EESTI ENERGIA AKTSIASELTS (incorporated as a joint-stock company under the laws of the Republic of )

€500,000,000 2.384 per cent. Notes due 2023 Issue price: 100 per cent.

The €500,000,000 2.384 per cent. Notes due 2023 (the “Notes”) of Aktsiaselts (the “Issuer”) will, unless previously redeemed or purchased and cancelled, be redeemed by the Issuer at their principal amount on 22 September 2023. The Issuer may, at its option, redeem all, but not some only, of the Notes in the event of certain tax changes at their principal amount plus accrued interest, in each case as described under “Terms and Conditions of the Notes – Redemption and Purchase”. The Notes will bear interest from, and including, 22 September 2015 at the rate of 2.384 per cent. per annum payable annually in arrear on 22 September in each year. The first payment will be made on 22 September 2016. See “Terms and Conditions of the Notes – Interest”. Payments on the Notes will be made in euro without deduction for or on account of taxes imposed or levied by the Republic of Estonia (“Estonia”), to the extent described under “Terms and Conditions of the Notes – Taxation”.

This document has been approved by the United Kingdom Financial Conduct Authority, in its capacity as the United Kingdom competent authority (the “UK Listing Authority”) for the purposes of Directive 2003/71/EC, as amended (the “Prospectus Directive”) and relevant implementing measures in the United Kingdom, as a prospectus issued in compliance with the Prospectus Directive and relevant implementing measures in the United Kingdom for the purpose of giving information with regard to the issue of the Notes. Applications have been made for the Notes to be admitted to listing on the Official List of the UK Listing Authority and to trading on the Regulated Market of the London Stock Exchange plc (the “London Stock Exchange”). The London Stock Exchange is a regulated market for the purposes of Directive 2004/39/EC on markets in financial instruments. The Notes have not been, and will not be, registered under the United States Securities Act of 1933 (the “Securities Act”) and are subject to United States tax law requirements. The Notes are being offered outside the United States by the Managers (as defined in “Subscription and Sale”) in accordance with Regulation S under the Securities Act (“Regulation S”), and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Estonia has not guaranteed the Notes and the Notes do not constitute obligations of Estonia. The Notes will be in bearer form and in the denomination of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000 each. The Notes will initially be represented by a temporary global note (the “Temporary Global Note”), without interest coupons, which will be deposited on or around 22 September 2015 (the “Closing Date”) with a common safekeeper for Euroclear Bank SA/NV (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”). The Temporary Global Note will be exchangeable, in whole or in part, for interests in a permanent global note (the “Permanent Global Note” and, together with the Temporary Global Note, the “Global Notes”), without interest coupons, not earlier than 40 days after the Closing Date upon certification as to non-U.S. beneficial ownership. Interest payments in respect of the Notes cannot be collected without such certification of non-U.S. beneficial ownership. The Permanent Global Note will be exchangeable in certain limited circumstances in whole, but not in part, for Notes in definitive form in the denomination of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000 each with interest coupons attached. See “Summary of Provisions Relating to the Notes in Global Form”. The Issuer's credit rating by Moody’s Investors Service Limited (“Moody's”) is Baa2 (with stable outlook) and by Standard & Poor’s Credit Market Services Europe Limited (“S&P”) is BBB (with stable outlook). S&P and Moody’s are established in the European Economic Area (“EEA”) and registered under Regulation (EU) No 1060/2009, as amended (the “CRA Regulation”). A credit rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. On issue, the Notes are expected to be rated BBB by S&P and Baa2 by Moody’s. An investment in the Notes involves certain risks. For a discussion of these risks, see “Risk Factors”. Joint Lead Managers and Joint Bookrunners

BARCLAYS DEUTSCHE BANK NORDEA

Co-Manager

SWEDBANK

Prospectus dated 15 September 2015

The Issuer accepts responsibility for the information contained in this document. To the best of the knowledge of the Issuer (having taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. Certain of the information set out under “The Republic of Estonia” has been extracted, where indicated, from publicly available data published by the Statistical Office of Estonia, the Ministry of Finance of Estonia, the Estonian Unemployment Insurance Fund and Eurostat on each of their respective websites. The Issuer confirms that such information has been accurately reproduced and that, so far as it is aware, and is able to ascertain from information published by each of the Statistical Office of Estonia, the Estonian Unemployment Insurance Fund, the Ministry of Finance of Estonia and Eurostat, no facts have been omitted which would render the reproduced information inaccurate or misleading. This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated herein by reference, see “Documents Incorporated by Reference”. This Prospectus should be read and construed on the basis that such documents are incorporated in and form part of the Prospectus. The Issuer has not authorised the making or provision of any representation or information regarding the Issuer or the Notes other than as contained in this document or as approved for such purpose by the Issuer. Any such representation or information should not be relied upon as having been authorised by the Issuer, the Trustee (as defined in “Terms and Conditions of the Notes”) or the Managers that are named as Managers under “Subscription and Sale” below (the “Managers”). Neither the Managers nor any of their respective affiliates have authorised the whole or any part of this document and none of them makes any representation or warranty or accepts any responsibility as to the accuracy or completeness of the information contained or incorporated in this document. Neither the delivery of this document nor the offering, sale or delivery of any Note shall in any circumstances create any implication that the information contained or incorporated in this document is true subsequent to the date of this document or that there has been no adverse change, or any event reasonably likely to involve any adverse change, in the condition (financial or otherwise) of the Issuer since the date of this document. This document does not constitute an offer of, or an invitation to subscribe for or purchase, any Notes. This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy the Notes in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this document and the offering, sale and delivery of Notes in certain jurisdictions may be restricted by law. Persons into whose possession this document comes are required by the Issuer and the Managers to inform themselves about and to observe any such restrictions. For a description of certain restrictions on offers, sales and deliveries of Notes and on distribution of this document and other offering material relating to the Notes, see “Subscription and Sale”. The Notes have not been, and will not be, registered under the Securities Act and are subject to United States tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons. In addition, the Notes will not be registered in Estonia as a public offer of securities and, therefore, may not be offered or sold publicly in Estonia. Each potential investor in the Notes must determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should: (i) have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the merits and risks of investing in the Notes and the information contained or incorporated by reference in this document or any applicable supplement; (ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Notes and the impact the Notes will have on its overall investment portfolio; (iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Notes, including where the potential investor’s currency is not euro; (iv) understand thoroughly the terms of the Notes and be familiar with the behaviour of any relevant financial markets; and (v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks. The Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall portfolios. A potential investor should not invest in the Notes unless it has the expertise (either alone or with a financial adviser) to evaluate how they will perform under changing conditions, the resulting effects on the value of the Notes and the impact this investment will have on the potential investor’s overall investment portfolio.

ii

In this document, unless otherwise specified, references to a “Member State” are references to a Member State of the EEA (being the European Union (the “EU”) plus Iceland, Liechtenstein and Norway), references to “euro” or “€” are to the currency introduced at the start of the third stage of European Economic and Monetary Union, and as defined in Article 2 of Council Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the euro, as amended and references to “billions” are to thousands of millions. Certain figures included in this document have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. In connection with the issue of the Notes, Deutsche Bank AG, London Branch (the “Stabilisation Manager”) (or persons acting on behalf of the Stabilisation Manager) may over-allot Notes or effect transactions with a view to supporting the market price of the Notes at a level higher than that which might otherwise prevail. However, there is no assurance that the Stabilisation Manager (or persons acting on behalf of the Stabilisation Manager) will undertake stabilisation action. Any stabilisation action may begin on or after the date on which adequate public disclosure of the terms of the offer of the Notes is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of the allotment of the Notes. Any stabilisation action or over-allotment must be conducted by the Stabilisation Manager (or persons acting on behalf of the Stabilisation Manager) in accordance with all applicable laws and rules.

