Industry Overview

6. INDUSTRY OVERVIEW AND OUTLOOK 6. INDUSTRY OVERVIEW AND OUTLOOK
Frost & Sullivan Malaysia Sdn Shd ‘SU”‘Wl Suite E-Qa-, 5, Slack E, Plaza Mont’ Kiara, 2 Jalan Kiara, Mont’ Kiara, 50480 Kuala Lumpur, Malaysia. Tel: +603.6204.5S00 Fax: +603.6201.7402
W’WVII.frost.com 2 5 APR 2012 The Board of Directors PESTECH INTERNATIONAL BERHAD No. 26 Jalan Utarid U5/14 Bandar Pinggiran Subang 40150 Shah Alam Selangor Darul Ehsan Dear Sirs, Executive Summary of the Independent Market Report on Power Transmission and Distribution: System Design, Engineering and Infrastructure for PESTECH International Berhad r”PESTECH” or the “Company”)
This Executive Summary of the Independent Market Report on Power Transmission and Distribution: System Design, Engineering and Infrastructure is prepared by Frost & Sullivan Malaysia Sdn Bhd (“Frost & Sullivan”) for inclusion in the Prospectus of PESTECH Intemational Berhad (“PESTECH” or the “Company”) in conneclion with its listing on the Main Market of Bursa Malaysia Securities Berhad. For and on behalf of Frost & Sullivan Malaysia Sdn Bhd: > M=–Hazml~usaf Vice-President Bangafore Bangkok Beijing Bogota Buenos Aires CapeTown Chenna; Delhi Dubai Frankfurt Kolkoto Kuala Lumpur London Melboume Mexico Oty Mumboi NewYork Oxford PoloA~o Paris Son Antonio Sao Paulo Seoul Shanghai Singapore Sydney Tokyo Toronto 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) © April 2012 Frost & Sullivan The market research process for this study has been undertaken through secondary or desktop research, as well as detailed primary research, which involves discussing the status of the industry with leading industry participants and industry experts. The research methodology used is the Expert Opinion Consensus Methodology. Quantitative market information could be sourced from interviews by way of primary research and therefore, the information is subject to fluctuations due to possible changes in the business and industry climate. This market research was completed in April 2012. This report is prepared for inclusion in the Prospectus of PESTECH International Berhad (PESTECH) for submission to the Securities Commission Malaysia and other relevant parties. No part of this research service may be otherwise given, lent, resold, or disclosed to non­customers without our written permission. Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without our permission. Frost & Sullivan has prepared this report in an independent and objective manner and has taken adequate care to ensure the accuracy and completeness of the report. We believe that this report presents a true and fair view of the industry within the limitations of, among others, secondary statistics and primary research, and does not purport to be exhaustive. Our research has been conducted with an “overall industry” perspective and may not necessarily reflect the performance of individual companies in the industry. Frost & Sullivan shall not be held responsible for the decisions andlor actions of the readers of this report. This report should also not be considered as a recommendation to buy or not to buy the shares of any company or companies as mentioned in this report or otherwise. For further information, please contact: Frost & Sullivan Malaysia Sdn Bhd Suite E-08-15, Block E, Plaza Mont’ Kiara 2, Jalan Kiara, Mont’ Kiara 50480 Kuala Lumpur. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distn”bution: System Design,  2  113
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.1 ANALYSIS OF THE ELECTRICITY SUPPLY INDUSTRY IN MALAYSIA 1.1.1 Electricity Consumption and Growth Trends The electricity supply industry comprises electricity generation, transmission and distribution / retail. Utility companies and Independent Power Producers (IPPs) generate electricity from energy sources to be sold to consumers. Electricity is generated in power plants / stations from various energy sources such as coal, natural gas, hydropower, geothermal power, solar and nuclear. These power plants house equipment such as boilers, turbines and generators, which are critical equipment in the production of electricity. Utility companies are companies typically involved in all three phases of electricity supply chain from generation to transmission to distribution. There are three primary utility companies in Malaysia, namely Tenaga Nasional Berhad (TNB), Sabah Electricity Sdn Bhd (SESB) and Syarikat SESCO Berhad (SESCO), serving the various regions within the country. TNB was established to generate, transmit and distribute electricity throughout Peninsular Malaysia, SESB serves the state of Sabah while Sarawak Energy Berhad (SEB) via SESCO serves the state of Sarawak. TNB, a company controlled by the Government of Malaysia, also has an 80% ownership stake in SESB. The remaining 20% stake is owned by the State Government of Sabah. In 1992, following a nationwide power blackout and series of interruptions, the Government opened the electricity generation phase to IPPs. IPPs are private finms which were awarded the concessions to deveiop, finance, build, own and operate power plants. This is in line with the rapid growth of the national economy and to cater for parallel growth in power demand. IPPs generate electricity which is sold to utility companies and selected large end users. IPPs are only involved in the electricity generation phase. These firms are not licensed by the Government to transmit or distribute electricity to the population at large. Each IPP will have a long term Power Purchase Agreement (PPA) in place with a utility company, governing the sale or off-take of generated electricity between these 2 parties. In 1998, NUR Distribution Sdn Bhd (NUR) received the license to generate and distribute electricity to the tenants of Kulim Hi-Tech Park, Kedah. TNB has a 20% interest in NUR through its parent company, Northern Utility Resources Sdn Bhd. Presently NUR is the soie independent power utility (IPU) with the license to generate, transmit and distribute electricity, albeit to consumers within the confined location of Kulim Hi-Tech Park, Kedah. Presently there are 26 iPPs in Malaysia, of which 16 are located in Peninsular Malaysia, 6 in Sabah and the remaining 4 in Sarawak. From these 26 IPPs, TNB Janamanjung Sdn Bhd (TNB Executive Summary of the JMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  3  114
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Janamanjung) is a wholly owned subsidiary of TNB, while Sejingkat Power Corporation Sdn Bhd and Sarawak Power Generation Sdn Bhd are wholly owned subsidiaries of SESCO. Electricity is transmitted to residential, commerciai and industrial end users along the National Grid in Peninsular Malaysia and state based grids in Sabah and Sarawak. The transmission system consists of infrastructure such as substations, structures, conductors, insulators and associated hardware that carry electrical energy from point to point in an elaborate power supply system. These transmission lines are operated at high voltages varying from 66 kiloVolt (kV) up to 500 kV, and are capable of transmitting large quantities of electricity over long distances. Transmission substations or electricity substations are erected at appropriate intervals to channel electricity from the National Grid to residential, commercial and industrial end users. Transmitting electricity at very high voltages reduces the transmission losses over long distances. Transmission loss refers to the difference in the ratio of electricity voltage at various points of the grid. For this purpose, the dispatch station of the power plant is equipped with voltage step-up transformers. The step-up transformer increases the voltage of electricity before it is transmitted along the transmission lines. A strong transmission system improves the reliability of electricity supply and is flexible in drawing power from various power plants and diversified fuel mix. A strong transmission system presents utility companies with the opportunity to tap power from diverse power plants in various locations with different operating characteristics or fuel mix. For instance, utility companies have the flexibility of meeting the demand for electricity by drawing additional power from coal power plants to compensate for the shortfall in electricity supplied by natural gas power plants during periods of gas supply shortages. The transmission system in Malaysia enables utility firms such as TNB, SESB and SEB to draw power from various types of power plants such as coal, gas and hydro which are located at different locations and have different operating characteristics. This power is then supplied to residential, commercial and industrial customers throughout the country. Failure in the transmission system could potentially lead to a situation of power loss. The erection of a transmission system requires much planning and investment in terms of financing. In Malaysia, electricity is distributed or retailed to residential, commercial and industrial end users by utility companies. TNB, SESB, and SEB via its wholly owned subsidiary SESCO, dominate the electricity supply industry throughout Malaysia. The electricity tariff in Malaysia is governed by the Government, with subsidies provided for the use of natural gas as a source of fuel. This is part of the Government’s move in maintaining the welfare of all levels of the population by ensuring their access to affordable electricity rates. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  4  115

 

6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) In Malaysia, third party engineering companies are hired to design and develop transmission and distribution infrastructure, connecting residential, commercial and industrial consumers to the National Grid. These companies are also required to commission the structure prior to handing it over to the .customer. This industry is known as the power system design, engineering and infrastructure industry, and this report will focus on system design, engineering and infrastructure providers in the power transmission and distribution industry in Malaysia, in which PESTECH operates in. The electricity supply industry in Malaysia is a large industry serving a combined consumer base from the residential, commercial, industrial and other sectors. In 2010, this industry’s consumer base exceeded 8 million consumers, which consumed 99,475 gigawatts per hour (GWh) of electricity throughout the year. This is expected to increase in the coming years as Malaysia’s economy continues to grow and consequently leads to higher electricity requirements. In order to meet the future demand from users, the electricity supply industry will have to further expand by generating additional capacities of electricity. High amounts of investment will be required not only to erect more power plants, but also on transmission lines, substations and other corresponding equipment that distribute electricity to homes and businesses that depend on it. Generation, transmission and distribution are core sectors within the electricity supply industry. Malaysia’s consumption of electricity increased from 81,507 GWh in 2005 to 99,475 GWh in 2010 at a compound annual growth rate (CAGR) of 4.1%. Regionally, Peninsular Malaysia remains as the primary consumer of electricity in Malaysia, consuming over 90% of the eiectricity generated between 2005 and 2010. This region consumed approximateiy 74,796 GWh of electricity in 2005 and its consumption increased to 89,621 GWh in 2010 at a CAGR of 3.7%. While the electricity consumption in Sarawak was marginally higher than Sabah, Sabah depicted a higher CAGR of 8.3% compared to Sarawak and Peninsular Malaysia. Peninsular Malaysia emerged as the primary consumer of electricity as a result of its much larger consumer base compared to Sarawak and Sabah. This region had a consumer base exceeding 7.4 million consumers in 2010, compared to Sarawak and Sabah, which only had about 400,000 to 500,000 consumers each in the corresponding year. The total consumed electricity in Malaysia dipped in 2009 as a result of the prolonged financial crisis which began the previous year. Industrial customers responded to this crisis by taking cost saving measures to reduce their expenditure on electricity. While electricity consumption in the industrial sector grew at a slower pace by 2.1 % between 2005 and 2010, this sector remained as the largest consumer of electricity generated in Malaysia. The industrial sector consumed 43,842 GWh of electricity in 2010, compared to the 39,573 GWh of electricity consumed in 2005. The commercial sector emerged as the second Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) largest consumer of electricity, with its consumption increasing from 23,951 GWh in 2005 to 33,209 GWh in 2010. The commercial sector experienced a 6.8% growth in electricity consumption during this period. The residential sector, despite its much larger end consumer base, was only the third largest consumer of electricity for the period, as its consumption rose from 15,388 GWh in 2005 to 20,847 GWh in 2010 at a growth rate of 6.3%. Frost & Sullivan notes that among these three sectors, the residential sector has the largest consumer base followed by the commercial and industrial sectors. Despite this, the industrial and commercial sectors topped the residential sector in terms of consumed electricity due to the higher electricity requirements for commercial and industrial operations. Historical Electricity Consumption (Malaysia), 2005 -2010
120.000 I 30 P 25

 

