UNIT Equity

completed

IFC’s proposed investment is an equity participation of up to US$137.5 million in UNIT Investment NV (“UNIT” or the “company”), an owner and developer of power generation assets primarily in Turkey and other countries in Europe and the Middle East. IFC’s investment in the company will provide financing for UNIT’s potential power generation projects (the “project”). UNIT is a member of the UNIT Group which is a conglomerate with a focus on energy generation, EPC (Engineering, Procurement and Construction) contracting, and electricity trade. UNIT Group is also active in the tourism, steel product trade, and mining sectors. UNIT has a long history as an independent power producer (“IPP”) developer and owner having developed Turkey’s first IPP project, the 480 MW Uni-Mar IPP in the mid-1990s. Since then, UNIT has developed, built and operated a substantial power generation fleet with total installed capacity of about 2,000MW composed of both conventional and renewable technologies, including Combined Cycle Gas Turbine (CCGT), hydroelectric and wind. IFC’s funds will be utilized by UNIT for potential power generation investments in the Middle East, Southeastern Europe, and Turkey, including the Unit Zakho project (a new 1,260 MW CCGT plant planned to be developed in Iraq). IFC appraised this Unit Zakho project (#34482) as a separate project in early 2014 and this project is pending approval by IFC as of February2015. UNIT’s portfolio of power generation plants is summarized below:Boyabat Hydroelectric Power Plant - HEPP (Boyabat Elektrik Uretim A.S.), 513 MW, Turkey (SINOP Boyabat). This HEPP started commercial operation in Dec 2012 and is 33 % owned by UNIT. The operation and maintenance of the plant is being conducted by Boyabat Elektrik Uretim A.S. This is the largest private hydropower plant project in Turkey developed so far and is located on Kizilirmak River, the longest river in Turkey. The plant has a 195 m height concrete gravity dam (height from the foundation), a 65.4 km2 reservoir (60 km reservoir length, 3,557 million m3 capacity), and required about 70 km2 land acquisition (of which about 31 km2 was private land). Government managed land acquisition and resettlement associated with the development of this project is covered under PS 5 section below. UNIT informed IFC that there was a court case (which is now settled) involving Cultural Heritage Protection Regional Committee in Ankara about a cemetery (kaya mezarlik) that was inundated by the reservoir. Bagistas II Hydroelectric Power Plant (Akdenizli Elektrik Uretim A.S.), 49.8 MW, Turkey (Erzincan). This HEPP started commercial operation in December 2012 and is 100 % owned by UNIT. The plant has a 19.5 m height concrete gravity dam (height from foundation). The plant is a run-of-river hydropower scheme and is located on the Euphrates River. The Euphrates River is an international river that originates in Turkey and flows through Syria and Iraq. Bagistas II HEPP is a relatively small operational HEPP located far upstream of two very large reservoir type HEPPs (Keban HEPP and Ataturk HEPP), and as such is considered to have negligible adverse impacts on the downstream riparian countries (Syria). Government managed land acquisition was done and there remain some open court cases with respect to the compensation amounts. No physical relocation of people was required. The plant design included a fish pass to mitigate potential impacts on fish movement in the river. The plant is being operated by Bogaz Elektrik Uretim A.S. which is a subsidiary of UNIT. Yeni/Gebze natural gas-fired combined cycle gas turbine (CCGT) plant (Yeni Elektrik Uretim A.S.), 865 MW, Turkey (Kocaeli Dilovasi) located in an industrial zone about 60 km from Istanbul. The plant started operation in December 2013, and is 60% owned by UNIT. The plant’s cooling system is Air Cooled Condenser to minimize water usage. The plant is equipped with low NOx burners. The plant is being operated by UNES established with the equal participation of UNIT and ESB International (ESBI). The electricity is transmitted by 400 kV transmission lines to two substations of TEIAS (5 km and 20 km from Yeni Elektrik). TEIAS acquired right-of-way for these transmission lines through expropriation, and UNIT is aware that there are some ongoing litigations and is monitoring the progress. Uni-Mar natural gas-fired CCGT plant (Uni-Mar Enerji Yatirmlari A.S.), 480 MW, Turkey (Marmara Ereglisi) located about 100 km west of Istanbul. It has a dual fuel capability to use natural gas and fuel oil, and the plant has a distillate fuel oil storage capacity which allows 10 day operation on fuel oil. The plant started commercial operation in June 1999, and is 32% owned by UNIT. The plant was the first Build Operate and Transfer (BOT) scheme power plant project by the Government of Turkey. The plant is being operated by National Power Enerji AS (Turkey) – 100% subsidiary of International Power Plc. The plant uses a seawater once-through cooling system. The plant may be expanded after the BOT period ends in 2019. According to UNIT, no any pending E&S issues exist about this plant. Prolez Wind Power Plant (WPP, VGE -1 OOD), 9 MW, Bulgaria. The plant started commercial operation in Nov 2010, and is 100% owned by UNIT. The plant has three Vestas V90-3MW wind turbine generators with 120 m hub height. The plant is located in an agricultural area. Zakho natural gas-fired CCGT project 840 MW (initially as simple cycle power plant, and at later stage, to be completed as 1,260 MW CCGT plant), Iraq (Zakho, Northern Iraq). The project is under development and is targeted to start commercial operation in July 2017. The plant will use a dry-low NOx gas turbines and Air Cooled Condensers to minimize water consumption. The project is 56% owned by UNIT. Univiridas/Babina Greda biomass-fired circulating fluidized bed (CFB) power plant (Univiridas D.O.O.), 10 MW, under commissioning, Croatia. The plant is targeted to start commercial operation in 2015, and is 70% owned by UNIT. The plant will use wood based biomass (e.g. wood chips). The wood based biomass will be delivered by trucks from the vicinity of the plant within 50 km radius. For future investment, UNIT is conducting preliminary studies of multiple projects including gas-fired CCGT projects, biomass / gas – fired cogeneration plants (district heating) projects, and conventional coal-fired combined heat and power plants.