iii

CONTENTS Page FORWARD LOOKING STATEMENTS 2 DOCUMENTS INCORPORATED BY REFERENCE 3 RISK FACTORS 4 TERMS AND CONDITIONS OF THE NOTES 21 SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM 32 USE OF PROCEEDS 34 DESCRIPTION OF THE GROUP 35 REGULATION 60 GLOSSARY 64 TAXATION 66 THE REPUBLIC OF ESTONIA 68 SUBSCRIPTION AND SALE 71 GENERAL INFORMATION 73

1

FORWARD LOOKING STATEMENTS This document includes certain “forward-looking statements”. Statements that are not historical facts, including statements about the beliefs and expectations of the Issuer, the Issuer and its Subsidiaries (as defined in Condition 9 of the Terms and Conditions of the Notes) from time to time (the “Group”), its directors or management, are forward-looking statements. Words such as “believes”, “anticipates”, “estimates”, “expects”, “intends”, “plans”, “aims”, “potential”, “will”, “would”, “could”, “considered”, “likely”, “estimate” and variations of these words and similar future or conditional expressions, are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend upon future circumstances that may or may not occur, many of which are beyond the control of the Issuer and the Group and all of which are based on their current beliefs and expectations about future events. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Issuer and the Group, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the present and future business strategies of the Issuer and the Group and the environment in which the Issuer or the Group will operate in the future. These forward- looking statements speak only as at the date of this document. Except as required by the UK Listing Authority, the London Stock Exchange, the Listing Rules, the Prospectus Rules, the Disclosure and Transparency Rules or any other applicable law or regulation, the Issuer expressly disclaims any obligations or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this document to reflect any change in the Issuer’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

2

DOCUMENTS INCORPORATED BY REFERENCE The following documents, which have previously been published, or are published simultaneously with this Prospectus, and have been approved by the Financial Conduct Authority or filed with it or notified to it, shall be deemed to be incorporated in, and to form part of, this Prospectus: 1. the audited consolidated financial statements of the Group for the year ended 31 December 2013, together with the auditor’s report thereon (pages 65 to 142 of the Eesti Energia Annual Report 2013); 2. the audited consolidated financial statements of the Group for the year ended 31 December 2014, together with the auditor’s report thereon (pages 69 to 140 of the Eesti Energia Annual Report 2014); and 3. the unaudited consolidated interim condensed financial statements of the Group for the six-month period ended 30 June 2015 (pages 26 to 42 of the Eesti Energia Interim Report for 1 April 2015 - 30 June 2015). Any statement made herein or in a document incorporated by reference or deemed incorporated herein by reference is deemed to be modified or superseded for purposes of this Prospectus if, and to the extent that, a statement contained in this Prospectus or in any other document subsequently incorporated or deemed incorporated by reference herein modifies or supersedes that statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. Any documents themselves incorporated by reference in the documents incorporated by reference in this Prospectus shall not form part of this Prospectus. Non-incorporated parts of the documents referred to above are either not relevant for investors or are covered elsewhere in the Prospectus. The Issuer will provide, without charge, to each person to whom a copy of this Prospectus has been delivered, upon the oral or written request of such person, a copy of any or all of the financial information which is incorporated herein by reference. Written or oral requests for such financial information should be directed to the Issuer at its registered office set out at the end of this Prospectus. In addition copies of the documents incorporated by reference are published on the Issuer’s website at https://www.energia.ee, but other contents of the website shall not form part of this Prospectus.

3

RISK FACTORS The Issuer believes that the following factors are material risks specific to it and may affect the Issuer's ability to fulfil its obligations under the Notes. Most of these factors are contingencies which may or may not occur and the Issuer is not in a position to express a view on the likelihood of any such contingency occurring. In addition, factors which are material for the purpose of assessing the market risks associated with the Notes are described below. The Issuer believes that the factors described below represent the principal risks specific to the Issuer and inherent in investing in the Notes but the inability of the Issuer to pay interest, principal or other amounts on or in connection with the Notes may occur for other reasons which may not be considered significant risks by the Issuer based on information currently available to it or which it may not currently be able to anticipate. The realisation of one or more of these factors could individually or together with other circumstances adversely affect the business activities and financial position of the Group. Prospective investors should carefully consider the factors set out below and the detailed information set out elsewhere in this document before making a decision about acquiring the Notes. Factors that may affect the Issuer's ability to fulfil its obligations under the Notes State ownership The sole shareholder of the Issuer is the Republic of Estonia acting through the Ministry of Finance and its representatives in the Supervisory Board are appointed by the Minister of Finance. The Group's primary businesses are of strategic national importance to Estonia and the Estonian Government, in particular the generation and distribution of electricity and mining of . The Ministry of Finance as shareholder has approved a document entitled “Owner’s expectations to Eesti Energia” and dated 25 February 2014 setting out its expectations including strategic and financial objectives for the Group. Currently, the Estonian Government allows the Group to be independent and to manage its activities in a manner consistent with its business strategy and in line with the Estonian Government’s expectations for the Group. However, there is a risk that the shareholder’s expectations referred to above may change or the Estonian Government may otherwise intervene in the conduct of the Group's business and if there was such a change or intervention, the Group may not receive fair and adequate compensation from the Estonian Government, which could have a material adverse effect on the Group's business and financial position. There is also a risk that a larger than normal dividend could be requested by the Estonian Government as sole shareholder, which, if paid, could negatively impact the capital requirements of the Group. In addition, as at the date of this document, whilst there is no indication that the Estonian Government will divest any of its equity stake in the Group, any such divestment could affect the Group's borrowing costs, which could have a material adverse effect on the Group's business and financial position. Price regulation A substantial share of the Group’s revenues, including those from the distribution of electricity and sales of heat, is derived from sales at regulated prices (accounting for 36 per cent. of the Group’s total revenue in the first six months of 2015). The Estonian Competition Authority (“ECA”) approves the tariffs for these products based on various pricing methodologies (as described in more detail in “Description of the Group – Distribution Network”). The Group has a limited ability to pass any additional costs incurred on to its customers through price increases. The ECA may also disagree with the Group as to the appropriate level of tariffs, costs and investments and pricing decisions may be significantly impacted by social and political considerations, which may cause delays in price determinations or result in lower price increases than necessary to compensate the Group for its cost increases and investments. Despite full deregulation of the Estonian electricity market with effect from 1 January 2013, the ECA retains some regulatory powers concerning the universal service obligation which applies to all network operators in Estonia. This applies in relation to customers who have not entered into an electricity supply contract. Under the Electricity Market Act (the “EMA”), the ECA is authorised to review and control whether the price charged for electricity sold under the universal service obligation is in compliance with the EMA. Any amendments to, or change in the interpretation of, the applicable price regulations could have a material adverse effect on the Group’s business and financial position. Competitiveness in and regulation of wholesale power and oil markets The Group operates in an integrated Baltic and Nordic power market. Two submarine interconnectors between Estonia and Finland provide 1000 MW transmission capacity between the two countries and Estonian power prices have converged to a large extent with Finnish prices. Price levels on the Nordic power exchange for Finland, Sweden, Denmark, Norway, Estonia, Latvia and Lithuania (“Nord Pool Spot”) have a direct impact on the revenues and profitability of the Group. The Group is exposed to a high degree of competition in the joint Nordic-Baltic power market. Some of the competitors in the integrated Nordic-Baltic power market have greater financial resources and more extensive operational experience than the Group, which may allow them to respond to challenges and exploit