1100,000 t-~~-~~~­.S! 80000-,Q, E :::J Ul
c: 0 u ::­’u ‘;: 20,000-” Q) iii 0 20 ………. ~ “” ~ 15 “III -It:10 .c-5 ~ 0 I!l­0 -5 -10 2005 2006 2007 2008 2009 2010 _  Peninsular Malaysia  _Sabah  ~Sarawak  .-..-Peninsular Malaysia Growth Rate (%)  – … – Sebeh Growth Rate (%)  – .g – Sarawak Growth Rate (%)
—–~~——————_._–~~~–~~~~~~ Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  6  117
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d)
Source: Extracted from the Independent Market Research Report prepared by Frost & Sutlivan Between 1980 and 2008, the per capita total consumption of electricity increased from 626 kilowatts per hour (kWh) to 3,368 kWh at a growth of 438%. The per capita electricity consumption by the residential and commercial (RESCOM) seelor increased from 304 kWh to 1,789 kWh at a growth of 488.5% during the same period. Growth in both the per capita total consumption of eleelricity and per capita electricity consumption by the RESCOM sector reftects the trend of Malaysia’s per capita gross domestic produelion (GDP) growth, which has been on an uptrend from 1980 to 2008. Malaysia’s GDP per capita rose by 168.5%, from RM7,096 to RM19,052 during the same period. 1.1.2 Outlook and Forecast of Electricity Consumption The consumption of electricity is a key driver for the eleelricity supply industry. This industry is expeeled to grow at a healthy pace from 2011 to 2014 as a result of future economic growth, supporting Government policies, population growth and consumer preferences. Electricity consumption is projected to grow from an estimated 101,496 GWh in 2011 to 119,086 GWh in 2015 at a CAGR of 4.1%. The electricity supply industry will need to plan and make its move in meeting this anticipated increase in electricity consumption in the coming years. In meeting this additional increase in the consumption of electricity, the electricity supply industry will have to gear up to increase its present electricity installed generation capacity. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sutlivan 2012  on  Power Transmission & DistribuUon: System Design,  7  118
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Stakeholders in the industry have two options available in increasing this capacity for Peninsular Malaysia: • To erect additional new power plants
• To extend the concession period of PPAs for existing first generation IPPs

The Government has approved three hydroelectric power plant projects, the Ulu Jelai Hydroelectric Project in Pahang, the Hulu Terengganu Hydroelectric Project in Terengganu and the Bakun Hydroelectric Project (Bakun) in Sarawak. The construction of the first two projects is targeted to complete in 2015, while the construction completion target for Bakun is between 2015 and 2017. However it is noted that presently the construction for Bakun has been largely completed in late 2010 and the dam is expected to be fully operational by 2012. In the Tenth Malaysia Plan (10MP), the Government has also announced its intention to commission a coal fired power plant in Sabah. In 2010, the Government announced its plan of building the nation’s first nuclear power plant in the country by 2021. The investment cost for the construction of a 1,000 megawatt (MW) nuclear power plant is expected to range between USD2.5 billion and USD4 billion. The Government plans to employ international consulting firms to identify suitable sites for this plan. In iine with this, awareness programs will be rolled out nationally to educate the population on the need for a nuclear power plant to reduce Malaysia’s dependency on fossil fuels. The move to build a nuclear power plant in Malaysia will enable the Government to provide for the increase in the consumption of electricity over the longer term post 2020. In meeting the anticipated increase in consumption of electricity post 2015, the Government is also mulling extending the PPA concession period for existing IPPs. The first generation of PPAs which are due for renewal between 2014 and 2016 are YTL Power Paka, YTL Power Pasir GUdang, Genting Sanyen Kuala Langat, Segari Energy Ventures in Lumut, Port Dickson Power and Powertek Telok Gong. In addition to these options, TNB has carried out a feasibility study to evaluate the possibilities of linking the National Grid in Peninsular Malaysia to Sumatera, Indonesia. This grid linkage project is likely to be rolled out in 2015. rNB is presently in talks with the Asian Development Bank (ADB) to seek funding for this project. This grid linkage project is also in line with realizing the ASEAN Power Grid (APG) program and the Indonesia -Malaysia -Thailand Growth Triangle (IMT -GT), whereby this grid project to Sumatera is a potential energy project connecting these three countries. It is clearly noted that the Government takes seriously its role of providing sufficient electricity to meet the anticipated increase in electricity consumption over the long term, with considerations Executive Summary of the fMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  B  119
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) in place for short term fulfilment as well. The Government has also, in the past, intervened through policy formulation and the revision of electricity tariffs to ensure that all levels of the population have access to affordable electricity. This trend is expected to continue in the coming years. Projected Electricity Consumption (Malaysia), 2011E -2015F ~ 125,000 I [7% ~ 120,000 ——————===—-1 6% 1 l5 115,000 5% C ~ 110,000 4% j :l ~ 105,000 3% ;S o ~ c;. 100,000 2% (;-:g 95,000 1% iii 2011E 2012F 2013F 2014F 2015F _ EleclricityConsumption (GV\1l) Growth Rate (%) L.• . . .._._ __. Electricity Consumption Year GWh I Growth Rate (%)

2013F 107,968 4.3
Executive Summary of the fMR Engineering & Infrastructure © Frost &Sullivan 2012  on  Power Transmission & Distribution: System Design.  9  120

 

6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.2 ANALYSIS OF THE SYSTEM DESIGN, ENGINEERING AND INFRASTRUCTURE SEGMENT OF THE POWER TRANSMISSION AND DISTRIBUTION INDUSTRY IN MALAYSIA 1.2.1 Definition and Segmentation The transmission system in Malaysia channels electricity generated by power plants to residential, commercial and industrial customers throughout the country. TNB, SESB and SESCO dominate the transmission and distribution of electricity in Peninsular Malaysia, Sabah and Sarawak respectively. TNB is the grid owner and operator in Peninsular Malaysia and Sabah, and acts as the sole supplier of electricity to residential, commercial and industrial customers. Large industrial customers such as mining operators, steel mills, cement plants, oil refineries, airports and seaports require high volumes of electricity and therefore may erect electricity substations within their premises which draw electricity supply from the National Grid. Utility companies such as TNB, SESB and SESCO typically engage third party engineering companies to design and develop transmission and distribution infrastructure, connecting residential, commercial and industrial consumers to the National Grid. Large industrial users also engage these third party engineering companies to erect electricity substations within their operating premises. These third party engineering companies are also required to commission the structure prior to handing it over to the customer. This industry is known as the power system design, engineering and infrastructure industry. This report will focus on system design, engineering and infrastructure providers in the power transmission and distribution industry in Malaysia, in which PESTECH operates in. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012
6. INDUSTRY OVERVIEW AND OUTLOOK (Conl’d) Industry Segmentation (Malaysia), 2012 Utility Independent Power Companies Producers (IPPS) .-~_._._._._.
l_._._.. _._._._._._._._._.~ Resident”,1 / Industria” Commerci,,1 • Industrial customers include large companies such as mining operators, steel mills, cement plants and refineries. Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan 1.2.2 Industry Size and Growth The performance of the system design, engineering and infrastructure segment of the power transmission and distribution industry is dependent on investments made by utility companies. specifically as defined by transmission costs incurred by these utility companies. In Malaysia, generation, transmission and distribution plans are developed by the Government and announced in the Malaysia Economic Plan. Investments are disbursed to various Government agencies and utility companies, and this translates to actual expenditure on projects executed within this industry. Utility companies allocate funds to ensure the reliability and security of the National Grid system. This includes expenditure on new low voltage, medium voltage, high voltage and extra high voltage transmission and distribution projects,  as  well  as  maintenance expenditure to  ensure  that  all  equipment  are  in  good working  condi tion.  This  expenditure  is  known  as  transmission cost.
The market size of the system design, engineering and infrastructure segment of the power transmission and distribution industry is based on the annual transmission cost incurred by utility companies in Peninsular Malaysia and Sabah. Based on the transmission cost sustained Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission  & Distribution: System Design,  11  122
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) by utility companies in Peninsular Malaysia and Sabah, the system design, engineering and infrastructure segment of the power transmission and distribution industry has increased from RM922.0 million in 2006 to RM1,276.5 million in 2011 at a CAGR of 6.7%’. In 2009, system design, engineering and infrastructure expenditure declined as subsequent result of the global financial crisis, whereby the Government lowered public spending. With the exception of 2009 and 2011, the growth rate for the system design, engineering and infrastructure segment of the power transmission and distribution industry has been robust, with the segment reflecting growth rates exceeding 6% per annum. Power Transmission Cost Incurred by Utility Companies (Peninsular Malaysia and Sabah), 2006 -2011 1400 ~———————-~~..—­
2006 2007 2008 2009 2010 2011 Year  RM million  Industry Size  Growth Rate (%)  2006  922.0

-j~ -C’;;\~d07 ­6A -I ___, 1 2008  1,150.3  17.3  -­2009  1,143;2  (0.6)  2010  1,236.5  8.2
1 Power transmission cosl incUfred by SESCO, the utility company in Sarawak, was not publicly available at/he time ofthe printing of this report. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d)
—-! Note: 1. Transmission cost includes expenditure on new low voltage, medium voltage, high voltage and extra high voltage transmission and distribution projects, as well as maintenance expenditure.
2. Power transmission cost incurred by SESCO, the utility company in Sarawak, was not publicly available at the time ofpublication of this report.
Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan Growth in Malaysia’s power transmission and distribution industry is aiso represented by the nation’s growth in transmission system capacity between 2005 and 2010. The total transmission system lines I cables in Malaysia increased from 20,559km in 2005 to 25,493km in 2010 at a CAGR of 4.4%. The highest growth rate was recorded in the .275kV category, which increased from 7,013km to 10,914km during the same period at a CAGR of 9.2%. As at end 2010, Malaysia had a total of 455 electricity transmission substations with a capacity of 95,433 megaVolt Ampere (MVA). Malaysia’s transmission substations capacity increased from 75,524 MVA in 2005 to 95,433 MVA at a CAGR of 4.8%.
Transmission System Capacity (Malaysia), 2005 -2010 , CAGR 2005 I 2006 2007 I 2008 2009 2010 2005­, 2010 (%)I i Transmission System Lines I Cables (km) “SI~o:q~~_D~r~~’E{,’i~-F-10~1~~§~~21C[c:~T~[;~£’1_,f~~~jl~~~W]’~’:00f~~Ii : 275 kV i 7,013 • 8,135 : 7,994 8,873 8,995 10,914 I 9.2 • ~~’fi;Jjji~4jr};~~’fif~~~IIJ1~~~4i~fl~~~~;1;;~?}t~921~jil~!.~~§~i~;~116~i·~ . 66 kV I 294 294′ 192 123 123 123.9 i (15.9) :j’g!~jI(~illil!-j~i1;~ifij~321l~J;~’j0j2,o;~~gciJl···iiji~1~~·!Sl·~~~.W:~~~f8~~~js1gtl~1;!~~j;(RIl:·Wj4;i’r·.~ Transmission Substations ~[;!f~~~~jif!el:j5lf~if1~tIclt~ilt~~-[i”‘~Q~~2~:;J’1;S¥L:’T[C1+11-4.t~lrfil»~~;mj~;i~1);;S.~ Capacity (MVA) 75,524 81,654. 83,992 92,327 91,709 95,433 4.8 ——–” .. _”. ———————————- ———–­Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan 1.2.3 Competitive I Industry Landscape and Structure Key players in the system design, engineering and infrastructure segment of the power transmission and distribution industry in Malaysia comprise locaily established companies, and foreign companies interested to penetrate this segment must first form a joint venture or be in Executive Summary of the IMR on Power Transmission & Distnbution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) partnership with local companies. There are high entry barriers in the high voltage and extra high voltage segment of this industry, and as such there are approximately 11 key players operating within the system design, engineering and infrastructure segment. Among these 11 key players are companies specializing in high voltage transmission and distribution system design, engineering and infrastructure, while other companies specialize in medium voltage and low voltage transmission and distribution system design, engineering and infrastructure respectively. • Duta Technic Sdn Bhd (Duta Technic) • Ramusa Engineering Sdn Bhd (Ramusa Engineering)
• KUB Power Sdn Bhd (KUB Power)
• System Protection and Maintenance
• Mahkota Technologies Sdn Bhd

