Call for Tenders. Provision of Advisory Services for the Establishment of a New Vertically Integrated Power Company: Small PPC Prepared By: PPC Date: 31 / 7 / 2014

Call for Tenders. Provision of advisory services for the establishment of a new vertically integrated power company: Small PPC Prepared by: PPC Date: 31 / 7 / 2014

Contents

1 Introduction ...... 3 2 Scope of work ...... 3 3. Budget of the Project - Duration 4

4 Necessary Qualifications and Other Requirements 5

5 Selection Procedure and evaluation of Proposals ...... 6 6 Award of the contract ...... 8 7 Time and Place for Tenders - Responsible Department ...... 8 8 Validity of Proposals ...... 8 9 Preparation of Proposals ...... 9

1 Introduction

On July 24, 2013, the Ministerial Cabinet adopted the restructuring and privatisation plan (“RPP”) of Public Power Corporation S.A. (“PPC”) in order to further promote competition in the Greek power market (Governmental Gazette Act 15/24-07-2013). The RPP was further detailed by Law 4237/2014 concerning IPTO, and by Law 4273/2014 (GG A’ 146/11.07.2014) concerning the creation of a new vertically integrated electricity company (“Small PPC”). The new company will be created by carving out, as detailed in Law 4273/2014, approximately 30% of the generation capacity (including certain lignite power plants and lignite mines, hydropower plants and natural gas power plants) and assets of the Supply Division as well as a proportionate share of the customer base of PPC into a separate standalone entity that is planned to be sold. The Restructuring and Privatization Plan envisions that the carved-out entity would also assume a proportionate amount of PPC’s liabilities. The law contemplates, among others, the transfer and contribution of the following assets to the new vertically integrated power company: . the Aminteo I and II lignite-fired plants (with an aggregate capacity of 600 MW), the existing Meliti I lignite-fired plant (330 MW), the generation license for the new Meliti II lignite-fired plant (450 MW) to be constructed in the future, the Platanovrisi, Thisavros, Agras, Edesseos and Pournari I & II hydropower plants (of a total capacity of 903 MW), the Komotini gas-fired plant (485 MW), and PPC’s rights to extract lignite from the Aminteo (including the Lakkia mine), Kleidi, Lofoi Melitis, Komninon I & II and the Vevi mines (in which PPC has concessions for 40% of the reserves); and . an equivalent proportion of PPC’s supply activity in such a manner that its customer portfolio will proportionally reflect the customer portfolio of the remaining PPC’s Supply Division. In order to implement the provisions of the RPP and Law 4273/2014, and more specifically the spin-off of “Small PPC”, PPC is seeking to engage a specialised firm (“Spin-off Business Advisor”) with significant knowledge and experience in the Scope of Work described below.

2 Scope of Work

The services to be provided by the Spin-off Business Advisor refer to (‘’The Project’’) and are as follows: 1. Definition of Small PPC’s blueprint (including assets and business perimeter, operating and organisational model, business plan) as a basis for effectively creating the new company. 2. Detailed analysis of business, operating, organisational and other critical parameters and related recommendations to ensure functionality and transition to the new operational environment. 3. Drafting of a detailed action plan and setting up of an appropriate Project Management Office. 4. Impact assessment on PPC’s business model and operations.

3 5. Prepare, monitor and deliver all necessary actions for setting up Small PPC, ensuring operational readiness. Provision of other complementary services ensuring a comprehensive facilitation of the carve-out of Small PPC.

In doing so, the Spin-off Business Advisor is expected to cover a wide range of areas including but not limited to the following: . Support finalisation of the details of the asset perimeter for the generation portfolio and mining assets already defined as well as define other assets and liabilities to be transferred to Small PPC (as may be needed for the operation of Small PPC). . Analyse, evaluate options and recommend the allocation of 30% of the customer portfolio of PPC’s Supply Division to be carved-out based on the principle of proportionality set out in the Law. . Prepare Small PPC’s business plan and provide financial impact analysis to the remaining PPC, in cooperation with PPC’s Financial Advisors. . Address business and regulatory issues (e.g. wholesale market structure, tariffs, etc.), and develop and propose appropriate strategy. . Formulate operational principles and identify challenges and options in terms of organisational structure and services, including general functions such as Human Resources, Finance & Accounting, IT Strategy. . Propose corporate governance model of Small PPC, identify staffing needs per major organisational unit, describe main roles and responsibilities and develop standard internal procedures, covering all major operating aspects. Assess organisational and corporate governance impact on remaining PPC. . Identify and support drafting of any necessary SLAs with regards to core, corporate or supporting functions and interdivisional contracts (such as between Mines & Generation or Generation & Supply). . Address issues required to ensure operational readiness.