4

opportunities more quickly or effectively than the Group. Further, some of these competitors are able to generate large volumes of electricity through hydro, nuclear power, carbon-based methods and wind, at a lower marginal cost than the Group and accordingly, drive down power prices. Moreover, some competitors, for example those operating in Russia, do not have to comply with a CO2 emissions scheme such as the EU ETS (as defined below) and, accordingly, do not need to purchase CO2 allowances in the market place. This may enable these competitors to sell their electricity at lower prices than the Group. Power prices in the Nordic- Baltic power market are also likely to be affected by the construction of new interconnectors such as the 700 MW NordBalt cable between Lithuania and Sweden, which is scheduled for commissioning in late 2015 and is likely to impact power prices in Lithuania, Latvia and Estonia. Power prices are also likely to be affected by the commissioning of new production capacities such as the Olkiluoto 3 nuclear reactor, which is being constructed in Finland, or by delays in closing down old production units by market participants. The Group also produces and sells , and is therefore exposed to price movements in the global oil markets. In particular, the reference product for the Group’s shale oil sales is heavy fuel oil with 1% sulphur content. The price of oil is very volatile and the Group has no control over its movements. Falls in oil and power prices will have a direct impact on the revenues and the profitability of the Group. Low prices for power or oil could also result in reduced output from the Group’s production facilities or closure of the Group’s production units. Low prices of oil and electricity could also trigger impairment charges for the Group’s production units which could have a material adverse effect on the Group’s financial position. The Group is also subject to risks arising from the regulatory framework applying to the wholesale power market, such as how limited transmission capacity between countries is allocated. For example, there is a substantial bottleneck on the border of Estonia and Latvia (i.e. the transmission capacity is not sufficient to equalise the power prices in the Estonian and Latvian price area). The Group’s generation capacity is located in Estonia. Therefore, the Group must effectively sell electricity in the Estonian price area of the Nord Pool Spot system and purchase back the electricity in the Latvian or Lithuanian price area to supply its retail customers in these countries. Auctions of physical transmission rights as organised by the Estonian and Latvian transmission system operators provide a mechanism for the Group to partially fix the transmission cost in relation to its retail portfolio in Latvia and Lithuania. However, the amounts of transmission capacity being auctioned are currently limited. Also the current auction rules do not permit hedging the transmission cost for time periods further out into the future. Any adverse change in the relevant regulatory framework could further limit the Group’s ability to effectively develop its supply business in Latvia and Lithuania which could have an adverse effect on the Group’s business and financial position. The Group is also subject to other developments in the regulatory framework and structure of the wider European power market. On 15 July 2015, the European Commission presented, as part of the Energy Union strategy, guidance and consultation documents to launch a redesign of the European electricity market, to improve the market for retail consumers, to update energy efficiency regulations and to revise the EU Emissions Trading System. Any amendments to EU regulations resulting from this consultation process could have an adverse effect on the Group’s business and financial position. Hedging risk and new regulatory initiatives The Group seeks to mitigate the effect of fluctuations in commodity, electricity and emissions allowance prices on its generation portfolio and revenues from fuel oil sales through the use of hedging, including certain long- term hedge contracts, where this is available. The Group's hedging strategy is focused on hedging the price risks of electricity, CO2 emission allowances and fuel oil. The Group uses hedges on a selective basis and does not hedge its exposures fully. If effective, the hedging strategy would at best moderate the effect from unfavourable changes in commodity prices, but it would not offer full or long term protection from such trends. There is also a risk that the Group's hedging and risk management strategies may not be successful or efficient, which could have a material adverse effect on the Group's business and financial position. Following the financial crises, new regulatory initiatives such as the European Market Infrastructure Regulation (“EMIR”) and the updated Markets in Financial Instruments Directive and Regulation (“MiFID II”) were introduced to regulate the derivatives market. EMIR sets out tighter rules for over-the-counter derivatives trading, the provision of collateral between the counter-parties and the types of eligible collateral. MiFID II also proposes tighter rules for trading in commodity derivatives but there is still some uncertainty as to how these will be applied to energy companies. Currently, the Group is able to provide bank guarantees as collateral to clearing-houses. The ability to provide bank guarantees as collateral will be phased out in early 2016 as a result of EMIR requirements. As a potential alternative to cleared trading, the Group has negotiated agreements with some bank counterparties whereby it does not provide any collateral. If the regulatory situation develops so that these existing collateral arrangements can no longer be used or more collateral has to be provided, hedging may become more expensive for the Group or it may not be possible to sustain the current hedging policy. This may increase volatility of the Group’s operating results and could therefore have a material adverse effect on the Group’s business and financial position.

5

The Group may have to recognise impairment charges The Group determines, as required, whether there are any indications of impairment to the carrying values of the Group’s property, plant and equipment, as well as its intangible assets. If the circumstances indicate that the net book value has fallen below the carrying value and therefore may not be recoverable, an impairment loss could be recognised. When carrying out impairment tests, the Group uses various estimates for the cash flows arising from the use of the assets, sales, maintenance, and repairs of assets, as well as estimates for inflation and growth rates and likelihood of getting grants. The estimates are based on forecasts of the general economic environment, consumption, emissions allowances, and the sales price of electricity. If the situation changes in the future, either additional impairment could be recognised, or previously recognised impairment could be partially or wholly reversed. Foreign exchange risk The Group has short term exposure to changes in the US dollar exchange rate, largely through the Group's oil sales, which are predominantly US dollar denominated and some exposure to changes in the Jordanian dinar exchange rates. The Group's foreign exchange exposures are not fully hedged and could adversely affect the Group's business and financial position. Liquidity risk Liquidity risk is the risk that the Group is unable to maintain a sufficient reserve of cash and other liquid financial assets that can be used to meet its payment obligations as they fall due. Managing liquidity risk is particularly important in the current economic environment where the financial markets are volatile and the availability of capital is uncertain. The availability of liquidity for business activities and the ability to access long-term financing are necessary to enable the Group to meet its payment obligations in cash, whether scheduled or unscheduled. This is particularly relevant in the context of the Group's ongoing capital expenditure requirements and in the context of its hedging activities, whereby large margin calls may become payable due to sudden movements in commodity prices. The Group's ability to access liquidity during periods of liquidity stress may also be constrained as a result of current and future market conditions. Although the Group monitors its liquidity position and follows procedures to manage liquidity risk, a reduction in the Group's liquidity position may have a material adverse effect on its business and financial position. Counterparty risk In conducting its business, the Group, like any other business, faces counterparty risk. Counterparty risk may result in financial losses (including, but not limited to, money receivable under the Group's hedging arrangements, funds deposited at banks, partners in long term construction projects, partners of bilateral power purchase contracts and revenues to be received from customers). Although the Group monitors its counterparty risks and has risk management policies that include the management of these risks, there is a possibility that if these risks are realised, they may adversely impact the Group's business and financial position. The Group‘s financing agreements may affect how the Group operates, or the Group’s ability to operate, its business The Group’s financing agreements contain, as is customary, representations, events of default and affirmative and negative covenants. The financing agreements with the European Investment Bank (“EIB”) also require the Group to maintain certain financial covenants, including, among others, net debt to Group EBITDA, interest coverage and net debt to Group equity ratios. The Group’s non-financial covenants restrict, among other things, the Group’s ability to grant security, dispose of assets, incur certain debt and merge or demerge. The Group’s financial and non-financial covenants could affect how the Group operates, or the Group’s ability to operate, its business. As is customary, if the Group does not comply with the representations, events of default and covenants in the Group’s financing agreements, the Group could be in default under those agreements, and the debt incurred under those agreements, together with accrued interest, could then be declared immediately due and payable. In addition, any default under one or more of the Group’s financing agreements could lead to an acceleration of debt under other debt instruments that contain cross-acceleration or cross-default provisions. For further information, please see “Description of Group – Financing” on pages 51 to 52 of this document. Downgrade to the Issuer's credit ratings There is a risk that the Issuer's credit rating could be downgraded. This could happen for example if the Estonian Government, as the sole shareholder of the Issuer, were to review its levels of support for the Issuer, or propose material changes to the structure or assets of the Group, or if the relevant rating agency was to determine that this had or was likely to happen. A rating downgrade could also be caused by, amongst other things, weakening financial ratios, more aggressive financial policy or increased business risk of the Group. A

