Bakent Doalgaz Datm A..

Brief Info Pack

Private and Confidential July 2011

Important Notice
This document has been prepared by Garanti Yatrm Menkul Kymetler A.. ("Garanti Securities) and Nomura International PLC (Nomura) (together referred as Financial Advisors) which has been assigned as exclusive advisor by the Republic of Turkey, Prime Ministry, Privatisation Administration (the PA), at the direction of and from materials and information supplied from Bakentgaz Doalgaz Datm A.. (Bakentgaz or the Company) and the sector in accordance with the instructions given by PA, in connection with the privatization of 80% of shares of Bakentgaz through sale method. This document is solely produced for informative purposes and may not be reproduced, retransmitted or further distributed to any other person or published directly or indirectly, in whole or in part, by any medium and in any form for any purpose or under any circumstances. No reliance may be placed for any purposes whatsoever on the information contained in this document or on its completeness, accuracy or fairness. The information is subject to updating, completion, revision and amendment and such information may change materially. None of the Company, or Financial Advisors is under any obligation to update or keep current the information contained herein, and any opinions expressed herein are subject to change without notice. Accordingly, no representation or warranty, express or implied, is or will be made by the Company, PA, the Financial Advisors, their respective advisors or any such persons directors, officers or employees, or any other person as to the accuracy, completeness or fairness of the information or opinions contained in this document, and any reliance you place on them will be at your sole risk. Without prejudice to the foregoing, the Company, its advisors and any such persons directors, officers or employees do not and will not accept any liability whatsoever, in negligence or otherwise, for any loss howsoever arising, directly or indirectly, from use of this document or its contents or otherwise arising in connection therewith.

Key Investment Highlights

Turkey Strategically located; attractive position between Europe, Middle East and Asia Despite global financial turbulence, achieved strong GDP growth; 8.9% and 11.0% in 2010 and 2011Q1, respectively Distribution Network Distribution network exceeding 8,600 km. in length More than 1,100 regulation and metering stations Flexible ring system; enabling alternative natural gas distribution routes Tariff Sole natural gas distributor charging US Dollar fixed tariff for all subscriber groups (till August 31, 2017) Distribution Charge threshold fixed at 800,000 m3 p.a. consumption (till August 31, 2017) Enjoys the fourth highest national Service Charge Service Charge
104 91 88 78 40 40
Attractive location with solid growth

Ankara Capital of Turkey Turkeys second most populated city with 4.8 million population Turkish Natural Gas Market Rapidly growing natural gas consumption; with a CAGR of 17% since 1988 High growth potential; relatively low per capita consumption (495 m3) compared to EU average (920 m3) Consumption Volume Second largest natural gas distribution company 1.3 million subscribers with additional 500 thousand subscriber potential with completed infrastructure investments Sales and supply volume increase by 52% and 29% respectively (between June 2010 and 2011) Annual distribution volume to reach 3 billion m3 p.a. (after the inclusion of Baymina CCGT and eligible customers in February 2011) Number of Subscribers
7% (Thousand)
1,182 1,252 1,294 938 1,026 1,112

17%

2 million subscriber potential

Wide and flexible distribution network

Fast growing natural gas market with further growth prospects Annual distribution volume to reach 3 billion m3

Sales Volume
(mn m3)
2,075 1,7051,826 1,759 1,658

52%
736 1,121

2006

2007

2008

2009

2010

06.2010

117
(TL / Thousand m3)

gda

Bakentgaz

Agda

Baheehir

Bursagaz

Esgaz

New Favourable Tender Conditions Introduced instalment payment option Debt settlement protocol with Ankara Municipality Incremental distribution volume of 1.3 billion m3 from Baymina CCGT and other eligible customers Fixed Distribution charge threshold 3

