While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts which must be managed in a manner consistent with the following Performance Standards: Performance Standard 1: Social and Environmental Assessment and Management Systems Performance Standard 2: Labor and Working Conditions Performance Standard 3: Pollution Prevention and Abatement Performance Standard 4: Community Health, Safety and Security Continuing operations of CEGCO’s existing thermal power plants, or upgrading and capacity addition of CEGCO’s assets that ACWA Power is planning, are not known to involve land acquisition requiring involuntary resettlement of people, or expected to have impacts on biodiversity conservation, indigenous peoples, and cultural heritage, and therefore, the relevant PS5 (Land Acquisition and Involuntary Resettlement), PS6 (Biodiversity Conservation and Sustainable Natural Resource Management), PS7 (Indigenous Peoples), and PS8 (Cultural Heritage) do not apply to this investment. Nevertheless, CEPCO’s corporate Environmental and Social Management System (ESMS) that ACWA Power plans to develop will include framework and procedures necessary to ensure that all the Performance Standards will be met in case CEGCO’s business activities turn out to involve these areas.

ACWA Power plans to operate CEGCO’s thermal power plants in accordance with the existing PPAs and contemplates to upgrade existing sites and assets to add capacity, with limited environmental or social impacts. ACWA Power will help improve the environmental and social (E&S) performance of CEGCO in various areas including its management system, and environmental, health and safety performance of existing thermal power plants. Because of these, this investment was categorized as B.

Performance Standard 1: Social and Environmental Assessment and Management Systems ACWA Power retained an independent environmental consulting firm (5 Capitals) in 2010 to conduct a detailed environmental due diligence of CEGCO’s assets. The final report dated October 2010 identified areas of concerns and recommendations for ACWA Power’s consideration before their investment in CEGCO. ACWA Power’ technical team also visited every plant of CEGCO to further review the environmental risks separately, and analyzed the due diligence findings and recommendations. ACWA Power identified actions that they would like to implement once they invest in CEGCO. IFC and ACWA Power discussed ACWA Power’s proposed actions, and agreed on the Environmental and Social Action Plan (ESAP) dated May 11, 2011 that is appended to this ESRS. The ESAP addresses the areas of concerns identified by the due diligence report as well as ACWA Power’s technical review, and includes further actions to bring CEGCO’s operation into compliance with Jordanian Environmental Standards and where appropriate IFC’s Performance Standards. These are summarized in the sections that follow under each Performance Standard. CEGCO has already obtained its management system certification against ISO 9001 (Quality Management), and has budgeted to pursue ISO 14001 (Environmental Management) in 2011. The due diligence identified that the existing thermal power plants of CEGCO do not have operational permits that are required under Jordanian environmental law. ACWA Power will work with CEGCO to check with the Ministry of Environment to confirm whether exemptions may be granted, and if not, to apply for necessary permits (ESAP Action No. PS1-2). CEGCO has a corporate level senior environmental officer managing the overall environmental protection and monitoring activities of the thermal power and wind power stations. Each power station has a technical or chemical engineer whose responsibilities include environmental, health and safety performance. Air emissions and liquid effluents are monitored against Jordanian relevant emissions and effluent standards and all monitoring results are reviewed by the corporate level senior environmental officer before being submitted to relevant environmental authorities. Once its investment in CEGCO is made, ACWA Power plans to strengthen training programs in the areas of health, safety and environment for technical staff at each power station and corporate headquarters. A detailed HSE training program will be developed in line with the agreed ESAP (ESAP Action No. PS1-4). ACWA Power has a dedicated environmental manager at its corporate Headquarters, and under his guidance, ACWA Power is developing and implementing an integrated quality, environmental, health and safety management system. The system will include monthly EHS key performance indicators aligned with the GRI (Global Reporting Initiatives) requirements. ACWA Power also has a program to conduct environmental, health and safety and quality