6

material deterioration in the Issuer's credit rating is likely to increase its costs of funding and/or reduce its access to funding, and may lead to the Group having to increase levels of security for hedging contracts which may limit its ability to trade in commodity markets and to implement its hedging strategy. Any adverse change in an applicable credit rating could also adversely affect the trading price of the Notes. Each of these factors could have a material adverse effect on the Group's business and financial position. Capital intensity The Group has recently gone through a period of high capital expenditures. Even though some of the largest investment projects are now being completed, the Group operates in a capital intensive industry and its assets will require substantial maintenance investments going forward, including in mining, generation, shale oil production, maintaining a distribution network and compliance costs with respect to environmental laws. Further details on the Group's capital expenditure policy, financing and recent and planned investments are set out in “Description of the Group – Capital Expenditure” and “Description of the Group – Financing” on pages 51 to 52 of this document. For the financial years ended 31 December 2014 and 31 December 2013, the Group had capital expenditure of €275.9 million and €418.7 million, respectively. The Group may also commit to certain new investments. Some of the investments which the Group may commit to are described in more detail in “Description of the Group – Capital Expenditure” on page 51 of this document. If the Group decided to proceed with any of these or other new investments, new funding would have to be secured. While the Estonian Government as the sole shareholder has previously made equity contributions to the Issuer, it is not known whether the Estonian Government will provide any further equity injections for financing the Group's possible future investments. There is also no certainty regarding other equity raising opportunities. There is a risk that the Group's investment plans could disproportionately increase the Group's debt, resulting in a breach of financial covenants and/or affect the Group's overall liquidity position.

Restrictions placed on CO2, SO2, NOx and other air emissions The Group's electricity generation and oil production installations are subject to EU Directive 2003/87/EC, which established the EU Emissions Trading Scheme (“EU ETS”). The EU has designed the EU ETS to achieve reductions in CO2 emissions annually until 2020 and beyond. Any changes to the existing EU ETS framework could potentially result in the future imposition of even more onerous obligations regarding the emission of CO2, for example quicker reductions in yearly available CO2 allowances. As part of the European Commission’s energy summer package announced on 15 July 2015, proposals have been made to modify the EU ETS. There is a risk that the EU ETS regime will be amended or that additional measures will be implemented with the aim of curbing supply and increasing the market price of CO2 allowances. For example, 900 million tonnes of CO2 allowances are being withdrawn from auctions in 2014-2016. Additionally, creating a market stability reserve has been agreed with the aim of removing surplus supply from the market and supporting a higher CO2 price. The EU ETS could be amended in future for the purposes of implementing a new global agreement on climate change. There is a risk that an increase in the market price of CO2 allowances, or generally more onerous obligations regarding CO2 and other emissions, could make the Group's oil production and electricity generation less economically viable, which could have a material adverse effect on the Group's business and financial position. With the commencement of EU ETS Phase III in 2013, the Group is incurring substantial additional costs in purchasing CO2 allowances because CO2 allowances are no longer made available for free to electricity producers on a general basis but sold on an auction basis. Certain free allowances are available for the production of heat and steam pursuant to EU ETS Art. 10A. Some free allowances may also be allocated in order to facilitate investment in new capacities for the generation of electricity pursuant to EU ETS Art 10C. The Estonian Government has applied for permission to award the Group some of these free CO2 allowances in connection with the Group’s investment into new oil shale and biomass fired CFB units. The application has been approved by the European Commission subject to certain pre-conditions. In total the Group is due to receive 17.7 million tonnes of free allowances as support for building the new CFB plant. Out of these, the Group has already received 9.3 million tonnes and is due to receive 8.4 million tonnes until 2017. In the event that the free allowances were found to constitute non-approved State Aid, the Group may receive fewer allowances than currently expected, may be required to give back some of the allowances already received or repay the value of allowances that constituted non-approved State Aid. This may result in a material adverse effect on the Group’s business and financial position.

As the market price of CO2 allowances is volatile, the Group's profitability and cash flows will be materially affected by the development of, and short-term and long-term fluctuations in, that price. If prices for CO2 allowances are high in the future this could have a material adverse effect on the Group’s business and financial position. Regulatory measures are also being taken at both national and international levels to reduce the quantities of other atmospheric pollutants, such as SO2, NOx, aromatic organic compounds and particulate matter from

7

industrial activities, including power generation. For example, the Group is subject to the EU Industrial Emissions Directive (“IED”). The IED came into force at the beginning of 2011, bringing together seven different Directives including the EU Large Combustion Plant Directive (“LCPD”) and Integrated Pollution Prevention and Control Directive (“IPPCD”). IED imposes limitations on concentration levels of SO2, NOx and particulate matter in flue gases from power stations and other large industrial boilers. The IED was incorporated into Estonian legislation on 1 June 2013. Estonia's EU accession agreement provides for certain exemptions from the Directives for the Group’s existing combustion plants and such exemptions are valid until the end of 2015. While the Group has planned for these changes in environmental regulation taking effect in 2016, there is a risk of further changes to the national and international regulatory framework in relation to CO2, SO2, NOx and other emissions that could affect the Group's ability to use its current production methods and limit its generation capacity. For example, a new updated LCP best available technique reference document (“BREF”) is being compiled which if approved in its current form could substantially tighten the emission levels for new and also existing large combustion plants such as the Eesti and Balti Power Plants. The final adoption and publication of the updated LCP BREF document is planned for 2017 and each Member State will have four years after the publication of the LCP BREF to update the permits of all relevant power plants in accordance with new emission levels set out in the LCP BREF. It is currently not clear if the full criteria currently proposed will be applicable to the Group, if certain exceptions in the IED will be available for power plants firing local specific and unconventional fuels such as oil shale or to what extent exceptions can be provided by the competent authority of each Member State in the approvals process. Further, the Issuer currently expects that the Estonian Government will publish a best available technique reference document in relation to oil shale, which would be applicable to the Group’s oil shale activities. In the event that the current BREF proposals are implemented in full and apply without derogation to the Eesti and Balti Power Plants, it is likely that older pulverised combustion units would have to be closed as it would be uneconomical to upgrade them to meet new requirements. Also material capital expenditure would be required in respect of the CFB boilers to bring them in line with some of the new requirements. Such risks and costs could have a material adverse effect on the Group's business and financial position. Additionally, the Group is affected by the EU National Emissions Ceiling Directive (“NECD”) which sets national annual limit values for emissions of SO2, NOx, non-methane volatile compounds and ammonia. Negotiations have started between the EU and Member States in relation to revising the NECD to lower the annual permitted emissions volumes for Member States, and to bring EU requirements in line with the Gothenburg Protocol of the Convention on Long-range Trans-boundary Air Pollution. It is expected that the negotiations will result in a revised NECD setting out new national emission ceilings for 2030, potentially with an intermediate target to be achieved by 2025. Further, it is possible that new emissions, such as particulate matter, will be added to the yearly emissions limitation list. Such revisions to the NECD would mean stricter pollution limits for Estonia and would likely also impact the emission limits applicable to the Group. In addition to the developments described above, there is a risk of additional changes to the regulatory framework in relation to air emissions which would impact the Group’s ability to use its current production facilities. Even if upgrades of existing assets were theoretically possible, completing such upgrades may not be feasible from an economic perspective and they would in any case carry technical risks and involve material costs for the Group. The works may be disruptive to production and if the new emission limits are still exceeded, there is a risk that the Group will have to reduce or shut down production at its plants. Such risks and costs could have a material adverse effect on the Group's business and financial position. Ageing distribution infrastructure, production facilities and technology Despite periodic modernisation works, the use of the Group's distribution network, production facilities and technology for extended periods means that investment in maintenance, repair and, in some instances, replacement is required. The Group’s distribution network has been, and is likely to continue to be, subject to interruptions caused by failure of ageing network equipment. For example, around 15 per cent. of the Group's power lines, 11 per cent. of the cables and around 14 per cent. of the distribution network’s substations are more than 40 years old, which exposes the Group to a heightened risk of failure or non-compliance with safety legislation. The level of investment in the distribution network was at lower than optimal levels over long periods in the past. As a consequence of the age of a large part of the distribution network, the level of investment required each year increases steadily, as do maintenance and repair costs. In order to improve the reliability of the network around 3 per cent. of the network needs to be replaced each year. Further investment in the distribution network is also required to reduce electricity losses during distribution. If such investment is not undertaken, there is a risk that electricity losses from distribution as well as maintenance and repair costs could materially increase, which could have an adverse effect on the Group's business and financial position. In addition, the Group's power generation units in Narva have been in operation for more than 40 years and some elements in these units are nearing the end of their physical life cycles. While specific steel quality testing and control procedures are in place, there can be no assurance that there will be no incidents which affect the