The Spin-off Business Advisor is expected to cooperate with PPC’s Advisors (including Financial, Legal and Tax & Accounting Advisors) and assist in the preparation of the required documentation to be disclosed to potential investors or authorities, including strategic, regulatory, economic, financial and legal documents. The Spin-off Business Advisor is also expected to assist in the effective communication with all the project stakeholders.

3 Budget of the Project - Duration

The remuneration of the Spin-off Business Advisor will consist of a monthly retainer fee in Euro, excluding VAT.

4 The monthly retainer fee will include all possible out of pocket expenses (travel, accommodation, subsistence, telecommunications, printing costs) and no further charge will be acceptable. The Project’s duration will be 8 months, beginning from the mandate letter, in line with the provisions of GG A 168/24.07.2013, and could be adjusted following any eventual amendments of the Law. PPC has the right to extend the above duration of the contract and negotiate in good faith the adjustment of the total value of the contract for up to 50%. At any time during the 8 months duration of the assignment, PPC reserves the right to suspend the Project twice for whatever reason for a total period of 2 months duration, prior to a one (1) week’s notice in writing to the Spin-off Business Advisor. At any time during the assignment, PPC reserves the right for whatever reason to terminate the Project following a one-month’s prior written notice.

4 Necessary Qualifications and Other Requirements

Interested firms are requested to submit in writing a Technical Offer, in a sealed Envelope A and a Financial Offer, in a sealed Envelope B, as defined below (together the "Proposal"). The Technical Offer (Envelope A) should include at least the following: . Proven track record and relevant experience in the power market in Europe and/or in Greece during the last 10 years. . Proven track record and expertise in providing relevant to the required above services internationally and/or in Greece during the last 10 years. . A description of the Bidder’s understanding of project requirements and approach/ methodology for the delivery of the whole scope of the project, including: o description of the main milestones of the envisaged project process & structure, key workstreams and related timetables. All these should be reflected in a detailed WBS. o overall strategy and key issues to be addressed (e.g. operational, commercial, regulatory, etc.) o description of key drivers of the business plan of Small PPC per business unit (mines, generation, supply) o preliminary assessment and main recommendations about optimal perimeter, organisational structure and transition/operating model . A description of the relevant individual experience of the key project team members, including head of project and team leaders . Detailed CVs of all team members shall also be included. . The commitment of senior team members’ and experts’ time to the project, as well as the time commitment of junior team members. The Financial Offer (Envelope B) shall describe the financial terms for the provision of services required in this tender document, in the form of a monthly retainer fee.

5 The interested firms and the members of the proposed teams must declare in writing that they do not have any conflict of interest, as well as that they do not have any relationship with other parties involved and/or PPC’s direct competitors and/or PPC affiliates in a way that hinders them to perform the services required herein. Such restriction as to conflict of interest will be in effect throughout the term of the engagement. Proposals excluding such declaration are considered unacceptable and thus shall be unquestionably rejected.

5 Selection Procedure and evaluation of Proposals

The Proposals will be evaluated as follows: The evaluation of the Proposals shall be based on the combined evaluation of both the Technical Offer (Weighting Factor 60%) and the Financial Offer (Weighting Factor 40%). The unsealing of the offers will take place in two stages. The Technical offer (Envelope A) will be unsealed first in order to proceed to the technical evaluation. PPC will proceed unsealing the Financial offer (Envelope B) for the proposals evaluated as acceptable during previous stage.

A. Technical Evaluation

The Technical evaluation for each of the following Criteria (A,B,C) will be in the range of 1 to 10.