Sdn Bhd (SPM) (Mahkota Technologies) • Toshiba Transmission & Distribution• Nova Nusantara and Subsidiary Systems Asia Sdn Bhd (previouslyCompany Sdn Bhd (Nova Nusantara) known as Toprank Corporation Sdn • Pembinaan Tajri Sdn Bhd (Pembinaan Bhd) (Toshiba Transmission & Tajri) Distribution) • PESTECH International Berhad • Transgrid Ventures Sdn Bhd (PESTECH), via its subsidiaries in (Transgrid Ventures) Malaysia and overseas
• Zafas Sdn Bhd (Zafas) 1.2.4 Market Share Based on Incurred Transmission Cost The market size of the system design, engineering and infrastructure segment of the power transmission and distribution industry in Peninsular Malaysia and Sabah was valued at RM RM1,276.5 million in 2011 2. In financial year 2011 (FY2011), PESTECH reported revenues from its local operations amounting to RM30.7 million from executing system design, engineering and infrastructure projects within the transmission and distribution industry, and the manufacturing of proprietary power system components and equipment. This has enabled PESTECH to gain a market share of 2.4% in Peninsular Malaysia and Sabah in 2011, within the system design, engineering and infrastructure segment of the power transmission and distribution industry. PESTECH’s market share of 2.4% was calculated based on the revenue generated by this company in Malaysia divided by total TNB’s incurred transmission cost of RM1,276.5 million in Peninsular Malaysia 2 Power transmission cost incurred by SESCO, the utility company in Sarawak, was not publicly available althe time ofpubJicaJionofthisreport. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) and Sabah during 2011. This transmission cost refers to expenditure incurred for asset maintenance and development initiatives in Peninsular Malaysia and Sabah which contribute to improving electricity transmission connectivity. Frost & Sullivan notes that PESTECH has also penetrated foreign countries such as Cambodia, Ghana, PNG and Brunei Darussalam. Revenues from PESTECH’s foreign operations increased from RM14.1 million in FY2008 to RM109.5 million in FY2011. The remaining 97.6% players comprise other industry players that are involved in high voltage transmission and distribution, system design, engineering and infrastructure, such as Duta Technic, KUB Power, Mahkola Technologies, Nova Nusantara), Pembinaan Tajri, Ramusa Engineering, SPM, Toshiba Transmission & Distribution, Transgrid Ventures and Zafas (this list highlights the major industry players and is not exhaustive), and other industry players that mainly focus on low and medium voltage. Market Share for PESTECH International Berhad in the System Design, Engineering and Infrastructure Segment of the Power Transmission and Distribution Industry (Peninsular Malaysia and Sabah), 2011
Note: 1. Transmission cost includes expenditure on new Jow voltage, medium voltage, high voltage and extra high voltage transmission and distribution projects, as welJ as maintenance expenditure.
2. Power transmission cost incurred by SESCO, the utility company in Sarawak, was not publicly 8vaNable at the time ofpublication of this report.

Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan The table below identifies selected key players in the system design, engineering and infrastructure segment of the power transmission and distribution industry. Among these 11 key Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  15  126

6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) players are companies specializing in high voltage transmission and distribution system design, engineering and infrastructure, while other companies specialize in medium voltage and low voltage transmission and distribution system design, engineering and infrastructure respectively. It should be noted that some of these players may also be involved in other business activities, and the segmental revenues of these companies are not publicly available. PESTECH has the largest revenue, PBT and PAT amongst the selected key players indicated below, based on the latest publicly available financial information. Financial Information of Key Players in the System Design, Engineering and Infrastructure Segment of the Power Transmission and Distribution Industry (Malaysia) Latest I Industry Player Financial Revenue (RM) PST (RM) PAT (RM) Year Ending Duta Technic Sdn Bhd ’31 March 2010 I 19,366,945 ,(69,777) I (91,910) , t:=’….. it “l~-!!’~!I!I$l~{~_illi~b~i~~]J~ll~ll~ 2010 33,921,000 _~(:6,2~~~~~0). (25,879,000) -·~~c-=..::::;;~~€;”;·,:·::::C:.;,::·,::x'” J7!~lli!’£I~, .. 23,948
C”.~lfi 161,966 ~f._fli~i “‘~~I~]6~~B!i~¥~lttl&i’II.I~L ‘”,
! Toshiba Transmission & Distribution Systems Asia Sdn Bhd 31 July 2011 49,125,055 3,337,062 3,303,444(previously known as Toprank Corporation. ‘ SdnBhd) ! ! :’~~fg~11J1A~[;!’f,~~~~t~~!1:fi§l~1~'”rl”””;1~””~~5,”‘~9~i’~Th~~Zfilf~I~B~.~.ij;·,.~Bi-~igl$~l
;zafas_:3~n~erhad_~ 31/111aX2~2CJ..-12,12~,705 “, 754,955 465,596 : ~~~binaan T~Jn Sd~•. “,i31, D2~~;beri “,67,587:337. 115..,'”,29″,4″”,=”, lii~l.i~fI~fHJllil’~l~a’]~~~ft~~~t. , Ramusa Engineering 31 January ! 315,930 ‘185,981i Sdn Bhd 2011 I l”¥i~t~il~!;;E~ifj:?1~,r1Iz!i:~~·ft±SY~;itJP-1,~39;~I~~~

Note: a List highlights financial information of selected key industry players and is not exhaustive. b Transgrid Ventures Sdn Bhd is classified as an exempt private company, and as such does not file its updated accounts with GGM for public information. Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan Executive Summary of the IMR on Power Transmission & Distn·bution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.2.5 Barriers to Entry High Capital and Operational Expenditure System design, engineering and infrastructure projects in the power transmission and distribution industry require high investment in terms of capital expenditure and operational expenditure. This investment includes initial costs of purchasing equipment and the development of related infrastructure in power transmission and distribution. It is noted that the primary equipment in substations are transformers, high voltage switchgear and panels, and these equipment are primarily supplied by larger multinational corporations such as ASS Group, Siemens Group and Toshiba Group. Contractors engaged to carry out system design, engineering and infrastructure projects will also have to sustain regular overheads, operation and maintenance cost during the construction phase of the substations. Players in this industry will have to depend on self funding or financial institutions to fund the initial investment and operational cost of the project until they receive payments from project principals. Delays in payment could potentially affect the financial strength of these contractors. Industry Regulations, Policies and Practices The electricity supply industry in Malaysia is highly regulated by the Government as a matter of social agenda. The Govemment intervenes in the industry via its various ministries and agencies such as the Ministry of Rurai Development, Economic Planning Unit (EPU), Ministry of Energy, Green Technology and Water (KeTTHA), Energy Information Bureau and the Energy Commission. Each body has a specific mandate in ensuring the reiiability of industry performance. All mechanical, electrical and civil contracts must be registered with the Construction Industry Development Board (CIDB), an accreditation body for contractors with business operations in Malaysia. Contractors engaged in the system design, engineering and infrastructure segment of the power transmission and distribution industry must aiso be registered with the Energy Commission and undergo competency testing before receiving their license. Ownership of this license is a prerequisite in bidding for contracts from utility companies in Malaysia. In addition, these contractors are expected to possess quality certifications from the International Organization for Standardization (ISO), which lend credibility to the contactor’s work processes. These regulations and practices act as a barrier to entry for potential entrants to the industry. Executive Summary of the fMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distn”buUon: System Design,  17  128
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Technical Capabilities of Contractors The design, construction and management of electricity substation systems require a specific level of skill and experience. Project principals would seek to hire companies with proven track record to execute such works. The system design, engineering and infrastructure project for the 132 kV Manjalara indoor gas insulated switchgear (GIS) substation in 2010 was awarded to PESTECH via the joint venture between its subsidiary PESTECH Sdn Bhd and Pembinaan Tajri Sdn Bhd, which has a track record of executing similar projects in Peninsular Malaysia. This substation was constructed to meet the current and future electricity demand from residential and commercial consumers in Manjaiara and Desa Park City. While the fundamentais of electricity transmission and distribution technology have remained constant over the years, skilled engineers and technicians are able to carry out improvements in order to enhance delivery and efficiency, while optimizing system performance. Such skill can only be gained through hands on experience. Industry Track Record and Reputation The system design, engineering and infrastructure segment of the power transmission and distribution industry comprises a few large players dominating the industry via the awards of high value projects primarily from TNB. It is not uncommon for industry players to establish joint ventures in the bidding of selected projects, and build relations and trust within the industry. Furthermore, Frost & Sullivan notes that the key industry players have been operational for over a decade, and have therefore established their track record and reputation within the industry which cannot be easily replicated by a new entrant. 1.2.6 Relevant Laws and Regulations 1.2.6.1 Regulation The Malaysian Grid Code The Malaysian Grid Code was launched in December 2010 and enforced in January 2011 to ensure the reliability of eiectricity supply in Peninsular Malaysia. The six critical functions governed by this document are the Planning Code, Connection Code, Operating Codes, Scheduling and Dispatch Codes, Data Registration Code, Metering Code. The Malaysian Grid Code essentially regulates the various functions across the value chain of the electricity supply industry. The parties that are regulated by this Code are: Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & SuI/ivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) • Electricity generators comprising both TNS and IPPs
• Network operators which operate networks and may import or export electricity to the National Grid
• TNS Transmission Division as the grid owner and single buyer of electricity
• Distributors connected to the National Grid that import electricity from the National Grid
• Directly connected large customers to the National Grid
• Grid system operator which operates the Peninsular Malaysia Grid System
• Interconnected parties outside Malaysia which are connected to the National Grid

The Malaysian Grid Code coordinates electricity supply activities between these parties. The Code is a technical specification document which outlines the parameters that power plants and the grid system network have to meet in order to ensure the electrical grid does not fail. It aims to ensure that operations at the distribution level are carried out in a timely and systematic manner. The Code sets regulations and technical requirements to be carried out by all involved parties in the planning, managing and maintenance of the National Grid and its distribution systems to ensure constant security, safety and reliability of electricity supply. The Energy Commission will establish and maintain the Grid Code Committee to oversee the implementation of the Malaysian Grid Code. The committee shall comprise of representatives from all stakeholders across the electricity supply industry value chain, including TNS and IPPs. The technical specification in the Malaysian Grid Code applies to TNS as the Grid owner and Grid system operator. As such, TNS is responsible for ensuring that its vendors, suppliers and contractors, including third party engineering contractors involved in system design, engineering and infrastructure works comply with the specifications in the Malaysian Grid Code. 1.2.6.2 Contractor Licensing a) Contractor Services Centre (Pusat Khidmat Kontraktor) The Contractor Services Centre is an agency under the Ministry of Works tasked to manage registration and related matters for all contractors at both the federal and state level. All engineering contractors operating in Malaysia must register with this agency and obtain a license prior to operating in Malaysia. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  19  130
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) b) Construction Industry Development Board (CIDB) Registration with CIDB is a mandatory requirement for all engineering contractors and specific to the skill or trade. System design, engineering and infrastructure providers in the power transmission and distribution industry are classified under the Mechanical and Electrical (M&E) category. These providers are categorized by paid-up capital from Grade 1 (“G1”) to Grade 7 (“G7″). In numerical order, the lower grade represents lesser paid-up capital, and vice versa. For instance, G1 contractors hold only RM5,000 in paid-up capital while G7 represents contractors with at least RM750,OOO in paid-up capital. Another attribute of this grading is that G1 contractors’ tendering capacity is limited to no more than RM200,OOO of the entire project value, while there is no limit for G7 contractors. As such, G7 contractors are deemed as bigger companies compared with the others. Contractor’s Grade of Registration (Malaysia), 2011 Grade Paid-up Capital (RM) Tendering Capacity (RM)