8

availability of these production units. The Group’s power generation units have not been designed or constructed for today’s volatile power markets where the output of the power plants needs to be quickly increased or decreased depending on market prices. Some of the Group’s assets, especially the older less efficient units, may be shut down for shorter or longer periods in time. It is not known how such temporary closures or ramping up and down of the power units may affect them. There is a risk of more frequent unplanned shut-downs or that the units may require more frequent maintenance. Any incidents relating to the Group’s infrastructure, production facilities and technology could also pose a risk to the environment and cause the Group to breach the terms of permits or licences that it has been granted. Any such incident could have a material adverse effect on the Group’s business and financial position. The Group is also required to obtain compliance certificates for its electrical installations, but it has not always done so and is in the process of rectifying this situation. The failure to comply with technical or other standards relating, for example, to service levels set out in the law or by regulatory authorities may result in the reduction of regulated service charges or significant liability, fines or administrative penalties, including remedial action being required which could take investment away from other projects, or disrupt the affected parts of the infrastructure. Lapses in compliance with administrative obligations could also lead to fines and/or third-party claims against the Group for accidents or failures and outages that could result in significant damages, penalties and/or negative publicity. The Group has informed the Estonian Technical Surveillance Authority of the lapses in compliance with respect to the distribution system operator’s power lines and this has resulted in an agreed action plan with the Estonian Technical Surveillance Authority for remedying the situation by 2020. Extensive regulation The Group's principal businesses, including oil shale mining, electricity generation, distribution and sale of electricity and shale oil, are subject to significant and complex regulations, which materially affect the structure and profitability of such operations. These regulations include those derived from EU regulations relating to health and safety, technical requirements and environmental matters, including the emission of CO2, SO2, NOx and other hazardous substances into the environment. The requirements of such regulations are complex, and compliance represents a significant expense to the Group. Any changes in those requirements that impose higher standards of compliance than the Group currently adheres to could have a material adverse effect on the Group's business and financial position. EU and Estonian environmental legislation is becoming increasingly stringent and uncertainty as to future environmental restrictions increases the risk that the Group's investments become less competitive or not competitive at all. The Group's operations include the production, manufacture, use, storage, disposal, emission, transport and sale of materials that are an unavoidable feature of an integrated energy business, but which may be considered to be contaminants when released into the environment. Preventive or remedial measures in connection with the Group's activities can be costly and such measures may affect the Group's business strategy and decisions. In terms of health and safety regulation, the Group's business carries an inherent risk of incidents which could lead to personal injury or death of employees, contractors or other third parties. Estonian legislation imposes obligations on employers in relation to the occupational health and safety of its employees. Any accidents or breaches of occupational health and safety legislation may require the payment of penalties and/or compensation and would result in negative publicity for the Group. According to late 2014 estimates, there were approximately 9,000 tonnes of asbestos in the Group’s power plants. Estonian legislation classifies waste materials containing asbestos as hazardous waste and as such, subject to special treatment. The asbestos in the Group’s power plants is being removed and replaced with other materials during regular maintenance or dismantling of asbestos containing equipment. While the Group is not aware of any third-party claims relating to asbestos, it may be compelled to maintain or remove remaining asbestos more quickly than it currently plans, which could have a material adverse effect on the Group's business and financial position. Expiry or revocation of licences, or failure to acquire new licences The Group requires licences from various regulators and authorities in Estonia and the other countries in which the Group operates. In particular, the Group is required to hold licences to mine oil shale, generate electricity and heat, produce shale oil, distribute electricity and sell electricity, gas and heat. Such licences may be amended, suspended or revoked and there is no certainty that the Group will be able to secure renewal of any expired licences on comparable terms, if at all, or the required amendments to existing licences to reflect the evolving nature of the Group’s business. The Estonian Earth's Crust Act regulates the procedure for the grant of exploration and extraction permits in Estonia. Upon the expiry of the Group's mining licences, or the Group seeking a new licence, competitors may emerge who are willing and able to bid higher than the Group to obtain such licences if they are put out for auction. Although the Group believes that it will have preferential rights in respect of auctions for certain of its

9

current and related licences, there is no assurance that, if contested, regulatory authorities will agree with the Group. As at the date of this document, OÜ VKG Kaevandused and TLA Invest OÜ have challenged the Group's mining licence with regards to the Uus-Kiviõli mine. OÜ VKG Kaevandused has also challenged amendments to certain of the Group’s mining licences with regards to the Estonia mine. If such challenges are successful, the results could have a material adverse effect on the Group's business and financial position. Other licences may also be disputed by third parties. By way of example, Integrated Pollution Prevention and Control (“IPPC”) permits that are needed for most of the Group’s major activities are granted under the IED, which has now replaced the IPPCD, and regulates the environmental impact of a wide range of industrial activities through the use of permits. IPPC permits have no expiry date and continue to apply until they are revoked or surrendered. However, they are subject to annual reviews. If there are new aspects that are regulated by the IPPC permit the Group is required to apply for revision of the permit. Facilities that do not hold IPPC permits require separate, additional environmental permits where necessary for the special use of water, waste disposal and recovery and air pollution. Under the IED the renewal of an IPPC permit with new aspects is an open process and may include a public hearing. The Group is also required to apply for planning permissions and building permits if it wants to construct new facilities or make certain modifications to existing production units to keep them in good order. The failure to renew a licence or permit or the amendment, suspension or revocation of a licence or permit, or dispute of a licence or permit, could materially limit or prevent the Group's continued operations, or limit the Group's ability to expand its operations, which could have a material adverse effect on the Group's business and financial position. There is also a risk of breaching the terms of a licence or permit despite the Group’s efforts to be compliant. This could happen as a result of, for example, changes in measurement methodology or frequency, or changes in the interpretation or terms of applicable regulations. Additionally, breach of permits could occur temporarily during periods when the Group’s production units run in an irregular manner, for example, for testing purposes. The failure to comply with the terms of a licence or permit could have a material adverse effect on the Group’s business and financial position. Availability of government subsidies and State Aid Certain aspects of the Group's business, including electricity generation from renewable sources and other similar investments, depend upon price subsidies and other incentives that are highly contingent on the prevailing political and regulatory environment in Estonia and the EU. Subsidies or other arrangements between the Estonian Government and the Issuer from time to time (including any loans, capital or financial contributions that were made other than on arm's length commercial terms, or any mining rights, special tax treatment or otherwise) may be found to constitute non-approved State Aid if these are not approved by the European Commission or are otherwise deemed incompatible with the common market. Receipt of any non-approved State Aid may result in the European Commission requiring the Estonian Government to withdraw such support, seek repayment (including any interest on any aid received prior to any European Commission decision, whether or not the aid is approved), and cease from providing any similar support in the future. The Issuer has limited control over such matters, which relate primarily to actions taken by the Estonian Government and the European Commission. Some of the Group's investments have been made in part pursuant to its expectation that it will receive subsidies from the Estonian Government for renewable energy and energy produced in qualifying co- generation plants (together “renewable subsidy” or “renewable energy subsidy”). In the financial year ended 31 December 2014, the Group received €13.2 million in relation to renewable subsidies, in particular in relation to its wind parks at Aulepa, Narva and Paldiski as well as the waste-to-energy co-generation plant at Iru. The Group expects to continue receiving further such renewable subsidies. A draft Act was prepared by the Ministry of Economic Affairs and Communications setting out a material reduction in renewable subsidies available to the Group and other Estonian electricity producers by amending the relevant legislation. The draft Act was discussed in the Estonian Parliament. However, as a result of the change in the composition of the Estonian Parliament following the general election in March 2015, this draft Act was removed from the agenda of the Parliament. At the same time, the revised support scheme as set out in the draft Act had been submitted for review by the European Commission resulting in a decision of no objection by the European Commission on 28 October 2014. For the time being, it remains unclear whether and to what extent the renewable subsidies may be reduced and indeed when the respective discussions will continue, but if any new legislation materially reduces subsidies, this could have a material adverse effect on the Group's business and financial position. In addition, the Issuer received an equity injection in the amount of €150.0 million in 2012 from the Estonian Government as the sole shareholder. There is no assurance that this equity injection or any future equity injections by the Estonian Government will not be subject to challenge as unapproved State Aid and as a result,