audits, both by ACWA Power’s internal technical team members and independent environmental consultants that will cover all of CEGCO’s assets once ACWA Power’s investment is completed. Performance Standard 2: Labor and Working Conditions In July/August 2010, recognizing that CEGCO had excess manpower and considering the expiration of Power Purchase Agreements (PPAs) for old units, CEGCO conducted “Right Sizing Project” which concluded that a reduction of 300 to 400 of its total workforce needed to be considered. CEGCO contacted the Government of Jordan, the electricity regulator (Electricity Regulatory Commission), CEGCO’s employees and labor union, and presented a voluntary retrenchment package. A total of 415 employees accepted the package; as of March 2011, CEGCO has 1,083 employees. Depending on the additional forthcoming expiration of PPAs, CEGCO may need to undertake further voluntary retrenchment, or to transfer some of its technical staff to other new projects. In case a significant retrenchment is proposed in the future, ACWA Power will ensure that such retrenchment follows IFC Performance Standard 2 (ESAP Action No. PS2-1) There is a one labor union (Power Sector Workers Union) active in the power sector in Jordan, and most employees at thermal power stations are members. CEGCO explained to IFC that the relationship between the labor union and CEGCO is constructive focusing on improvement of compensation and working conditions, and no major labor actions occurred in recent years. ACWA Power and CEGCO will review the current HR policy and procedures and strengthen, as appropriate, to include IFC PS2 elements (e.g. information regarding employees’ rights, wages and benefits, working conditions, employment terms, non-discrimination and equal opportunities). A corporate level environmental and social management system to be developed will include a grievance mechanism in line with good international practice. Based on IFC’s visit to selected thermal power stations, various safety warning signs, personal protection equipment, and emergency evacuation systems are in place at each thermal power station. ACWA Power will review the adequacy and effectiveness of the existing emergency preparedness plans against good international industry practice (ESAP No. PS3-14). CEGCO has a training center where employees are provided relevant technical trainings, including health and safety training for specific jobs. ACWA Power and CEGCO will review the current health and safety management practices and systems to identify areas for improvement necessary to meet good international industry practice (e.g. procedures, reporting lines, identification of hazardous working areas, health and safety training programs, documentation and reporting of occupational accidents and incidents, emergency preparedness plans) (ESAP Action No. PS2-2). Performance Standard 3: Pollution Prevention and Abatement The environmental due diligence conducted by 5 Capitals for ACWA Power identified various aspects of CEGCO’s operations that need to be improved to meet good international industry practice. Major areas identified by the due diligence, and the actions that ACWA Power plan to implement, are listed below: - Inadequate bunding for fuel storage tanks (damaged bund wall at Amman South Power Station, bunding capacity less than 110% of tank capacity at various power stations). CEGCO will review the details and mobilize necessary contractors to enhance / replace the existing bunding system (ESAP Action No. PS3-1). - Degraded airshed at Hussein Thermal Power Station and high sulfur content in the HFO Fuel. Jordanian HFO quality specification is maximum 4 %, very high for use at stationary power plants. Fuel provided by the Ministry of Energy and Mineral Resources (MEMR) contains around 3.6% to 3.8% sulfur, and sulfur dioxide emissions in 2008 – 2010 ranged between 4,000 to 5,500 mg/Nm3. This level complies with the currently approved level of 6,500 mg/Nm3 by the Jordanian regulatory authority, but far exceeds the level of 850 mg/Nm3 applicable to new thermal power plants under World Bank Group Thermal Power Guidelines (December 19, 2008). According to CEGCO, in the past, in order to mitigate high sulfur containing HFO issues, CEGCO adopted magnesium oxide injection to reduce sulfuric acid mist (about 95% removal of SO3, or average 15% of SOx - total of SO2 and SO3). CEGCO’s Hussein Thermal Power Station is located in an industrial area that has other major industrial sources including a refinery, and the ambient air quality levels are reported by the regulators to be degraded. All the units of Hussein Thermal Power Station were commissioned in 1970s and 80s, and the current Power Purchase Agreement (PPA) is effective until end of 2015. In