G7 750,000 No limit Source: ExtJactedfrom IheIndependentMarkelResearch Reportprepared byFrost & Sullivan 1.2.7 Demand Conditions and Dependencies The key drivers for the growth of system design, engineering and infrastructure services for power transmission and distribution is growth in the demand for eiectricity supply in Malaysia. The consumption of electricity in Malaysia increased from 81,507 GWh in 2005 to 99,475 GWh in 2010 at a CAGR of 4.1 %. Further increase in the demand for electricity in Malaysia is Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) expected to positively impact the system design, engineering and infrastructure segment of the power transmission and distribution industry.
1.2.7.1 Economic Growth Since achieving independence, Malaysia’s economy has transformed from one that has been dependent on agriculture and primary commodities to one that is export driven. Malaysia’s present economy is driven by knowledge and capital intensive industries, and technology. The nation’s GDP has increased over the years as the Government has launched several economic plans to continue spurring the economy. Malaysia’s GDP rose from RM1.8 trillion in 1990 to an estimated RM5.6trillion in 2010 at a growth rate of 210.3%. Despite the economic challenges faced by the country in 2008 as a result of the global financial crisis, Malaysia’s economy posted an admirable GDP growth rate of 4.6% during that year, primarily driven by domestic demand and continued expansion in private and public consumption. The Government has recently rolled out the 10MP to further drive the domestic economy. Malaysia’s GDP is estimated to increase to RM5.9 trillion in 2011, at a year on year growth rate of 5.5%. Further growth in the economy is outlined in the 10MP, which strives to transform Malaysia into a high income nation by 2020 by focusing on 12 national key economic areas (NKEA). These NKEAs are specific areas in the nation’s economy with potential to significantly contribute to economic growth. Among the identified NKEAs are wholesale and retail, financial services, tourism, electronics and electrical, education and Greater Kuala Lumpur. The Government has also committed to the establishment of 5 economic growth corridors to promote free trade. These corridors are the Iskandar Malaysia (IRDA) in South Johor, Northem Corridor Economic Region (NCER), East Coast Economic Region (ECER), Sabah Development Corridor (SDC) and Sarawak Corridor of Renewable Energy (SCORE). It is noted that these initiatives will lead to increase inflow of foreign direct investment (FDI) into the country, via investments and the relocation of foreign companies. Domestic private investment is aiso expected to increase in the coming years in line with the incentives set out under the 10MP. These developments are expected to lead to the formation of commercial and industrial firms, and offering greater employment opportunities to the population of Malaysia. These new commercial and industrial firms will be potential customers to the electricity supply industry. The electricity supply industry in Malaysia is expected to experience growth in the coming years, as a direct result of economic growth within the country. Executive Summary of the IMR on Power Transmission & Distnbution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.2.7.2 Government Commitment in Ensuring Reliable Electricity Supply to Consumers The Government of Malaysia regulates and monitors the electricity supply industry via tariffs, policies and industry based regulations. All this is carried out with the aim of ensuring a steady and consistent supply of affordable electricity, which remains affordable to consumers. In the 10MP, the Government has announced initiatives to improve the generation capacity and transmission of electricity. In improving the generation capacity of electricity, the Government is looking towards: • Diversifying alternative fuel sources, particularly hydro and the importation of coal and liquefied natural gas (LNG) by 2015 to ensure stability in fuel supply
• To further explore investments in coal technology to reduce emission from this source of fuel
• To consider nuclear energy as a source of energy

The Government has further announced specific initiatives to increase electricity generation capacity in Malaysia. This inciudes: • The commissioning of the Ulu Jelai and Hulu Terengganu hydroelectric plants with a combined capacity of 622 MW during the Plan period
• The commissioning of 2 gas fired power plants and 1 coal fired power plant in Sabah with a combined capacity of 700 MW
• The commissioning in stages of the Bakun Hydroelectric Project in Sarawak with a capacity of 2,000 MW

In addition, the Government has also approved a RM7 billion project to increase the capacity of TNB Janamanjung by 1,000 MW. The construction of this project began in July 2012 and is expected to be completed by 2015. The Government also opened bidding for a second power plant extension project, in which MMC Corporation Berhad was awarded the contract to undertake the construction and development of a 1,000 MW coai fired power plant to be situated adjoining the existing Tanjung Bin Plant. This plant is expected to be operational in the first quarter of 2016. The expansion plans for the TNB Janamanjung Plant and the Tanjung Bin Plant is anticipated to fill the gap in electricity demand, especially after taking into consideration the fact that electricity generated from the Bakun dam will not be transmitted to Peninsular Malaysia by 2015, as initially planned. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cant’d) Alongside increasing the generation capacity in Malaysia, the Government also intends to strengthen and expand transmission lines and improve reliability in the supply of electricity. The 10MP aims to implement new transmission projects, including new overhead lines in Peninsular Malaysia, from Bentong South to Kampung Pandan via Ampang East, from the Bakun Hydroelectric Project to Similajau in Sarawak and other similar transmission projects in Sabah. In order to minimize loss, reduce cost and increase reliability, the implementation of a Smart Grid system will be considered. Frost & Sullivan notes that these initiatives by the Government will further serve to strengthen the performance and reliability of the electricity supply industry in Malaysia. 1.2.7.3 Stable Population Growth Malaysia’s population has been increasing steadily since the 1990s. Between 1990 and 2010, Malaysia’s population grew from 18.1 million to 28.3 million at a growth rate of 56.5%. Residential consumers are the largest consumer base for electricity, constituting approximately 83% of total consumers by segment between 2005 and 2010. The residential consumer segment is expected to continue emerging as the largest consumer base demanding electricity in the coming years, in line with further population growth experienced by the country. The preference of residential consumers, in particular for electric and electronic products Is also expected to drive the electricity supply industry. Consumer electronics are largely charged by electricity and it has become a norm for households to own mUltiple consumer electronic products in the current technological age. 1.2.8 Product Substitution The electricity supply industry in Malaysia supports a wide end user base. To date, there is no substitute for electricity. However it is noted that there are substitutes for the choice of fuel used to generate electricity. Fuel options range from fossil fuels (natural gas, LNG, diesel and coal) to renewable energy (hydro, biomass and nuclear). The generated electricity is delivered to end consumers via an elaborate nationwide cable network, or transmission and distribution system. In Peninsular Malaysia, this system is known as the National Grid. Projects within the system design, engineering and infrastructure segment of the power transmission and distribution industry are executed by third party contractors. These contractors provide the services of design, procuring of construction materials and Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) construction of the substations and transmission lines. These contractors also commission the project prior to handing it over to the customer. Frost & Sullivan notes that there is no substitute for services provided by these contractors. This lack of product substitute reflects positively on the sustainability of the system design, engineering and infrastructure segment of the power transmission and distribution industry. 1.2.9 Supply Conditions and Dependencies 1.2.9.1 Availability ofEquipment Key equipment in the transmission and distribution of electricity typically comprises transformers, relay and communication panels, and high voltage switchgears. These equipment are largely manufactured by multinational companies and imported from foreign countries such as Japan and Europe. As investment in these equipment is often relatively large, the selection of equipment supplier is given great consideration. Frost & Sullivan also notes that TNB has identified its approved brands of equipment for use in electricity substations. Primary equipment such as transformers are imported, however secondary equipment such as relays, isolators, control and protection panels and remote terminal units can be sourced from local manufacturers I assemblers. While some equipment is imported, contractors engaged tD carry out system design, engineering and infrastructure prDjects are able tD cDmpete with multinatiDnal cDmpanies by IDcally assembling secDndary equipment fDr use in their respective prDjects. 1.2.9.2Availability ofSkilled Labour The design, engineering and cDnstructiDn Df electricity substatiDns require a specific level Df skill and experience. PrDject principals such as TNB wDuld seek tD hire cDmpanies with proven track recDrd tD execute system design, engineering and infrastructure wDrks. Due to the high level of technicality Df this field, contractDrs bidding fDr system design, engineering and infrastructure projects are expected tD pDssess skills and experience in the following areas: • Design, develDpment and planning Df indDDr and outdDDr substatiDns
• Supply, delivery and erection Df pDwer transfDrmers, protectiDn and cDntrDI systems, switchgears, ancillary equipment and assDciated civil wDrks fDr transmissiDn and distributiDn netwDrks, transmission lines and substations

Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) • Design, installation and supply of communication and protection and control systems; supelVisory control and data acquisition (SCADA) system implementation projects
• Substation extension projects
• Various other tumkey projects

While the fundamentals of electricity transmission and distribution technology have remained constant over the years, skilled engineers and technicians are able to carry out improvements in order to enhance the performance of the system and optimize substation performance. Such skill can only be gained through hands on experience. 1.2.10 Reliance and Vulnerability to Imports The system design, engineering and infrastructure segment of the power transmission and distribution industry is dependent on the imports of primary equipment such as transformers. These equipment are not available locally and sourced from established multinational companies in the power transmission and distribution industry. The corresponding software, which is used as a platform for the programming of primary equipment, is also typically sourced from equipment manufacturers which in this case are foreign multinational companies. Frost & Sullivan notes that there is a certain level of reliance on imports for the sourcing of secondary equipment such as relays, isolators, and control and protection panels. However, these equipment could also be sourced from selected iocai manufacturers I assemblers. The system design. engineering and infrastructure segment of the power transmission and distribution industry is not dependent on imports for selVices offered by third party engineering companies. Utility firms such as TNS engage third party engineering companies to carry out power transmission and distribution system design, engineering and infrastructure works. This is a selVice that can only be carried out locally at the construction site and therefore is not dependent on imports. 1.3 OVERVIEW OF THE ELECTRICITY SUPPLY INDUSTRY IN CAMBODIA 1.3.1 Electricity Consumption and Growth Trends Electricity in Cambodia is primarily generated by IPPs. In 2010, IPPs produced a total of 2,254 GWh or 91% of the total generated electricity in the country while consolidated licensees Executive Summary of the JMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  25  136
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) generated 41 GWh or 4.2%. Consolidated licenses are issued to isolated systems to grant applicants the right to generate, transmit, dispatch, distribute and sell electric power to consumers. The remaining 47 GWh or 4.8% of electricity was generated by Electricite du Cambodge (EDC). Cambodia’s supply of electricity is generated by hydropower plants, diesel power plants, thermal power plants using coal, and thermal power plants using wood or other forms of biomass. In 2010, about 93% of the generated electricity originated from diesel and heavy fuel oil (HFO) power plants. Although there are 13 operating IPPs in Cambodia, these plants are unable to generate sufficient electricity to meet demand. Cambodia imported approximateiy 70% of its total electricity needs from the neighboring countries in 2009. Cambodia is relatively dependent on imported electricity. Cambodia has established Government levei cooperation with the Governments of Thailand and Vietnam for the purpose of importing electricity. Since November 2007, Thailand exports 115 kV of electricity to Cambodia’s Banteay Meanchey, Battambang and Siem Reap provinces. Since April 2009, Vietnam exports 230 kV of electricity to Cambodia’s Takeo, Phnom Penh, Kandal and Kampong Speu provinces. According to the World Bank, only 26% of Cambodia’s 2.8 million households had access to electricity as at December 2010. Most of these households were located at urban areas, while 13% of the rural population had access to electricity. The Govemment of Cambodia has targeted to expand its rural electrification strategies with the goal of ensuring that all villages in the country would have access to electricity by the year 2020, including access to mini-grid and off-grid electricity, and 70% of households will have electricity by 2030. To this end, the World Bank is supporting 2 projects, namely the Rural Electrification and Transmission Project (RETP) and the Greater Mekong Sub-region Power Trade Project (GMSRPTP). The country’s electricity supply industry has experienced improvement since EDC became a wholly state owned company to generate, transmit and distribute electric power throughout Cambodia. Cambodia’s consumption of electricity increased from 858 GWh in 2005 to 2,254 GWh in 2010 at a CAGR of 21.3% during that period. The growth rate of electricity consumption grew strongly between 2005 and 2008 in line with the nation’s economic growth. In 2009, the growth rate of electricity consumption in Cambodia dipped as a consequent result of the global financial crisis in the previous year, which led to many residential, industrial and commercial consumers conserving on utility expenditure. Nevertheless, electricity consumption recovered with a strong growth of 21.6% in 2010. Between 1995 and 2008, the per capita consumption of electricity increased from 10.46 kWh to 112.83 kWh at a growth of 978.7%. Growth in per capita total consumption of electricity refiects the growth trend of Cambodia’s GDP per capita, which has been on an upward trend from 1995 Executive Summary of the JMR on  Power Transmission & Distribution: System Design,  Engineering & Infrastructure  26  © Frost & Sullivan 2012  137
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) to 2008. Cambodia’s GDP per capita rose by 135.1%, from USD302 in 1995 to USD710 in 2008. The capital city Phnom Penh is the primary consumer of electricity in Cambodia, constituting more than 67% of the total electricity consumption in 2008. As the capital city of Cambodia, this region consumed 667 GWh in 2005 and its consumption increased to 1,246 GWh in 2008. Phnom Penh emerged as the primary consumer of electricity as a result of its larger industrial and commercial consumer base and population compared to the other 15 regions. Phnom Penh city has a consumer base of 254,662 customers in 2008, almost 100,000 customers more compared to other towns and provincial towns during the same period. Historical Electricity Consumption (Cambodia), 2005 -2010
2005 2006 2007 2008 2009 2010 , . , Year Electricity Consumption (GWh) . Grow1h Rate (%j , r:~ftj~~1i~y~:.~?&~~:I~~:ff~~~!~tf~~t:tffi~1~lli~l~f~fttr~~22~~1_:~~”fit:~~~~~:~~~~~\~~!I\i
2006 1,057 23.2 l[l~~I~”)”~q,pX~~I~ ..i~-‘fli’itjjIi~.~!§!q.il;j~~1,;i~rtIT:0it{;~’1~~~·:~~;~ii~
2008 1,664 23.4 .. ···········z66g?
·>14:4’: -‘:,’ .:’:.::…_ .. ‘. “._:’-: -‘ ._—. _ ~.,.” 2010 2,254 21.6 .CAGR2005 ..<201 0·, ….•. 21.3.’ ..,. “.’ . Source: Extracted from the Independent Market Research Report prepared by Frost & SuI/ivan Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & SuI/ivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.3.2 Industry Outlook The consumption of electricity is a key driver for the electricity supply industry. In meeting the anticipated future growth in electricity consumption as a result of population and economic growth, the Government of Cambodia has planned for the increase in installed generation capacity and transmission capacity. The Government has announced its intention to strengthen the transmission system in Cambodia during the 2001 to 2020 period. Under its national targets, the Government aims to strengthen the transmission system in Cambodia bya factor of over 20 times from 120 km in 2001 to 2,582 km by 2020. At the end of 2009, Cambodia had 4 operational high voltage lines: • 115 kV line from the Kirirom 1 hydropower plant to Phnom Penh’s distribution system, length 111.24 km
• 115 kV line surrounding Phnom Penh, length 82.71km
• 115 kV line from the border of Thailand to Banteay Meanchey -Siem Reap and Battambang, length 221 km
• 230 kV line from the border of Vietnam to Takeo and Phnom Penh, length 91 km

