egaL guide to investing in P generation in iraq

1 LegaL guide to investing in Power generation in iraqCONTENTSCHAPTER I. THE POWER SECTOR 3A Introduction 3B Evolving Market Structures 3 1 Private Capital, Public Good 3 2 Towards a More Developed Power Sector 4C Creating An Enabling Environment 4 1 Power Sector Policy, Legislation.

2 And Regulator y Frameworks 5 2 Secure Ownership Rights 5 3 Commercially Viable Sector 5D Global Examples of Power generation 6 1 Independent Power generation in Emerging Markets 6 2 Case Example I: Pakistan 7 3 Case Example II: Turkey 8E Independent Power Projects Lessons Learned from Decades of Reforms 11 CHAPTER II.

3 IRAQ POWER SECTOR S FINANCE & LEGAL LANDSCAPE 14A Introduction 14B Iraq Power Sector 14 1 Iraq Power Sector Background 14 2 The Iraq Electricity Master Plan 15 3 Sovereign Guarantees 18 4 The Private Generators Market 18 5 The Legal Framework as It Per tains to the Power Sector 19C Regulator y Agencies in the Power Sector 19 1 The Ministr y of Electricity 19 2 The Ministr y of Oil 19 3 The General Commission for Taxes

4 20 4 National Investment Commission 20 5 Sovereign Immunity 21D Key International Institutions 21 1 International Finance Corporation (IFC) 21 2 Multilateral Investment Guarantee Agency (MIGA) 22 3 World Bank Iraq Trust Fund 23 4 United Nations Development Programme Iraq (UNDP) 23 5 Japan Bank for International Cooperation (JBIC) and Japan International Cooperation Agency (JICA) 23 6 The Expor t-Impor t Bank of Korea and South Korean Projects in Iraq 23 7 Overseas Private Investment Corporation (OPIC)

5 24 8 Other Institutions 24E Third Countries 25 1 Iran 25F Land Rights in Iraq 25 1 Constitutional Basis of Land Rights 25 2 Extending Land Rights to Foreign Investors 25 3 Owning and Leasing Land 26 4 Other Relevant Proper ty Laws 27G Applicable Incentives for IPPs 28 1 Guarantees and Privileges 28 2 Tax and Customs Incentives and Exemptions 29 3 Free Zones

6 30 4 Other Relevant Iraqi Laws on Taxes and Duties 31H Legislative Provisions Related to Power Sector 31 1 Exclusive Jurisdiction 31 2 Current Legal Reforms 31I Enforcement of Investor and Lender Rights 32 1 Dispute Resolution in General 32 2 International Center for Settlement of Investment Disputes (ICSID)

7 33 3 Dispute Resolution for Investors 33 4 Investor Violations 34J Doing Business in Iraq 35 1 Investment Application Requirements 35 2 Ser vices Provided to Obtain an Investment License 35 3 Granting an Investment License 35 4 Legal Registration and Establishment of Companies 36 5.

8 Notification and Reporting Requirements 36 6 Employment and Labor Requirements 37 7 Environmental Requirements 38K Iraq Power generation Success Stories 39 1 Al-Khairat Power Plant: Best Global Project 39 2 Zakho Project 39 3 GE MegaDeal 40L Challenges/Risks 41 1 Security 41 2.

9 Tariff Structure and Payment Recovery 41 3 Oscillating Oil Prices 42 CHAPTER III. FINANCING OF POWER PROJECTS 43A Introduction 43B Over view of Project Finance 43C. Refinancing the Project through A Special Purpose Vehicle 44D Financial Institutions 44 1 Development Finance Institutions / Export Credit Agencies 44 2 Political Risk Insurance Providers 47E Government Financing 47F PPP Value Drivers 48G Alternative Funding Sources

10 49 1 Financing a Project via Corporate Loan 49H Key Stakeholders 49I Credit Enhancements 50J. Tariffs 53K Invoicing and Payments 55L Taxation/Investment Law 56M Collateral Security / Secured Transactions