10

may be subject to State Aid approval and/or repayment (including any interest on any aid received prior to any European Commission decision, whether or not the aid is approved). If an equity injection is paid and is subsequently challenged as unapproved State Aid, the Issuer may be required to repay the equity injection (including any interest on any aid received prior to any European Commission decision, whether or not the aid is approved) and the Estonian Government may be required to cease from providing any similar support in the future. Each of these situations could have a material adverse effect on the Group's business and financial position. The occurrence of one or more of these aforementioned events could have a material adverse effect on the Group's business and financial position. International investments While the Group’s principal focus is currently on its businesses in Estonia, as part of its business strategy, the Group hopes to market and export its oil shale know-how, including to Jordan (through the Group’s associated companies) and the United States where it is seeking to commercialise its oil shale expertise and intellectual property. Such international investments are subject to significant legal, financing, political, technological (including those relating to the Enefit280 technology) and operational risks, including the risk that the project could be expropriated without adequate compensation. The composition of , Jordan and the United States varies so it is possible that Enefit280 oil production technology and power generation based on CFB boilers, even if proven in Estonia, may not be suited to processing or the United States. Failure of these international investments could have a material adverse effect on the Group's business and financial position. The Group faces numerous risks in connection with its investments in Jordan, where the Group (through the Group’s associated companies) entered into a 44 year concession agreement with the Government of the Hashemite Kingdom of Jordan (the "Jordanian Government") for an area of land in the Attarat region estimated to hold circa 3.5 billion tonnes of oil shale, which is expected to be used for two separate projects: a power generation project and an oil production project. The Jordanian projects are subject to political risks associated with the region, including potential conflicts, acts of terrorism, political instability and changes in the approach of the Jordanian Government. The Pre-Development Licence issued to the Group under the Jordan Concession Agreement expired in August 2015 which grants the Jordanian Government the right to terminate the Concession Agreement. While the Group has not received any notice of termination and is currently in discussions with the Jordanian Government regarding amending the Concession Agreement and extending the pre-development period, there is no certainty that the Group will succeed in extending the pre- development period. The Jordan power project is in the final phase before work is expected to commence on the construction of the power plant and mining operations. The Group is looking to sell down a large portion of its 65% stake in the Jordan power project. Discussions with YTL Power International Berhad, which is an existing participant in the project, and other interested parties in relation to such a sell down are ongoing. In order to sell down its interest in the Jordanian project, the Group requires the consent of the Jordanian Government, although such consent is only to be withheld in limited circumstances, including where there are concerns relating to national security or unlawful acts by the acquirer of the shares. Furthermore, advanced discussions are ongoing with banks regarding the debt financing of the Jordan power project. Agreement to the proposed sell down, as well as debt financing of the power project, may or may not be reached in the near to medium term, or at all. Whether or not the sell down occurs in the near to medium term, in accordance with the plans of the Group, and in line with the expectations of its Shareholder, the Group does not currently intend to make further significant capital investment into the Jordanian power project. Were the Group not able to sell down its interest or agree satisfactory terms for its debt financing, this is likely to mean that the Jordanian project would not proceed and the investment which the Group has made in it to-date, together with the US$3 million bond that has been provided to the Jordanian Government by the Attarat Power Company (“APCO”) would be lost. The completion of the pre-development phase of the power project is subject to risks arising from and deadlines established in agreements signed for sale of electricity by the proposed power plant and other project agreements signed with the Jordanian governmental authorities, financing contracts to be entered into obligations of the Group set out in the shareholders’ agreement and the engineering, procurement and construction (“EPC”) contract signed for the construction of the power plant. Any of these risks could have an adverse effect on the Group. The Group currently has limited material capital expenditure obligations in relation to the Jordanian oil project as it is in the pre-development phase which is expected to last until at least 2016. If the projects proceed, they will also involve a variety of material operational and technological risks, including substantial procurement, construction and other risks relating to the building of a shale oil and power plant as well as the performance and commissioning of facilities in connection with the mining of oil shale. These risks may lead to expenditure in excess of that contemplated or the deferral, reduction, or elimination of a financial return for the Group from its investment. For further details of the Jordanian projects, see “Description of the Group – Material Contracts” on pages 56 to 58 of this document.