The Power Development Plan for the period of 2008 to 2021 outlines national strategies to be taken in the development of generation capacities, transmission capacities, and power trading with neighbouring countries. As a reflection of the nation’s commitment in accelerating the development of rural electrification in Cambodia, the Government has set a two-step target in rural electrification, through Ministry of Industry, Mines and Energy (MIME). Firstly, the Government targets that all villages in Cambodia will have electricity supply by the year 2020. Secondly, the Government targets to have at least 70% of the total households supplied with grid quality electricity by 2030. According to the Electricity Authority of Cambodia (EAC), only the capital city of Phnom Penh was 100% electrified in 2009, compared to the 20% electrification rate in provinces such as Mondolkiri, Preah Vihear, and Ratanakiri. From the 13,898 villages in the 24 provinces in Cambodia, only 6,629 villages were electrified during the same period. The Government of Cambodia aims to further reduce poverty in the country by improving the standards of living and fostering economic development in rural areas. This shall, in part, be possible through the Government’s rural electrification policies and strategies. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Conl’d) National Targets in the Transmission Expansion Plan (Cambodia), 2001 -2020
2001 2002 2003 2’004 2lXlS 2006 2007 200S 2009 2010 2011 2012 .2013 2014 2015 2016 2017 2018 2’0.19 2020 1_,15W_2301iN _500’tN —+-ll:Ital.1r3’lsnissloollne I Source: Extracted from the tndependent Market Research Report prepared by Frost & Sullivan In order to achieve these targets, the Government has established the Rural Electrification Fund (REF). The REF is anticipated to promote equitable rural electrification coverage by facilitating the population’s access to electricity at affordable price for economic, social and households usage, thus contributing to poverty reduction, and to promote and encourage the private sector to participate in providing sustainable rural electrification services, in particular for the exploitation of the economic application of well proven, technically and commercially, new and renewable energy technologies (RET). The Royal Decree states that the mandate of REF shall last until REF achieves the goals outlined in the Government’s policy on rural electrification. The Government has carried out several initiatives over the years to develop the power sector in Cambodia. Among these initiatives include the extension of the supply grid to new areas and the strengthening and expansion of isolated supply systems. A major development is the erection of the double circuit 230 kV line from Vietnam to Phnom Penh, with the commissioning of grid substations at Takeo and Phnom Penh (GS4). Government Driven Transmission Expansion Plans (Cambodia), 2010· 2019 ,  Scheduled  No  Transmission Expansion Plan  Dislance (km)  Operational  Year  230 kV, Kompol),  Takeo  -Kompol  (construct  subslalion  in  87  2011  2 _:;~::g~~;~~~~~~reng”  LoapDR(constructsUbstationin :  56  _-2012  .~.  3  110 kV, Kampong Cham Vietnam (construct substations: Kampong Cham, soung, Pongnearkreak)  3  68  2010
Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution~  System Design,  29  140
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d)
~,~Jj~t9l;~tJ~!j~~1~~g}~!.i.~~~ij1i;{~f~~ii~i~1~'[;~i,~i]J;’~,~i~~itr~.~lllfl1
I 9 :230 kV, Phnom Penh -Kampong Cham i 110 ! 2012 \ w]~%~i~IJ.~\~~&t~i11Ir~~~Jl~il!R~l~~.jfl~2~!:f.fil~~i~~&’~Ri~
i 11 i 230 kV, East Phnom Penh -Neakleung -Svay Rieng I 120 : 2014 : i : (construct 2 substations: Neakleung, Svay Rieng) ~ ~(±1.3§;i~~~~i]jl~~’1!;~~~~~~i~’;iil:il”‘t~”‘:;~”r”‘]~”‘t~.”lr”‘J'”if;-“‘~”j~f~liti~~l~f!t~~
, ,I’ I 115 kV, West Phnom Penh -East Phnom Penh (construct ‘[ 20 2015’ substation GS4 at South Phnom Penh) : fs’S’o~’~”‘c,-,” -” ,­~t$IQ!~’!f~~~’f ‘,”._ l~~ I230 kV, Stung Chay Areng-,Osomsub:~:li~n~_~_ ~;i_ .. ~W~~li;:::”5’1{~iir~t”C 17 500 kV, Loa POR (Ban Sok) -Steung Treng -VielnamI I 220 2019L l (Tay Ninh) (,:,_m,~uct sUbst~ti~~ in Steung Treng) Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan To this end, the World Bank, Australian Government Overseas Aid Programme (AusAID), ADB and other development partners are coordinating their support towards bringing affordable power to rural households to foster economic growth. The focus of World Bank’s support for rural electrification in Cambodia is to improve power sector efficiency and reliability, reduce electricity costs, improve standards of living, and enhance economic growth. This is being achieved by expanding rural electrification and other energy supplies, and strengthening electricity institutions while boosting the regulatory framework and the “enabling environment” for energy sector commercialization. The World Bank and various other private sponsors have also committed to investing an approximate USD1.7 billion to further develop the electricity supply industry in Cambodia. The largest investment is intended for the construction of the 338 MW Orussei Hydroelectric Power Plant and its related infrastructure, which requires an investment of approximately USD558 Executive Summary of the IMR on Power Transmission & DistribuUon: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) million. In March 2011, the Government of Cambodia has further committed to investing USD500 million over the next 5 years for the development of power transmission lines to transport power from hydroelectric plants and other power plants to household consumers within the country. With the measures to provide sufficient electricity to meet the anticipated increase in electricity demand in the long run, which includes the development of generation and transmission expansion plans, the continuous power trades with neighbouring countries, and also the implementation of provincial and rural electrification programs, the transmission and distribution infrastructure must likewise be sufficiently expanded. This will lead to substantial increases in transmission and distribution expenditure incurred by the Govemment. System design, engineering and infrastructure companies such as PESTECH are expected to benefit from the public and private investments for the electricity supply industry in Cambodia. Selected Targeted Investments in the Electricity Supply Industry (Cambodia), 2010 ­2014 Project Description Targeted Investment (USD million) i Rural Electrification and Transmission Project (RETP) i 40.0 Il’!’,i’iii~lg~~:~~i~a&BIJIJ1.i~~iE~tltl~ili~}::~~{}WJ~!~~~~~~~
i Greenfield Project North Phnom Penh -Kampong Power . 106.5 . ~:.rransmis!llo~ J11gk.rr:’L. _””.” .__ “”,,’~_”~__. . ~ __ ..) ;_!§~@-e-~treld’l?;o)eJt:”6ffissej”j;i’ydfii~iicl~t:R’d~!lrRIi~~fi~8J”twr.-; . . ··.·5513.iti: ……..•.” f:2′;”;’:’~:-”~~-:O~-”’:~;<~~;;-”:::,~~’.’2:~;~_,:.2.-~”::”'”;;t,:;,,~~~O; ~,,·_·.s’?:””;=::::.:;-~?0,::.-_~~j!h-:-o-::””~:’~~”,,-.~o.~,_,_:i; -‘1 _-c;;.: __ –‘=’C-_-~:-“‘_. __..oi.i:::._ -..:._..’_”‘-:~.~’:” .~’:~~ ! Greenfield Project Stung Russey Chrum Krom Hydropower Plant 412 0 I(338MW) i . I r;~1L~2!I~i~ItiJ~~{f~Vllct~’~]1~i”lj!i~~tif~i4IT!~~lli~~IO~-i.,~’l·i·;!
Total Investment 1,675.0 Note: List of projects is not exhaustive but captures major targeted investments in the electricity supply industry in Cambodia. Source: Extracted from the Independent Market Research Report prepared by Frost & SuI/ivan Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.4 OVERVIEW OF THE ELECTRICITY SUPPLY INDUSTRY IN PAPUA NEW GUINEA (PNG) 1.4.1 Electricity Consumption and Growth Trends PNG presently does not have a national power grid backbone throughout the country, although there are two main electricity networks serving the Port Moresby and the Lae -Madang ­Highlands areas respectively. PNG Power Limited (PPL) is the sole national state owned power utility responsible for the generation, transmission, distribution and retailing of electricity throughout PNG. PNG had a total of installed generation capacity of 580 MW in year 2006, sourced from hydropower (230 MW, or 39.7%), diesel (217 MW, or 37.4%), gas (82 MW or 14.1%) and geothermal (53 MWor9.1%). Presently, there are two main power grids in PNG, one located in Port Moresby and the other in the Lae -Madang -Highlands areas. The second grid is known as the Ramu Grid. There are also smaller grids servicing the smaller urban centers in PNG. Due to the unreliability of the power supply in these areas, there is considerable self-generation and back-up generation capacity In urban areas, resulfing in high operational and maintenance cost. The power sector in PNG is faced with challenges, including low investment in power infrastructure and high initial infrastructure costs to extend power to off-grid areas, such rural areas and smaller urban centers. Investments are required in electricity generation, and transmission and distribution at the Port Moresby and Ramu Grids. Apart from that, the supply of electricity in urban areas is often unreliable, limiting growth in smaller urban areas not connected to the main grids, and thus discouraging economic development. This has been a barrier to the industry as the cost of self generated electricity is high. Between 2003 and 2008, the consumption of electricity in PNG contracted from 3,078 GWh to 3,026 GWh at a negative CAGR of 0.3% during this period. Electricity consumption peaked in 2004 before contracting in 2005 due to lower demand from a slower economy. The nation’s electricity consumption subsequently depicted a positive growth rate between 2005 and 2008. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Historical Electricity Consumption (PNG), 2003 -2008′ ~ ~ c 0 ‘K E :l VI c 0 u ~ ‘u’c; ~ ” “iii  4,000 3,500 . 3,000 2,500 2,000 1,500 -1,000 500 0  –…-…-… 2003  CAGR 2003 -2008 : (0.3)% …._-_._.—–~–. ..-.—.—~-_._—–” 2004 2005 2006 2007  2008
Year ElectricitiG~~iumPtion I Growth Rate (%)
, Latest available data Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan 1.4.2 Industry Outlook Although electricity consumption has slowed between 2005 and 2008, the Government has developed the Power Sector Development Plan (PSDP) together with ADS to strengthen and enhance the electricity supply industry in PNG. The PSDP aims to increase electrification rates in the country, and provide reliable electricity to the remaining 90% of the population which presently does not have access to power. The PDSP has been recognized by the Department of Petroleum and Energy (DPE) as the basis for future planning of the power sector in PNG. The PSDP includes: Executive Summary of the fMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) • power demand analysis
• assessment of generation alternatives
• analysis of policy and regulatory framework
• barriers assessment
• preparation of pre-feasibility studies
• power sector operational program
• results dissemination.