Technical evaluation Criteria: A) Bidder’s understanding of project requirements and proposed approach (Weighting Factor 30%). A.1 Understanding of the Greek power market (characteristics, challenges and key considerations). A.2 Understanding of the current regulatory framework and on-going/planned developments and their impact on the envisaged transaction. A.3 Understanding of PPC’s specific challenges regarding the implementation of the envisaged transaction and potential impact on the remaining PPC. B) Bidder’s track record over the last 10 years in relation to the execution of similar projects internationally and/or in Greece, with an emphasis in the following areas (Weighting Factor 40%):  Understanding the economics of lignite, natural gas and hydro power generation and electricity supply market  Cooperation with Regulators and European Commission on matters similar to the requirements of the specific project  Power and supply market regulation with emphasis on the Greek market  Design of energy products, supply tariffs design and customer analytics  Business planning in power / utilities sector  Power markets advanced modelling capabilities

6  Design of business units carve out, preparation of the operational readiness of the new entity and implementation during the transition phase (e.g. organisation, HR, operations, SLAs).  Project Management in complex environments  Experience in restructuring as well as in preparing privatisation/M&A transactions of utilities in Europe C) The Bidder’s team (both Greek and non Greek members) relevant experience and depth in tackling the challenges of the specific project, as well as its organisation (Weighting Factor 30%):  Detailed approach and organisational structure of the project team. There should be a clear description of the Project team structure with an analysis of the roles for the team members. This should also include the Total Man Days per Month which will be committed per project team member.  Individual experience of team members in the areas covered by the Scope of Work of this tender document. Emphasis will be given to team members who have actively participated in projects included in section B above. Emphasis should also be given to qualified Greek speaking personnel.  The commitment of time to the project by senior team members and experts.

The interested firms may be required to make a presentation to PPC's senior managers following the submission of their proposal.

Only proposals with a Technical Evaluation score of equal or higher than 70% of the proposal with the highest Technical Evaluation score will be taken into consideration for the remaining selection procedure.

B. Financial Evaluation

The financial evaluation will consist in the attribution of a score in the range from 1 to 10. The highest score (10) represents the most competitive (lowest monthly retainer) offer. The other offers will be scored with linear relation to the highest score based on the scores derived from the financial valuation:

Score of Financial Evaluation = [FML / FMi] * (highest score) where,

FML = Financial Mark of the most competitive offer (lowest monthly retainer fee* eight (8) months)

FMi = Financial Mark of bidder (i) (monthly retainer fee* eight (8) months)

Highest score of financial valuation = 10

7 6 Award of the contract

The contract will be awarded according to the Proposal with the highest combined scores of the Technical Offer and Financial Offer, as described in Section 5. This Call for Tender does not constitute a binding commitment to proceed with the appointment of the Spin-off Business Advisor.

7 Time and Place for Tenders - Responsible Department

The present Call for Tenders is under the responsibility of the "Strategy Department" of PPC. For any information or inquiries, please contact Mr. Sotiris Hadjimichael, (Phone number: +30 210 5247886 or Ms. Anna Siganou, (Phone number +30 210 5218671), Ms Alexandra Vryniou (Phone number +30-210-5218620) or Ms Dimitra Croba (Phone number +30 210 5218668) All Proposals shall be submitted to the Strategy Department, at the following address: Public Power Corporation S.A.

Strategy Department

29, Chalkokondili str.

3rd Floor,

104 32 Athens, GREECE

Phone numbers: +30 210 5218671

(For the attention of Mrs Anna Siganou)

Closing date for the submission of Proposals according to the present Call for Tenders shall be Monday, 08/09/2014, 14:00 p.m. Athens time. Proposals may be also delivered to the secretariat of the Strategy Department at the same address by registered mail or by courier by 14:00 p.m. Athens time on 08/09/2014. In this case, the participant assumes full responsibility for both the timely delivery of the Proposal and the contents thereof.

8 Validity of Proposals

Unless otherwise specified, Bidders tacitly agree that their Proposals will be valid and binding for a time period of one hundred and twenty (120) days, starting the next day from the deadline for submission of the Proposals. Proposals setting explicitly a shorter period of validity shall be considered unacceptable and thus rejected.

8 9 Preparation of Proposals

Proposals shall be submitted in one “original” in English language. Any documents / certificates pertaining to the Consultant’s status and / or validation, issued in any other languages by the authorities of the country, in which the Consultant is established, must be accompanied by a duly certified translation into the Greek or English language. All Proposals shall be submitted in one (1) sealed envelope, named “TENDER ENVELOPE”, bearing the name and the address of the Bidder and marked as follows: Tender for Inquiry: Provision of advisory services for the establishment of a new vertically integrated power company: Small PPC The “TENDER ENVELOPE” shall contain two separate sealed envelopes:

 Sealed Envelope A with the Technical Offer as defined above  Sealed Envelope B with the Financial Offer as defined above The content of each Envelope shall be in paper AND in digital form. Proposals which are submitted in a different form than described in this Article will be considered unacceptable and thus shall be unquestionably rejected.