11

The Issuer is also the sole owner of Co., the company responsible for development of the oil project in , in the United States as described in more detail in “Description of the Group – International Projects” on pages 47 to 48 of this document. This project has material technological, environmental, approval, legal and financing risks. Although the Group owns its patented retorting technology, this process will need to be adjusted for the Utah shale and to work in tandem with the facility’s other process units. Process testing and engineering are ongoing. In terms of the approval risks, the United States environmental regulations are complex, strict and differ in their application when compared with EU environmental regulations. The Group has started a process to secure the required rights of way for industrial-scale utility connections to the project property, but has not yet submitted permit applications regarding the construction and operation of the mine and processing facility, although significant pre-approval work has been completed. These risks, individually or combined, could impact the planned development budget and schedule, ability to obtain the necessary environmental approvals and ability to effectively finance the project, with a potential to delay or undermine the project. Failure to attract and retain key personnel Any limitations placed on the Group's ability to recruit and retain a skilled and experienced management team and operating staff may affect the Group's capability to implement its business strategy successfully. In particular, the Group relies on certain key employees who have specific experience, technical know-how and skills in respect of technology development, shale oil production and electricity generation, although the Group is trying to reduce its reliance on such employees by documenting know-how, amongst other methods. In an increasingly competitive environment, there is an increased risk of losing staff to competitors, who may be willing and able to pay higher salaries. The failure to attract and retain key personnel could have an adverse effect on the Group's business and financial position. Strike or labour disruption Any strikes, threat of strikes or other resistance or work stoppages could disrupt the Group’s operations and could therefore have a material adverse effect on the Group’s business and financial position. Seasonality, climate conditions, terrorism, natural disasters and insurance Seasonality and weather fluctuations, as well as long-term shifts in climate, affect demand for the Group's products, such as power and heat. Higher demand for power and heat is typically experienced from October to March, and lower demand from April to September. Periods of unseasonably warm weather during the autumn and winter months typically reduce demand below anticipated levels. Long-term shifts in climate conditions may result in more permanent changes in demand for the Group's products. Adverse weather conditions can also affect the Group's equipment and power networks. In addition, the Group's business is vulnerable to acts of terrorism and natural disasters, such as storms (that may result in power outages), earthquakes, fire and flooding. This in particular affects the Group’s mining operations, generating units and the distribution network. Such situations may result in the Group being liable for repair and maintenance costs, damages and fines, all of which may undermine the Group's financial position. These events may also affect third parties whose operations have a material influence on the Group, for example AS (“Elering”), the transmission system operator (“TSO”). Moreover, adequate insurance cover might not be available, either as a result of the lack of relevant insurance or excessive costs (in particular with respect to the risk of terrorist attacks and similar occurrences) and any insurance proceeds received may be inadequate to cover all liabilities incurred, lost revenue or increased expenses. These risks could have a material adverse effect on the Group's business and financial position. Resource risk The Group's operations depend on a consistent and commercially adequate supply of raw materials and fuels, including woodchips, municipal waste, natural gas and other fuels used in operations. The market price for these commodities may fluctuate widely beyond the Group's control. Relationships with suppliers are also very important. There is a risk that supplies may not be available, or may only be available on unfavourable terms that would adversely affect the Group's profitability, which could adversely affect the Group's business and financial position. The Group's business also depends on a substantial and consistent supply of oil shale for the production of the majority of its electricity and shale oil and any interruption to, or decrease in, the supply of oil shale may negatively impact the Group's operations. The Group mines oil shale in Estonia pursuant to licences granted by the Estonian Government. Estonia has a national limit on the amount of oil shale that may be mined annually which currently stands at 20 million tonnes of geological oil shale resource. Recently amendments were passed to the relevant legislative acts whereby the annual total limit can be increased if in the past seven years some of the 20 million tonne limit has been left unmined.

12

There have been and are ongoing discussions about what Estonia’s total mining limit should be and how it should be allocated between the various companies using oil shale as raw material. For example a decrease in the national limit was envisaged by the Estonian National Development Plan for the Utilisation of Oil Shale 2008-2015 (“NDPOS”) to 15 million tonnes; however, no steps have been taken to implement this plan. Adoption of the Estonian National Development Plan for the Utilisation of Oil Shale 2016-2030 (the “NDPOS 2016-30”) is scheduled for the end of 2015. A draft of the NDPOS 2016-30 has been presented to the Estonian Government and it provides for a total extraction limit across Estonia of 20 million tonnes per annum. Additionally, a new draft of the Earth’s Crust Act has been prepared by the Estonian Ministry of Environment which envisage a change in how the total national mining limit would be set in the future. Currently, the mining limit is provided for in the Earth’s Crust Act and can therefore be only changed by the Parliament. Based on the draft Act, the Estonian Government would have to approve the national mining limit every five years but would also be entitled to change the limit at any other time as it sees fit. Such a mechanism could subject the mining limit to short term political considerations and increase uncertainty regarding potential changes in the level of the national mining limit and the limit of each mining company. This could materially harm the Group’s ability to make long term plans for its business. It is not clear at this stage whether this draft Act will be adopted in its current form. The Group is the largest miner of oil shale in Estonia and currently has the right to mine 15 million tonnes of geological oil shale per year. There is a material risk that if the national limit on the amount of oil shale that can be mined per year is decreased, the Group's existing rights to mine may also be reduced. The Group may thereafter be unable to mine a sufficient amount of oil shale. There can be also no certainty that, even if the total extraction limit remains at 20 million tonnes per annum, the Group’s right to mine oil shale will not be curtailed for some other reason. Currently, each mining company’s share of the total national mining limit is unaffected by the expiry of the company’s individual mining licences. The draft Act referred to above also foresees that when a mining licence expires and is not renewed, a recalculation of the company’s total annual mining limit would be triggered and an amount proportionate to the expired mining licence would be deducted from the existing limit and allocated to other mining companies. A large share of the Group’s mining licences will expire in 2019 and while the Group expects that it can extend these licences as there is unmined resource left in the mines, in the event that the renewal process is delayed even for technical reasons, the Group could lose its share in the national mining limit which would harm the Group’s ability to mine the amount of oil shale that it requires as feedstock for its production facilities. It is not known whether the draft Act will be adopted as currently prepared by the Ministry of Environment. A further regulatory initiative has been started based on the action plan of the current coalition government. The action plan foresees adopting a new comprehensive regulatory framework for Estonia’s oil shale based businesses. This would include review of the principles of how the oil shale resource is allocated between the various companies and how the sector is taxed. This regulatory review is headed by the Ministry of Finance and its aim is to present a set of policy recommendations to the Estonian Government in June 2016. It is currently not known what the policy recommendations will be and how they would impact the Group, if adopted as legislation. Any inability of the Group to mine sufficient quantities of oil shale (as a result of technical, geological licence or allocation issues or otherwise) could have a material adverse effect on the Group's business and financial position. In addition, grants of mining permits may be subject to dispute as is currently the case with regards to the Uus-Kiviõli mine, where OÜ VKG Kaevandused and TLA Invest OÜ have disputed the Group's mining licence and Estonia mine where OÜ VKG Kaevandused has disputed amendments to certain of the Group’s mining licences as more particularly described in the section “Description of the Group – Litigation” on pages 54 to 56 of this document. If such challenges are successful the results could have a material adverse effect on the Group's business and financial position. The Group's oil shale reserves and resources are based on the best information available at the time of estimation and certain assumptions. Actual reserves, resources, life of mines and future production profiles may vary from the Group's estimated data, and the variations may be material, for numerous reasons, including, for example, geological irregularities and inconsistent depth and accessibility. The consequences of such variations may include lower production, reserves and resources than expected or the need for impairment write downs and may therefore materially adversely affect the Group's business and financial position. Furthermore, the economic viability of the Group's international investments depends on the value of the resource being acquired through those investments. Detailed geological surveys are ongoing and there is a risk that reserves at the Group's sites will turn out to be lower than expected or that oil shale at these sites will not be compatible with existing mining, power generation or oil production technologies, which could adversely affect the Group's business and financial position. Furthermore, the Group’s mining operations depend upon obtaining deliveries of specialist explosives on a timely basis and the Group relies on one third party supplier, Orica Eesti OÜ, for the supply of all its specialist explosives for its mining operations in Estonia. Although the Group has a long-term supply contract with Orica Eesti OÜ, any significant shortages or disruption in the supply of explosives by Orica Eesti OÜ could disrupt