PNG has significant indigenous energy sources such as hydropower, natural gas, geothermal, and solar with high potential of development. The electricity supply industry infrastructure requires upgrading to improve reliability, extension of grids to service the growing urban populations, and expansion of disaggregated generation to service the rural populations. Energy losses have continued to increase over the years, primarily because of outdated and poorly maintained transmission and distribution lines, and inadequate substation sizing. The ADB Country Partnership Strategy of PNG 2011 -2015 is aimed at providing support for the implementation of the Government’s Development Strategic Plan, 2010 -2030. The Country Partnership Strategy identifies ADB’s continued efforts in the promotion of private sector development and good governance. ADB’s operational strengths and focus will be on infrastructure, including transport and power development and management, regional cooperation and integration, access to finance, and environment, particularly climate change adaptation. ADB will support the expansion of the power sector in provincial centers by developing least­cost hydropower projects and improving distribution systems. This is expected to significantly improve access to .energy in the provinces. ADB will also expiore options for financing least­cost generation options, primarily through technical assistance for Preparing the Power Sector Development Project. ADB will support the expansion of power generation capacity at PNG’s two main grids to meet anticipated demand growth. The demand for electricity in PNG is expected to be driven by economic development in the Port Moresby associated with the proposed LNG project, and from the development of mining sector projects. ADB will build on recent technical assistance for the development of power sector planning capacity by providing technical support to the DPE for the implementation of the Electricity Industry Policy. As requested by the Government, technical assistance will also be provided to support sustainable development through the promotion of renewable energy, particularly in off-grid areas, and improved energy efficiency. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cant’d) ADB has been a long advocate in supporting the development of the electricity supply industry in PNG through a series of technical assistance projects between 1970 and 2000, and has thus far processed four loans for hydropower and transmission projects. Between 2000 and 2005, ADS provided two technical assistance projects to assist in the development of the gas sector. In 2009, ADS completed a technical assistance for preparation of the national PSDP, which will provide strategic assistance to the power sector through preparation of the power demand forecast and least-cost supply development plan. The recent 150 million kina (K) loan agreement signing between the Government of PNG and ADB in February 2011 was to kick start a Town Electrification Investment Program (TEIP). The signing also involved a Loan Agreement between PPL and the Government, in which PPL would be receiving funds for the implementation of the first phase of the TEIP. The TEIP, to be executed in 2 phases, will include the construction of 6 run -of -river hydro power plants, construction of transmission systems to connect provincial centers to generation sources, and capacity building within the power utility and communities. Projects under the first phase, which is expected to be completed by end 2013, include • Kimbe to ialla Interconnection -West New Britain Province
• Divune Hydropower Plant -Northern Province
• Ramazon Hydropower Plant -Autonomous Region of Bougainville

The beneficiaries of TEIP will include the current energy consumers in town centers particularly commercial, industry and domestic (including poor households) sectors, agro-industries including oil palm estates, and rural villages. The primary beneficiaries under phase 1 will include at least 50% of an estimated 3,273 unconnected households in the town of Popondetta, about 50% of estimated 1,187 unconnected households in the town of Kimbe, and an estimated 922 households in the Arawa and Buka towns. Presently consumers in these towns are experiencing regular rotating blackouts due to limited capacity. These consumers are expected to benefit from regUlar power supply after the project implementation. The Government of PNG, PPL and ADS have collectively targeted to invest approximately USD254 million over the next 5 years in improving the generation, transportation and distribution infrastructure for the electricity supply industry in PNG, which will benefit system design, engineering and infrastructure companies such as PESTECH. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  35  146
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Selected Targeted Investments in the Electricity Supply Industry (PNG), 2010 -2015 Project Description  Targeted Investment  (USD million)  , Town Electrification Investment Program (TEIP)  150.0

Power Grid Development Project 100.0 ~€r~~fi~~~~~~.~]t~~tl~.’~#~iM …•,’.~ …~”o~!.’]I~1f\~I~2”’r~7]~i;i~~\~! Total Investment 254.0 —–~ ———-_.._————_._._–_.­Note: List ofprojects is not exhaustive but captures major targeted investments in the electricity supply industry in PNG. Source:Extractedfrom the IndependentMarketResearchReport preparedbyFrost & Sullivan The PNG Govemment is working hand in hand with the ADS to address the issue of electricity supply availability and reliability in the country. TEIP (2011 -2015), which was approved by ADS in late 2010, aims to improve electricity suppiy in urban areas, erect key transmission links along major corridors to boost connectivity outside main provincial locations, and provide financial funding to the Government in improving the quality and reliability of the electricity supply industry. The ADS estimates a total investment of USD150 million, of which USD57.3 million was approved in the form of loan to PNG Power Limited in February 2011. This loan will fund renewable energy efforts, including run-of-the-river hydropower plants and the erection of transmission systems in urban areas. The Government believes that ADS’s support will be crucial in creating an export driven economy, increasing rural development and reducing poverty within the country. The various power transmission and distribution projects under TEIP are expected to create demand for system design, engineering and infrastructure providers, enabling companies such as PESTECH which have experience in this area to contribute to the development of the electricity supply industry in PNG. In addition to the USD150 million in TEIP, the Government of PNG and ADS have committed to investing approximately an additional USD204 million for the improvement of the electricity generation, transmission and distribution infrastructure in PNG, which will ultimately benefit system design, engineering and infrastructure companies such as PESTECH. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cant’d) 1.5 OVERVIEW OF THE ELECTRICITY SUPPLY INDUSTRY IN THE STATE OF BRUNEI DARUSSALAM (BRUNEI DARUSSALAM) 1.5.1 Electricity Consumption and Growth Trends The State of Brunei Darussalam (Brunei Darussalam) had an installed generation capacity of BBB MW in 2010, which is shared between Department of Electrical Services (DES) and Berakas Power Company Sdn Bhd (BPC). DES supplies electricity throughout the country, which Is generated from its four power stations. These four power stations have a combined installed capacity of approximately 425 MW. BPC owns a total installed generation capacity of approximately 260 MW, generated from its three power stations. BPC is a state-owned utility firm and sells generated electricity to DES for eventual distribution to residential, commercial and industrial consumers. Brunei Darussalam’s electricity transmission network extends throughout the country, with approximately 99.7% of its population having access to electricity, while the remaining 0.3% of the population in remote communities is largely being electrified by generators. DES and BPC operate the three main electricity transmission networks in the country. This nation is dependent on gas turbine power plants for approximately 9B% of its power needs and the remaining 2% of electricity is generated by diesel solely for the Temburong district. Electricity Transmission Networks (Brunei Darussalam), 2010 Network Districts Power Stations Utiolily OWner II perator 1 I Brun.el Muara, Tutong and • G d g 2 DES Belalt a ong , ;~:’~i-:ItT:-~~~~~~~l~~:’ -:~2·~.’;1Iit:~~~fq~lil~ifiiil~~;~~~~~~llli~~
I .. ‘. Gadong 3 ‘ 3 i Selected addresses Within • J d BPC ~ Brunei Muara eru ong , :. Berakas Source: Extracted from the Independent Market Research RepOr/pre/Jared by FroSt’& Suilivan Brunei Darussalam’s demand for electricity is driven by its expanding population and economic activities. The country’s installed generation capacity increased from 2,94B.2 GWh in 2006 to 3,611.5 GWh in 2010 at a CAGR of 5.2% during this period, while its electricity consumption depicted a similar trend, having increased from 2,655.B GWh in 2006 to 3,327.6 GWh in 2010 Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) at a CAGR of 5.8%. The nation’s largest electricity consumer between 2006 and 2010 has consistently been the domestic lighting and power segment, which consumed 1,181.4 GWh or 35.5% of total consumed electricity in 2010. Historical Electricity Consumption (Brunei Darussalam), 2006 -2010 4,000 -,————————..-::—–, ____________________________________~_J),C;~~QQ_6_:_~QJJ) ~_§~~,!o ~
Year Electricity Consumption G th R t (“)(GWh) row ae ”
1.5.2 Industry Outlook The demand for eiectricity in Brunei Darussalam is expected to increase in line with the growth in the nation’s population and economic development. Presently, the nation’s electricity generation is presently dependent on fossil fuels. However the Government aims to diversify this by including other energy sources in the generation mix. The Government is considering solar, wind, hydropower, biomass and geothermal as sources of energy for power generation. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost &Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) A national efficiency study is being prepared by the Government as part of Wawasan 2035 (Vision 2035) plan, the nation’s long term national development plan. Brunei Darussalam’s National Development Plan (2007 -2012) includes a plan to integrate the existing three main electricity transmission networks in the country by 2012 in forming a national grid. This plan also aims to further explore the potential of the Temburong Basin formation through the construction of a hydroelectric dam. In meeting the anticipated future increase in electricity consumption. the Government is considering the option to link its existing transmission grid to Sarawak’s grid, which would enable the channelling of surplus electricity from the Bakun Hydroelectric Project to Brunei Darussalam’s population. To this end, DES signed a Memorandum of Understanding (MoU) with SEB(based in Malaysia) in May 2009, to study the feasibility of expanding power generation capacity for Brunei Darussalam. This feasibility study was completed and handed over to Brunei Darussalam’s Energy Minister in early 2010. Details of this feasibility study include the proposal of developing an integrated Brunei Darussalam -Sabah -Sarawak regional grid connecting Sarawak to Brunei Darussalam and Sabah. SEB has proposed two phases of implementation for this grid linkage: Proposed Brunei Darussalam -Sabah -Sarawak Regional Grid, 2010 Phase Description • 275 kV transmission line of 13 km connecting Tudan, Miri, Sarawak and Sungai Tujuh, Brunei Darussalam. i 1 • 18km transmission line connecting Sungai Tujuh to Kuala Beliat where a I i 275 kV /66 kV substation will be erected.l ‘.275 kV transmission backbone connecting Sungai Tujuh -Kuala Beliat-I L_ Spark -Bukit Panggal-Katok. –..–“”-,”——–.——————-.’i I • Connection via Limbang, Sarawak, likely in conjunction with the proposed I erection of the Limbang hydroelectric project which is targeted to be 2 completed in 2015. • Electricity generated by this dam will be channelled to Brunei Darussalam via the town of Limau Manis, Sarawak. Source:ExtracTed trorT’/he Independent MarkiTResearCh Report prepar”-d byFrosi&Sulliva;( The construction of a power transmission line beginning from Mlrl and extending to Brunei Darussalam could be completed In an estimated 18 months. With this grid connection, Sarawak has the potential of exporting 100 MW to Brunei Darussalam in 2012, an additional 50 MW in 2013 and a further 50 MW in the following years. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  39  150
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Additionally, the Government of Brunei Darussalam is promoting energy efficiency and energy conservation nationwide, across various economic sectors. In doing so, the Government is organizing public awareness campaigns and talks, publishing articles on energy efficiency and conservation and encouraging the energy labeling for air-conditioners. The Government also sees the need for building and enhancing human talent via conducting seminars and workshop on energy management, energy auditing and energy educational programs in schools. The prospects for electricity transmission and distribution in Brunei Darussalam appear positive as the Government takes steps to ensure sufficient and reliable electricity for the country over the long term via the construction of the Brunei Darussalam -Sabah -Sarawak regional grid. The construction of this grid will serve to further benefit system design, engineering and infrastructure companies such as PESTECH. 1.6 OVERVIEW OF THE ELECTRICITY SUPPLY INDUSTRY IN THE DEMOCRATIC SOCIALIST REPUBLIC OF SRI LANKA (SRI LANKA) 1.6.1 Electricity Consumption and Growth Trends The Democratic Socialist Republic of Sri Lanka (Sri Lanka) electricity supply industry is regulated by the Public Utilities Commission of Sri Lanka. The state-owned Ceylon Electricity Board (CEB) has been mandated with the generation, transmission and distribution of electricity nationwide. CEB generates approximately 60% of the electricity in the country while the remaining 40% is generated by IPPs, with both utility firms depending largely on hydropower and petroleum fuels in generating electricity. Sri Lanka has also commissioned 87 non-conventional renewable energy (NCRE) projects to date, consisting of mini hydropower, biomass and solar power, which sell energy to the national grid and constitute approximately 185 MW of the total installed capacity nationwide. Sri Lanka had an estimated total installed generation capacity of 2,644 MW in 2008. The transmission system in Sri Lanka is wholly owned and operated by CEB while both CEB and Lanka Electricity Company (Private) Limited (LECO) are responsible for electricity distribution. Electricity consumption in Sri Lanka increased from 6,523 GWh in 2004 to 8,272 GWh in 2008 at a CAGR of 6.1 %. As at 2007, a total of 4.5 miilion domestic, industrial and commercial consumers have access to electricity, and the country had household electrification rates of approximately 77% in that year. The challenges for rural electrification include high capital investment and operational cost as well as difficulties in extending grid connected transmission Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission  & Distribution: System Design,  40  151
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) lines to remote areas. In addressing this issue, the Government is looking towards the implementation of renewable energy options such as solar and small scale hydropower to promote medium term electricity generation. Historical Electricity Consumption (Sri Lanka), 2004 -2008*
Year ElectricitrG~~iumPtion Growth Rate (%) 2004 , 6,523 I r,.~.”l_lttl~ltll{)~!0t~~I~;~~ili~111[~1t’f”‘~~~~rt'”~t'”~f~”‘;ir”‘t”‘~”‘}f”‘lt”-:t”~”‘~nnil~i~W~o~’~~2~!
.  2006  6,862  I..  (7.7)  [Ei~I~’.19!I;!’;;~Wi-.:_:~:~~_~~~1-:{~,  -· .. ,L-2_:_~<  ~~.~_  .. -.  2008′  .  8,272  _  1.6
§:~!4If.~~g&il~~j~i{~if&~r{‘f~1t:fj(~I.~;jj{~t-I~i~~Z1.1
• Latest available data Source: Extracted from the tndependent Market Research Report prepared by Frost & Sullivan 1.6.2 Industry Outlook Sri Lanka’s national energy policy aims to ensure that the population of the country has access to basic energy needs and ensuring the security of energy, among others through the promotion of energy efficiency and energy conservation. The Government aims to ensure that 10% of electricity channelled to the national grid is generated through non-conventional renewable energy sources by 2015. The Government has also developed a 10·year development framework (2007 -2016) which details the sustainable development of energy sources and its respective delivery systems at competitive pricing to the population. This Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) framework promotes fuel diversity and its security through the investment in conventional and non-conventional renewable energy. Sri Lanka’s Government has targeted to ensure that 98% of its households have access to electricity by 2016. Key Issues, Strategies and Targets (Sri Lanka), 2007 and 2016 Issue  , II  Strategy  I I  .IndIcator  II  Status in 2007  II  Target for 2016  Access to  I  Invest  in  grid  I extensions I  I  electricity  and  off-grid  energy, Households electrified.  s stems.  f;ij,’~.~”‘-”  ~~I~~~~!  re  _  ~O~g  ~  ,·RE)E~-erecfrTcltrro(jlIcfiQn,.  Renewable energy for electricity  I Relieve 9ridi and arrange i accelerate  constraints’ Share of NCRE on the I finances to I ‘d’ t : NCRE ! 9n I I~’pac o~ average i  NCRE share: 4.1%  NCRE share: 10.7%
_.~.l!tfltIM~1
, Supply-side i Accelerate investments; Technical. loss . in i Total T&D loss ‘ Total T& D loss I ‘ and management efforts to I transmission, technrcal I 167″1. ft 120″1. fti ~n~rgy i reduce technical and non-loss in distribution, non-! . DOt” nne g .n o~. nne ! e IClency : technical losses. i technical losses. : genera 10. i e era 10 . _’ ——L..–.:.. . .. , ,~–‘-‘~__~0.0..· .••••..• Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan In February 2011, Sri Lanka received a USD120 million loan from ADB for the expansion and improvement of the country’s power network in anticipation for the future increase in electricity demand and to meet its househoid electrification rate of 98%. The Government will also invest an additional USD42 million in this project. Sri Lanka will also be receiving a technical assistance grant amounting to USD1.85 million from Japan’s Asian Clean Energy Fund. This funding will be used to build transmission lines across the country, strengthen distribution networks in rural areas and to electrify 12,000 households in remote areas, and will be largely spent in provinces such as Eastern and Uva where electricity supply is unreliable and electrification rates are below the national average. The targeted completion date for this project is in April 2014. Such improvements in the electricity generation, transmission and distribution infrastructure in Sri Lanka will benefit system design, engineering and infrastructure companies such as PESTECH. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure 42 ©Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.7 OVERVIEW OF THE MINING INDUSTRY IN WEST AFRICA 1.7.1 Production and Growth Trends Countries which fall under the West Africa region include Benin, Burkina Faso, Cape Verde, Cote d’ivoire, Gambia, Ghana, Guinea, Guinea Bissau, liberia, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, and Togo. These countries, with the exception of Mauritania are part of the Economic Community of West African States (ECOWAS), which was established in May 1975 to promote regional economic cooperation among member countries. Mauritania was previously part of ECOWAS, but since 2001 had withdrawn its membership to join the Arab Magreb Union. Countries in West Africa are heavily dependent on the mining and minerals sector. According to Worid Bank, the mining and minerals sector accounts for approximately 54% of total exports and 25% of the GDP for this region. In the past, civil unrest and unfavourable investment legislation have hampered exploration and mining activities on a commercial scale. However, nations in West Africa have begun achieving political stability in recent years and revised investment legislation to welcome foreign participation in the mining sector. Many large foreign companies have penetrated the mining industry in West Africa with exploration rights or concession for the mining of minerals. This includes companies such as Newmont Mining Corporation, Ashanti Goldfield Co. ltd, Vale limited, Rio Tinto Group, ArcelorMiltai Group, Aluminium Corporation of China and BHP Bilmon Group. West Africa is rich with minerals such as bauxite, coal, diamond, gold, crude petroleum, and uranium. Between 2005 and 2008, the production of gold, bauxite, coal and diamond was on an upward trend, while production levels of minerals such as iron are, crude petroleum, manganese, phosphate, uranium and steel depicted a fluctuating trend. The production of gold increased from 133.1 metric tons to 157.4 metric tons between 2005 to 2008 owing to the opening of new mines as a result of the increasing global prices of this commodity between the same period. There are presently approximately 30 active gold mines in West Africa with capacities exceeding 18 metric tons a year. These gold mines are primarily located in Ghana and managed by mining companies such as Newmont Mining Corporation and Ashanti Goldfield Co. ltd. Ghana is the largest producer of gold in West Africa and this country aiso has the largest amount of gold reserves in the region amounting to 1,400 metric tons in 2010. Ghana’s gold reserves dipped in 2010 as a subsequent result of the opening of new gold mines in the country since 2007. Other major gold producers are Mali and Guinea. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & DistribuUon: System Design,  43  154