Supply Volume
(mn m3)
1,802 1,746 1,831 1,5241,740

29%
1,379 1,070

2006

2007

2008

2009

2010

06.2010

zgaz

2006

2007

2008

2009

2010

06.2011

06.2011

06.2011

Fixed US Dollar tariff and Distribution Charge

Enhanced investment atmosphere

Bakentgaz Overview
Business Description
Established in 2007 Second largest national natural gas distribution company Exclusive distributor of natural gas within its assigned region covering an area of c. 50 km in radius in Ankara, capital of Turkey Serves over 1.3 million subscribers (June 2011) Holds a 30-year natural gas distribution license, valid until 2037 Owned by the Turkish Privatization Administration and Ankara Metropolitan Municipality and its affiliates (80% and 20% shareholding respectively) Regions covered by the network

Ankara
Population: 4.8 mn (6.5% of Turkey)

Subscribers and Sales Volume

The natural gas sales and supply volume growth has achieved a CAGR of 3.6% and 7.2% between 2003 and 2010. In 2010 Ba kentgaz sold 1.7 billion m3 and supplied 1.8 billion m3 natural gas Discrepancies between the volume of natural gas sale and supply is attributable to pre-paid system Between June 2010 and June 2011 period, natural gas supply has grown 29% which depicts the rapid increase of natural gas consumption in the region After the transfer of RMS stations to the Companys distribution network in February 2011, eligible customers with different suppliers but still charged service charge has been added to Ba kentgazs subscriber portfolio. After these additons, the annual distribution volume is expected to reach 3 billion m3
1,740 1,524 1,802 1,746 1,831 1,038 2006 2007 2008 2009 2010 1,070 (mn m ) 2,075 1,705 1,826 1,759
3

1,921
1,658 542 1,121 951 736 1,379

06.2009 06.2010 06.2011

Natural gas sale volume

Natural gas supply volume

Consumption of eligible subscribers with different suppliers Source: Bakentgaz

Distribution Network
Distribution Network
Wide distribution network with 8,625 km of infrastructure, including primary and service lines Operates 11 RMS-A, above 50 RMS-B and over 1,000 RMS-C stations Distributes natural gas to non-eligible subscribers under low pressure (75 100 mbars) following its decompression in RMS-C regional stations Utilizes a flexible ring system enabling distribution of natural gas to a destination through alternative pipeline routes
(km) 5,991 1,924 6,373 2,097 6,767 2,243 7,247 2,380 2,487 2,634 2,714 2,785 7,837 8,245 8,456 8,625

5,460 1,749

2,988 722 2003

3,273 793 2004

3,441 835 2005

3,639 885 2006

3,913

4,278

4,484

4,592

4,681

954 2007

1,072 2008

1,127 2009

1,151 2010

1,159 06.2011

Steel Main Lines

Source: Bakentgaz

Polyethylene Main Lines

Service Lines

Network Topology
40-70 bars RMS-A Main transmission lines X52 Steel Pipes (radius: 150-600 m) 12-19 bars RMS-B Stations RMS-B Industrial Stations 1-7 bars RMS-C Industrial Stations 0.1-2 bars Subscriber RMS-B Stations 12-19 bars 1-7 bars 1-7 bars RMS-C Regional Stations RMS-C Industrial Stations 0.1-2 bars X50 Steel Pipes (radius: 80-600 mm) 75-100 mbars 21 mbar Subscribers