addition, a new Independent Power Producer (IPP) project is being proposed in the area that will also use HFO. The Government of Jordan has specified the use of 1% sulfur HFO or equivalent sulfur dioxide emission levels using flue gas treatment for new IPPs in Jordan. If a new IPP is developed in the area with much better environmental performance, Hussein Thermal Power Station may be retired at the time the existing PPA expires. ACWA Power will implement an ambient air quality evaluation study to quantify the Hussein Thermal Power Station’s impacts on the surrounding ambient air quality levels, and formulate an air pollution management plan. This plan will consider all the above listed circumstances to evaluate cost benefit of the additional control measures (ESAP Action No. PS3-2). - High sulfur content in the HFO fuel at Aqaba Thermal Power Station. As described below under the GHG emissions section, Aqaba Thermal Power Station (the largest thermal power plant in Jordan), was converted from high sulfur HFO to gas-fired in the late 2000s. A 125 meter stack height had been adopted at the time the units were initially developed to ensure better dispersion of emissions resulting from HFO combustion. Conversion to gas (imported from Egypt) significantly improved the emissions performance for all pollutants (sulfur dioxides, nitrogen oxides, particulate matter) and carbon dioxide. In recent years, however, instability of the supply of imported gas from Egypt required Aqaba Thermal Power Station to use HFO for consecutive several months. Considering that the plant is 22 km from Aqaba, one of Jordan’s prime tourist areas, CEGCO and ACWA Power are aware of the need to carefully monitor the environmental performance of the station when using HFO. ACWA Power will formulate an air pollution management plan to minimize the station’s contribution to ambient air quality levels of Aqaba (ESAP Action No. PS3-3). - PCB containing transformers at Hussein Thermal Power Station. The due diligence identified nine PCB containing transformers that are due to be decommissioned by the end of 2010. Existing PPAs are currently being extended for 3 years, until 2013. ACWA Power will work with CEGCO to dispose of the PCB containing transformers upon decommissioning. ACWA Power and CEGCO will prepare a draft PCB treatment plan to be submitted to the Ministry of Environment for their approval (ESAP Action No. PS3-4). - Decommissioned HFO cement underground tanks at Marka Power Station. ACWA Power and CEGCO will measure underground water and soil contamination levels, and formulate a contamination remedial plan in coordination of Ministry of Environment, as necessary (ESAP Action No. PS3-5). - Low stack height. Except for Aqaba Thermal Power Station, the due diligence concludes the stacks of all the power plants are considered to be short for the adequate dispersion of pollutants to prevent ground level impacts on sensitive receptors. ACWA Power will conduct air dispersion analysis of selected power plants to estimate impacts on ambient air quality levels, and formulate and implement a mitigation plan to address these impacts (ESAP Action No. PS3-7). - Incineration waste disposal. Several of CEGCO’s plants (such as Risha and Marka Power Plants) have incinerator rooms with potential for toxic emissions and soil contamination from the ash and other residues. ACWA Power plans to terminate incineration use at all such plants (ESAP Action No. PS3-12). - Emergency Preparedness Plans. ACWA Power will review the adequacy and effectiveness of the existing emergency preparedness plans for all of CEGCO’s plants (ESAP Action No. PS3-14) and, where necessary, revise these to ensure they conform to good international industry practice. GHG Emissions: CEGCO’ Aqaba Thermal Power Station (650MW, 5 steam units x 130MW, the largest power plant in Jordan) was developed as an HFO-fired power plant in the 1980s and converted to use imported gas from Egypt in the mid 2000s. CEGCO submitted a Project Design Document (PDD) to the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanism (CDM) for “Fuel Switching Project of the Aqaba Thermal Power Station”. The project was registered by CDM on September 30, 2008, with an estimated GHG emissions reduction of 3.9 million tons of CO2 over the period of 2008 – 2017. CEGCO’s Rehab Power Station (357MW) has the country’s first 297MW combined cycle gas turbine (CCGT) power plant. The CCGT was originally developed as 2 x 100MW simple cycle gas turbine units, and an additional 97MW Heat Recovery Steam Generator was added in the late 2000s to improve efficiency and reduce GHG emissions per unit of electricity generation. CEGCO also has developed wind generation capacity (1.445 MW), further contributing to improvement of the