6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Countries such as Guinea, Sierra Leone and Ghana are also bauxite rich. Between 2005 and 2008, the production of bauxite in these countries increased from 15.9 million metric tons to 18.9 million metric tons. Bauxite is an aluminium ore and the increasing global demand for aluminium during this period has led to increased production levels of bauxite. Compagnie des Bauxites de Guinee and Compagnie des Bauxites de Kindia increased production in their mines between these years to meet global demand. In 2008, Guinea’s production of bauxite contributed to 91.0% of West Africa’s total bauxite production. Guinea still sits on large volumes of untapped bauxite reserves. In 2010, the nation reported bauxite reserves amounting to 7.4 billion metric tons. While the production of coal has exhibited a positive growth trend between 2005 and 2008, its potential has yet to be fully tapped. To date, Nigeria is the only country in West Africa to have discovered and ventured into coal mining on a commercial scale. In Nigeria, coal is primarily mined for power generation as the Government diversifies its dependence on petroleum and gas for this purpose. Additionally, Nigeria is also the largest producer of petroleum in West Africa, having produced 768.8 million barrels of oil or 97.2% of West Africa’s total production of oil in 2008. Nigeria’s petroleum reserves are centered around the Niger Delta Basin in the Niger Delta. Regional Production of Selected Minerals (West Africa), 2005 -200S* Mineral I Unit I 2005 2006 I 2007 2008* ThousandBauxite 15,926 18,870
II metric tons I ‘0~~fl~§~~~~1~2~’l)~I;~il{ __ I Diamond ,Thousand 2,592 2,357 2,253 4,482 :! carats: .’ . ~§11P1[ii,~;P!(~;@r’i~;_iilc·..•~ji3~i{E~5Ns1;1,¥J§i’l~~f~j~j19~’t1~:;JtH(rl~lt~91J,q
. L Thousand 3i ead metric tons 3 17,500 0 ~~I~~Q~~i~J·~·~~li~ri~~·j_;s~~ib’.•. -J}~.ili~l~~t!t~~~-~~’~~_E.· .. ·:·~~~~;fi~
i Crude Thousand 940,264 836,238 820,727 790,800 ! petroleum barrels r:~~~~i~%ln{~~r~~fn~’L .~c-I~i6~·;;;–):.~~~·;j&V}r_’·?0’i?E~;;;-i~–.~:;;.’~:’~’
..””–_.-. —-~:-­Uranium  . “”  Thousand metric tons -.. ­ 3,647  4,049 -.,. -­_..  3,718  3,575  Zinc  Thousand metric tons  0  0  8,7do .”-­ 0  Iron Ore  Thousand metric tons  11,000  11,155  11,910  10,950
Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  44  155
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) • Latest avaifable data Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan Annual Production of Selected Minerals (West Africa). 2008* Mineral Unit Country I Production f Benin , 20 1~~~~~11~~~1t.~t*\,rr~i~~rilii1 Cote d’ivoire 4,205 ~~ilit<i~~~••~~~~ll11Q~®:t~ltll i Guinea .. , 19,945 , l~Jilcf5r?io~)1J~R~ifi~ig;t!~;~!~1t~~fii~t~~1~lf~~ii~§~: Gold Kilograms Mali 41,160 ~~ilitrfi~~1;’j:~I]’!Jlt~~~~J~1!~1£t6Jj Nigeria 200 ~Jt~~!il~@~~~~ltlfJ§(I~~2ti;.~1tIr’iSierra Leone 196 , ~'”~’~~l~j?~~~!~~~L~~i~’!ltf~~lf]~~tfl~~ZiPiif£l:j-__0’_”” . __~-_._._,—–­, Ghana . 738 , I Bauxite Thousand metric ~’jr~1l&:Yi!t~~’~’:i,i[\tifjlitt;1~,~~~~~#{if~j , tons i Sierra Leone 954 I I’ I !__ __~ ,_ ___._ ,”‘,.__ mt.~i’ft~~~~itt~±~l~,;;f.f;af,iM;il~~~~ I Cote d’ivoire ‘ 22,000 I i Crude Petroleum , Thousand barrels ~0~~i:!lfjl~];:f~’!;~j.~~fi£~{~’~~{gl~~o:[~~’~dI, ! Total ‘ 790,800 : . ~’————–_._-­• Latest avaifable data Source: Extracted from the Independent Market Research Report prepared by Frost & Sullivan The economies of Liberia, Sierra Leone, Guinea and Cote d’ivoire particularly are highly dependent on the mining and minerals sectors. Collectively these 3 countries form the Mano River Union (MRU) countries. The MRU region is rich with significant geological resources including key commodities such as iron ore, bauxite, gold and diamond. Additionally Sierra Leone has heavy minerals and platinum group mineral deposits within its borders. Revenue gained from the mining and export of bauxite has contributed to an estimated 20.0% of Guinea’s GDP in recent years. Sierra Leone’s export earning from bauxite and rutile was approximately 29.0% and 22.5% of the nation’s annual mineral and total export earnings. The Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  45  156
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) minerals and mining sector also provides ample employment opportunities for the local workforce and this contributes to lowering poverty in the region. To date, infrastructure developmenrfor the mining industry in the MRU region has been slow and is insufficient to meet the increasing needs of mining companies and other users. With the exception of dedicated rail lines and ports constructed by individual companies, infrastructure in potential mining areas have yet to be fully developed. This shortage of infrastructure includes electricity supply infrastructure, where in many cases, electricity substations and transmission lines are erected to supply electricity to power mining operations. This infrastructure is typically erected by mining companies at their respective sites. 1.7.2 Industry Outlook The outlook for the mining industry in West Africa is closely tied to the level of mineral reserves in the region. Reserves are mineral deposits that are valuable, and economically and technically feasible for commercial scale extraction. West Africa has high reserves for gold, bauxite and crude petroleum. In 2010, the region had an estimated 1,400 metric tons of gold, 7.4 billion metric tons of bauxite and 37.2 million barrels of petroleum in reserves with the potential to be mined on a commercial scale. It is anticipated that these high volumes of reserves will boost future mining activities in the region. Mining activities in West Africa are also expected to be led by multinational mining companies with presence in the region. Further growth in the minerals and mining industry will lead to growth in the electricity supply industry as power infrastructure is erected to support mining operations. Annual Reserves of Selected Minerals (West Africa), 2007 -2010 Mineral : Unit I Country 2007 2008 I 2009 .­, Gold Metric tons i Ghana 1,600 i 1,600 . 1,600 , 1,400 :,~t!t~~Lt~~~~~i~~:~}~J~~Jrii~~,{~~~ggJ?£gij~l~~~~~i~Ijij~~il,al~J2lE
Crude Thousand I petroleum barrels Nigeria 36,220 36,220 36,220 37,200 Source: Extracted (;om the Independent Market Research Report prepared by Frost ‘& Sullivan The World Bank carried out an environmental and social strategic assessment for the development of the minerals sector in MRU countries. Findings from the assessment were published in the West Africa Mineral Sector Strategic Assessment (WAMSSA) in 2010. WAMSSA’s objectives included: Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distribution: System Design,  46  157
6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) • Identifying regional policies, institutional and regulatory policies required to integrate social and envinonmentaJ considerations in developing the minerals sector
• Propose recommendations to promote environmental and social benefits fnom the development of the mining sector through regional infrastructure building and economic diversification

