Asia.

plan, but the actual project is done by the community with oversight

As the window of opportunity for acquisitions begins to close, we will transition

and support from both Songas and

to the development of new generation capacity like the Kallpa Project, which will

the government.

make use of Peruvian natural gas to help meet Peru’s rapidly rising demand for electric power. The first phase of the 168 MW, simple-cycle, natural gas-fired

Naima Abdallah

project is scheduled for completion in mid-2007.

Community Relations Coordinator

In addition to our investments in development of the electric power sector, we

Songas, Tanzania

support local initiatives to help meet basic needs for clean water, housing, health care and education, and work to become part of the solution in countries affected by crises such as drought and natural disasters. In this way, we support development of the communities where we operate and the people whose lives we touch.

Safe, clean, reliable, affordable, sustainable, development – they are words we live by.

Globeleq Ltd

Development

Globeleq Ltd a Bermuda Limited Company Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

Globeleq affiliated companies may be contacted at: Globeleq Inc. 1400 Post Oak Blvd., Suite 700 Houston, Texas 77056 USA T + 1 713 355 3450 F + 1 713 355 3847 Globeleq Advisors Ltd 2 More London Riverside London, SE1 2JT United Kingdom T + 44 (0) 20 7234 5400 F + 44 (0) 20 7234 5486

www.globeleq.com [email protected]

Globeleq and its associated symbols are trademarks of Globeleq Ltd