company’s overall GHG emissions performance. CEGCO also invested in Jordan Biogas Company (owned 50% by CEGCO, and 50% by Greater Amman Municipality) which is working to maintain, expand and improve the landfill gas collection system and electricity generation facilities at Russaifeh landfill site, near Amman. This project was approved by CDM on December 11, 2009. ACWA Power is reviewing various investment options to further improve CEGCO’s overall GHG emissions performance by both improving energy efficiency of existing assets and adding renewable generation capacity. Other environmental areas of CEGCO’s operations reviewed: As neither the Hussein Thermal Power Station nor Rehab Combined Cycle Power Plant are located near the coast, in order to reduce cooling water requirements for steam boilers, both adopted air cooled condensers. At Aqaba Thermal Power Station, a once-through cooling system with sea water is used. Thermal discharge, temperature difference of the condensers between intake and outfall, and ambient temperature impacts of the receiving water around the discharge points are all monitored at the Aqaba station. An independent science marine institute is involved to assist CEGCO to evaluate thermal discharge impacts. NOx emissions from boilers / gas turbines. Jordanian air emissions standards specify 1,500 mg/m3 if the combustion process temperature is higher than 1,200 Celsius, and 200 mg/m3 if the combustion process temperature is less than 1,200 Celsius. No adjustment of excess oxygen levels, which are common to international air emissions regulations, is used. According to CEGCO’s air emission monitoring summary data, steam boilers (e.g. Aqaba, Hussein) have NOx emission levels of 300 to 900 mg/m3, and gas turbines (e.g. Risha, Marka, Amman South) have NOx emission levels of 100 to 200 mg/m3. Compliance evaluation of these will be dependent on the temperature of the combustion process. The due diligence identified the need to check the exact method to confirm compliance with the Jordanian regulation. ACWA Power will follow up on this. Performance Standard 4: Community Health, Safety and Security Amman South Station was developed in 1984-1985. When the station was developed, there were no houses or sensitive receptors around the power station. The due diligence found that there is a kindergarten and a mosque very close to the station, both of which were developed recently. Although the station is operated on a peaking mode, for only a limited number of hours per day when the electricity demand is high, some complaints have been raised due to the plant’s close proximity to the kindergarten and mosque. According to CEGCO, Amman South Station is mostly operated during the evening peak hours, whereas the kindergarten is open between 8am and 2pm, and this situation is contributing to ameliorate the impacts. ACWA Power will formulate a noise management plan that includes checking and improvement of the turbine compartment sealing and acoustic insulation, and implementation of any modifications of the boundary walls found to be effective in attenuating noise levels (ESAP No. PS4-1).

Each station manager of thermal power station is acting as a community liaison officer to handle inquiries from community members and stakeholders. CEGCO explained to IFC that inquiries and requests are handled by this system, and no major outstanding complaints exist except for the noise issue at Amman South Power Station. The corporate level environmental and social management system to be developed will strengthen CEGCO’s current grievance mechanisms (ESAP No. PS1-1). CEGCO has a corporate social responsibility program: to provide support to local communities such as financial and in-kind support to Jordanian associations, institutions, municipalities; to provide annual support for the environmental protection associations; to provide support and training for the government schools, in order to improve its conditions; to organize field visits for Jordanian universities students to the working stations in the company; to provide university students with training opportunities. Some of these actions are contributing to maintaining good relationships with communities of existing thermal power stations.

The environmental and social action plan (ESAP) dated May 11, 2011 and additional environmental or social information can be accessed at: ACWA Power: Address:16th Floor, Park Place, Sheikh Zayed Road, Dubai PO Box 30582, UAE Telephone: +971 4 5090555 Name of the contact person: Rohit C. Gokhale Title of the contact person: Director - Acquisitions & Project Finance Email: rgokhale@acwapower.com Name of the contact person: Garuda Prakash Title of the contact person: Senior Advisor to VP Technology Email:gprakash@acwapower.com