Upon completion of the assessment, various national and regionai mineral clusters were identified, which would benefit from the development of infrastructure for the mining sector. Several mineral sector projects. as part of national development plans in order to eradicate poverty in the region were also identified. Additionally key issues for this sector were also addressed in reducing deforestation, loss of biodiversity, water pollution and land degradation caused by the mining sector, and well as increasing the reclamation of mining land. The commodity prospects for iron and bauxite are promising as key minerals to be further pursued for mining on a commercial scale. West Africa is rich with high quality iron ore deposits. Coupled with high global iron prices, iron ore should be mined on a commercial scale, and with the development of additional infrastructure, further downstream processing of this mineral can be explored. The prospects for bauxite are closely related to the demand for aluminium. Long term prospects for bauxite appear positive as global demand for aluminium is expected to increase in the medium to long term. Gold is also a key mineral to this region and is a strong investment commodity especially in times of financial downturn. Therefore investments in gold mining appear promising. The minerals and mining sector has potential to be a key economic driver for the region and a driver for infrastructure development in the electricity supply industry as its diverse mineral wealth is beginning to be realized. 1.8 FUTURE OUTLOOK AND PROSPECTS FOR PESTECH INTERNATIONAL BERHAD 1.8.1 Malaysia The consumption of electricity is a key driver for the electricity supply industry. Electricity consumption is projected to gnow from an estimated 101,496 GWh in 2011 to 119,086 GWh in 2015 at a CAGR of 4.1 %. Further developments in the electricity supply industry are necessary in meeting this anticipated increase in electricity consumption. The industry can develop further by increasing its current electricity installed generation capacity and strengthening the nationwide transmission and distribution network. Executive Summary of the fMR on Power Transmission & Distribution: System Design, Engineering &Infrastructure © Frost &Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) As the Government strives to transform Malaysia into high income economy, further infrastructure development is necessary to support the nation’s development. Further infrastructure development in the electricity supply industry is vital in attracting new investments in addition to encouraging existing industries to expand into value-added activities. Under the 10MP, the Government has announced its intention to further reform and grow the electricity supply industry by introducing the New Energy Policy (2011 -2015). The Government announced its intention to bring reforms to the electricity supply industry in 10MP with the aim of ensuring continuous security of electricity supply within the country. The 10MP highlights several efforts to create a sustainable industry despite volatile global energy pricing and depleting gas resources especially in Peninsular Malaysia. The New Energy. Policy (2011 -2015) was introduced in the 10MP, and it targets to: • Increase and diversify generation capacity
• Strengthen transmission and distribution networks
• Improve customer service delivery
• Restructure the electricity supply industry

The 10MP aims to implement new transmission projects, including new overhead lines in Peninsular Malaysia, from Bentong South to Kampung Pandan via Ampang East, from the Bakun Hydroelectric Project to Similajau in Sarawak and other similar transmission projects in Sabah. In order to minimize loss, reduce cost and increase reliability, the implementation of a Smart Grid system will be considered. The Government has outlined plans for the strengthening and expansion of the transmission and distribution network in the country in minimizing loss, reducing cost and increasing the reliability of electricity. To this end, the Government also intends to increase and diversify the generation capacity domestically. These initiatives are expected to create a demand for the services of companies specializing in system design, engineering and infrastructure of the power transmission and distribution works. Companies such as PESTECH are expected to benefit from these investments by the Government of Malaysia. 1.8.2 Cambodia Cambodia has emerged as a fast developing nation since the 1990s and as the country experiences high economic growth rates, there is a need for the country to meet the growing demand for electricity. While the nation’s power facilities have significantly improved since the civil unrest period with aid from international bodies and foreign funded private sector projects, Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission  & Distribution: System Design,  48  159
6. INDUSTRY OVERVIEW AND OUTLOOK (Conl’d) there is still much room for improvement within the electricity supply industry in meeting electricity demand and improving the standards of living within the country. The Government has announced its intention to strengthen the transmission system in Cambodia during the 2001 to 2020 period, by a factor of over 20 times from 120 km in 2001 to 2,582 km by 2020. The RETP, launched by the Government of Cambodia with the support of World Bank, aims to deliver affordable, reliable, and clean power to the population. In doing so, the Government hopes to raise the standards of living in the country while enhancing rural economic growth. To this end, the Government also intends to reduce poverty via providing electricity to rural areas in Cambodia. The Government of Cambodia has established specific goals to be achieved in the next 2 decades. The first goal is to ensure that all villages have access to electricity by 2020 and that 70% of households will have electricity by 2030. To date the success of RETP has resulted in • 23km of 115 kV high voltage transmission lines have been erected in and around capital city Phnom Penh in meeting additional demand and improving the quality and reliability of electricity supply
• The upgrading of 3 substations which have been operational since August 2009
• 560km of medium voltage and 278 km of low voltage lines have been erected to supply electricity to rural Cambodia
• Approximately 30,400 new households from a total of 50,000 identified households under the on-grid project have electricity
• Approximately 268 Rural Electrification Enterprises (REE) have been given licenses to operate and expand off-grid connections throughout Cambodia

These achievements emphasize the commitment by the Government in improving the standards and quality of the electricity supply industry in Cambodia. In addition to the targeted USD1.7 billion of private investments between 2010 and 2014 intended for improving generation, transmission and distribution industry in Cambodia, the Government has also announced its intention to invest USD500 million over the next 5 years to further develop the power distribution network in the country. Further developments in improving the electricity transmission and distribution network in the country are expected to create a demand for qualified companies offering system and design services such as PESTECH, which have a track record in executing similar projects. Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering &Infrastructure © Frost &Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) 1.8.3 Papua New Guinea (PNG) A large percentage of the rural population in PNG does not have access to electricity. In areas where electricity is available, the supply is often unreliable. The DPE has been tasked to draft the Electricity Industry Policy. The national Government owned PPL presently undertakes infrastructure planning and investment for the power sector. The PNG Government is working hand in hand with the ADS to address the issue of the availability and reliability of electricity supply in the country. TEIP (2011 -2015) was approved by ADS in late 2010 with the goal of improving electricity supply in urban areas, erecting key transmission links along major corridors to boost connectivity outside main provincial locations, and providing financial funding to the Government in improving the quality and reliability of the electricity supply industry. The ADS estimates a total investment of USD150 million, of which USD57.3 million was approved in the form of loan to PPL in February 2011. This loan will fund renewable energy efforts, including run-of-the-river hydropower plants and the erection of transmission systems in urban areas. The Government believes that ADS’s support will be crucial in creating an export driven economy, increasing rural development and reducing poverty within the country. The various power transmission and distribution projects under TEIP are expected to create demand for system design, engineering and infrastructure providers, enabling companies such as PESTECH which have experience in this area to contribute to the development of the electricity supply industry in PNG. In addition to the USD150 million in TEIP, the Government of PNG and ADS have committed to investing approximately an additional USD204 million for the improvement of the electricity generation, transmission and distribution infrastructure in PNG, which will ultimately benefit system design, engineering and infrastructure companies such as PESTECH. 1.8.4 West Africa The prospects of the electricity supply industry in West Africa will be driven by the developments in its mining industry and overall electrification initiatives by the various Governments in this region. The minerals and mining industry is an important pillar of the economies in West Africa. The various Governments in this region have plans to further improve related infrastructure to boost foreign investment in the minerals and mining industry. This includes improving transportation infrastructure, including roads, rail and sea ports, and availability and reliability of electricity and energy. Executive Summary of the IMR Engineering & Infrastructure © Frost & Sullivan 2012  on  Power Transmission & Distn”bution: System Design,  50  161
6. INDUSTRY OVERVIEW AND OUTLOOK (Conl’d) The outlook for the mining industry in West Africa is closely tied to the level of mineral reserves in the region. Reserves are mineral deposits that are valuable, and economically and technically feasible for commercial scale extraction. West Africa has high reserves for gold, bauxite and crude petroleum. In 2010, the region had an estimated 1,400 metric tons of gold, 7.4 billion metric tons of bauxite and 37.2 million barrels of petroleum in reserves with the potential to be mined on a commercial scale. It is anticipated that these high volumes of reserves will boost future mining activities in the region. Mining activities in West Africa are also expected to be led by multinational mining companies with presence in the region. Further growth in the minerals and mining industry will lead to growth in the electricity supply industry as power infrastructure is erected to support mining operations. Presentiy, less than 10% of the population in MRU countries have access to reliable electricity. There is also very limited grid infrastructure in this region. Electricity access is largely only available in mining sites or municipal areas. Power facilities at mining sites are typically constructed by mining companies operating at their respective sites. The electricity supply to rural areas in West Africa is limited. To address the issue to power supply, World Bank and the respective Governments have plans to: • Install 3 units of 7.56 MW diesel generating units at Blackhall Road, Sierra Leone to generate 22.68 MW of electricity
• Construct the King Tom Generating Station, a thermal plant with 10 MW capacity
• Increase the generation capacity of the Burnbuna Hydroelectric Project from an initial 20 MW to 50 MW to provide electricity to the main hospital, prison and Government agencies in Sierra Leone

Additionally, there are plans to create a regional West African Electricity Exchanges (WAEE), an effort to integrate national power systems operations into a unified regional electricity market. This power pooling rnechanism will include Cote d’ivoire, Liberia, Sierra Leone and Guinea. The plans to increase electricity under WAEE will include: • Rehabilitating the Mount Coffee Hydropower facility which experienced damages during the civil unrest
• Develop several run-of-the river hydropower opportunities along the St Paul River in Liberia
• Studying thermal supply options available to mining operators in Liberia
• Studying supply options from renewable sources

Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure ©Frost & Sullivan 2012 6. INDUSTRY OVERVIEW AND OUTLOOK (Cont’d) Efforts at improving power generation are expected to result in a similar improvement in the transmission and distribution network. As the generation capacity and reliability of electricity supply improves in mining sites, it is anticipated that the respective Governments will plan to channel excess capacity to nearby towns enabling its households to have access to electricity. System design, engineering and infrastructure companies such as PESTECH will be able to contribute to the expansion of the power transmission and distribution in the respective countries in meeting the respective national agendas of providing the population with access to electricity. [The rest of this page is intentionally left blank] Executive Summary of the IMR on Power Transmission & Distribution: System Design, Engineering & Infrastructure © Frost & Sullivan 2012

 

 

 

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