Polyethylene Pipes (radius: 32-125 mm) Subscriber

Main transmission lines RMS-A Source: Bakentgaz 40-70 bars

Polyethylene Pipes (radius: 32-125 mm) RMS-C Regional Stations 75-100 mbars

21 mbar Subscribers

Tariff Structure
Regulation and the Distribution Tariff
Baskentgaz operates under Natural Gas Market Legislation and is subject to regulations set forth by the Energy Market Regulatory Authority (EMRA) The tariff structure regulated by EMRA is composed of three components: (i) natural gas price; (ii) special consumption tax on the natural gas, applied by Ministry of Finance; and (iii) distribution charge, which is a fixed charge per m3 of natural gas distributed Based on Law No 4646, subscribers consuming over the eligibility limit set by EMRA are classified as eligible subscribers and these customers are eligible to select suppliers Two types of distribution charges; service charge (SC) is collected from captive (non-eligible) subscribers and transmission charge (TC) is applied to eligible subscribers Based on Law No 5655, Bakentgaz is secured to charge US dollar fixed SC and TC till August 31, 2017 USD / Thousand m3 SC TC 7.70 55.55
Residential and NonEligible Industrial Eligible Industrial (700,000 m3 800,000 m3) Eligible Industrial ( >800,000 m3) Natural Gas Price Special Consumption Tax Distribution Charge

Non-Eligible Tariff

Service Charge

Eligible Tariff

Constant SCT Over Natural Gas Price

Service Charge

Eligible Tariff

Transmission Charge

Regulated by

BOTA

Ministry of Finance

Constant until 2017,secured by Law USD

Currency

TL

TL

Source: EMRA

Eligibility Limit
Eligibility limit is gradually lowered in line with market liberalization plan
(Thousand m /year) 1,000 800 600
3

800

TC 700 SC

TC

For 2011, EMRA set the eligibility limit at 700,000 m3 annual consumption volume Accordingly other distibution companies namely zgaz, Esgaz and Bursagaz charges their subscribers SC or TC based on this consumption threshold. On the other hand via a recent communiqu of EMRA, Bakentgaz is privileged to collect service charge from all its subscribers with less than 800,000 m3 annual consumption till August 31, 2017

SC

400 200 0 2008 2009 2010 2011

Bakentgaz

Source: EMRA

Bursagaz Esgaz zgaz

Profit and Loss Statements

The Profit & Loss statements of the Companys are prepared according to IFRS standards and audited by Grant Thornton, are presented below.
Profit & Loss Statement million TL Net Sales Natural Gas Sales Other Income Sales Return (Refund) COGS Cost of Gas Supplied from BOTA Cost of Services Rendered Gross Profit (loss) Margin SG&A Marketing, Selling and Distribution Expenses General Administrative Expenses Other Operational Income Other Operational Expense EBITDA Margin Depreciation & Amortization EBIT Margin Financial Income Financial Expense Profit Before Tax Tax Net Income (Loss) 31.12.2008 (Full Year) 1.122,0 1.096,0 27,5 (1,5) (1.126,4) (1.081,8) (44,6) (4,4) (0,4%) (20,9) (5,2) (15,7) 9,2 (1,1) (17,1) (1,5%) (18,5) (35,6) (3,2%) 37,8 (18,0) (15,8) 3,1 (12,7) 31.12.2009 (Full Year) 1.263,6 1.246,8 20,8 (4,1) (1.127,7) (1.078,8) (48,9) 135,9 10,8% (19,8) (5,2) (14,6) 8,5 (9,2) 115,3 9,1% (20,1) 95,1 7,5% 37,4 (74,5) 58,1 (13,2) 44,9 31.12.2010 (Full Year) 1.068,4 1.055,7 17,6 (4,8) (989,7) (942,2) (47,5) 78,7 7,4% (30,0) (6,2) (23,7) 11,6 (13,0) 47,4 4,4% (28,3) 19,2 1,8% 80,0 (87,1) 12,0 (2,6) 9,4

Source: Bakentgaz, Grant Thornton

Contacts

Garanti Securities
aan Erkan Executive Vice President T: +90 212 384 1030 F: +90 212 352 4240 E: cerkan@garanti.com.tr

Garanti Securities
aatay Abra Senior Vice President T: +90 212 384 1036 F: +90 212 352 4240 E: cabras@garanti.com.tr

Garanti Securities
Metin zhan Vice President T: +90 212 384 1037 F: +90 212 352 4240 E: mozhan@garanti.com.tr

Garanti Securities
Akn Kozikolu Senior Analyst T: +90 212 384 1043 F: +90 212 352 4240 E: akozikoglu@garanti.com.tr