13

the Group’s mining operations which could in turn disrupt the Group’s other operations and could have a material adverse effect on the Group’s business and financial position until the Group is able to source the specialist explosives it requires from other sources. Technology risk The Group's business is heavily reliant on technology; in particular, its Enefit280 technology, which forms the core of the new shale oil plant near Narva and the basis for the Group’s future oil production developments. The start-up and commissioning of the first plant based on Enefit280 technology near Narva has been subject to various mechanical and technological challenges. Although production of shale oil and generation of electrical power at the new plant has begun, testing the new plant continues and the plant has not yet reached its designed performance parameters for an extended period. Mechanical and technological changes have been implemented in the plant to improve the process flow and to increase the reliability of mechanical equipment. Long-term test runs have not yet been completed on all of the technological improvements and there is a risk that the improvements made to Enefit280 are not sufficient to achieve the desired performance parameters, especially the mechanical reliability of equipment and the capacity of electrical power generation are met. There is also a risk that the CFB unit integrated to the oil plant will not deliver the expected capacity of electrical power generation. Any of these risks could have a material adverse effect on the Group’s business and financial position. In addition, the Group has commissioned Alstom Consortium (“Alstom”) to construct a new oil shale and biomass fired CFB unit with a total capacity of 300 MW (gross) to be located near the existing Eesti Power Plant. The plant is scheduled to be finished by the end of 2015. However, Alstom as the EPC contractor has no previous experience with the main fuel used in the plant (i.e. oil shale). The Group is exposed to the risk that the technological solutions selected for the power plant are not suitable for Estonian oil shale or that there are other technological issues which will delay completing the power plant as planned by the Group. Any such delays in construction of the unit, or related technological problems may have a material adverse effect on the Group’s revenues, profits and financial position. Please refer to further details in “Business Description – Material Contracts” on pages 56 to 58 of this document. Insurance risks The Group insures its operations in accordance with industry practice. However, in certain circumstances, the Group’s insurance policies may not be of a nature or level to provide adequate insurance cover. In addition, insurance of all risks associated with the Group’s businesses is not always available and where available the costs can be prohibitive and the Group’s mining operations, as well as the distribution network and equipment, are not insured for these reasons. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business and financial results of the Group. Environmental damage The Group's facilities, mining and power infrastructure may damage the natural environment, and accidents in or near, or external attacks to, such facilities and infrastructure may have serious consequences. Many of the Group's production processes, raw materials and products are potentially destructive and dangerous in uncontrolled or catastrophic circumstances, such as fires, explosions, accidents or major equipment failures. Any such occurrence could adversely affect the Group's business and financial position, and potentially expose the Group to third party claims. In addition, the transportation of oil shale and liquid fuels, the generation and distribution of electricity, the use of heavy equipment and hazardous materials at power plants and landfilling of oil shale ash pose risks to health and safety, the human environment, disruption of business and the reputation and finances of the Group. If any one or more of these risks were to materialise, it could materially adversely impact the Group's business and financial position. Furthermore, the Group's operations include extensive mining activities in Estonia. These activities by their nature are capable of having a significant environmental impact and give rise to various risks, including subsidence and dewatering (dewatering meaning the pumping out of water to lower the level of groundwater to prevent the flooding of mines). These activities subject the Group to potential material risks, including third party claims. Taxes and fees Tax rules, including those relating to the energy industry, and their interpretation, may change, possibly with retrospective effect, in any of the jurisdictions in which the Group operates. Significant tax disputes with tax authorities, any change in the tax status of any member of the Group and any change in taxation legislation or its scope or interpretation could affect the Group's business and financial position. In addition, the Group is required to pay environmental fees in relation to an amount of the emissions and waste generated by its operations as well as resource taxes for extracting oil shale and water. For example, the Group's landfilling of mining enrichment waste from underground mines incurs environmental fees. These fees and taxes, which may be substantial, are set and adjusted by the Estonian Government by reference to quantity and other criteria. The

14

Estonian Government has previously raised resource taxes and environmental fees at short notice and without prior discussions with industry stakeholders. Additionally, there have been proposals made for reforming the resource tax system by tying the level of resource tax to the market price of the end product such as shale oil. A working group has been created by the Ministry of Finance to draft specific proposals by June 2016 for reforming the resource tax framework. The announced aim of the working group is to link resource taxes to the market prices of the output product (oil or electricity). Any increase in these fees and taxes, and/or their application to materials not currently subject to such fees and taxes, such as oil, could increase the Group's costs. Decommissioning liabilities The Group is required to decommission its mines and related infrastructure and restore surrounding land when a mine's reserves are exhausted or the mining licence expires and mining activities are terminated. The Group is also required to make financial provision for liabilities relating to such decommissioning and restoration. There can be no assurance that current or future provisions are or will be sufficient and additional investments may be required, either as a result of change in applicable law or otherwise. Any significant increase in the actual or estimated decommissioning and restoration costs that the Group incurs may adversely affect its business and financial position. Competition and unbundling The Group is subject to Estonian and EU competition and antitrust laws, which are administered by the ECA and the European Commission, respectively. The ECA may declare that the Group is dominant in certain markets, which may lead to Estonian and/or EU competition enquiries. For example, in March 2013 the ECA published a non-binding market analysis concerning the competition situation in the oil shale sector. As the Group is the largest seller of oil shale in Estonia, the ECA's analysis largely focused on the pricing structure of the Group's oil shale sales within the Group and to third parties. The analysis also contained ECA’s recommendations regarding the future choices for the oil shale sector and relevant legislation in Estonia. The ECA also raised concerns regarding the barriers to entry that exist in the Estonian oil shale mining and oil shale supply industries and has expressed the view that the principles applicable to the granting of mining licences may need to be changed in the future. The Group is dependent on a reliable supply of oil shale. Any change in the legislation governing the allocation of permits for mining oil shale could have a material adverse effect on the Group’s business and financial condition. The ECA is also carrying out an investigation which it initiated in March 2014 with regards to Eesti Energia Kaevandused AS (the Group’s mining company) in connection with alleged abuse of dominant position. The referred proceedings were initiated by the ECA on the basis of a complaint submitted by AS claiming that Eesti Energia Kaevandused AS applies discriminatory pricing practices upon sale of oil shale. The Group is of the view that the referred claims are unfounded and the pricing structure of sales of oil shale of the Group is in compliance with applicable competition law requirements. The proceedings are currently ongoing. The Group is currently a vertically integrated energy utility. No assurance can be given that changes in competition or other law affecting the Group or changes in the application of these laws might not require the Group to sell one or more of its business units or subsidiaries. The Group may also be required to sell one or more of its business units or subsidiaries or be otherwise restructured as a result of a change in policy or decisions of the Group's sole shareholder. In those circumstances, the Group may not be able to effect a sale at the best commercial terms and/or on terms that are in the best interests of Noteholders. Any such unbundling may also have a material adverse effect on the Group’s business and financial condition. Local community or individual complaints The Group is subject to potential complaints by communities in the locality of the Group's sites, which may lead to individuals or groups taking legal action against the Group in relation to physical damage that has been caused to their property or interference with the enjoyment of their property. For example, complaints have been made regarding emissions of aromatic compounds by the Group’s oil production facilities and their effect on the quality of air in nearby locations. Relations with local communities are especially important for the Group in getting permission to locate its wind farms, oil production facilities, new mines or other facilities at specific sites. The potential consequences of a complaint or third party claim could be: the payment of substantial damages for personal injury; damage to property or interference with the enjoyment of property rights; the loss of a regulatory permit or other regulatory enforcement action; and/or the imposition of fines or obligations to investigate and clean up/remediate environmental pollution or contamination. Each of these potential consequences could have a material adverse effect on the Group's business and financial position. Litigation and disputes The Group is a party to legal proceedings from time to time, including investigations by regulatory authorities. By way of example, the Group's mining licence for the Uus-Kiviõli mine has been disputed in court by OÜ

15

VKG Kaevandused and TLA Invest OÜ. In addition, amendments to certain of the Group’s mining licences, allowing for more flexible mining operations at the Estonia mine, have been disputed by OÜ VKG Kaevandused. The Ministry of Environment is also investigating whether as part of the Group’s operations at the Narva opencast mine and the removal of layers of peat to enable the mining of oil shale, the Group had undertaken unauthorised mining of peat which is registered in the Environmental Register (as is more particularly described below). The ECA is also looking at an investigation into the Group’s pricing structure of sales of oil shale to third parties and a possible abuse of dominant position. VKG Oil AS, a subsidiary of Viru Keemia Grupp AS filed a claim for damages against Eesti Energia Kaevandused AS in January 2015 in connection with the sale of oil shale by Eesti Energia Kaevandused AS to VKG Oil AS. Further details of these disputes and investigations are set out in the section “Description of the Group – Litigation” on pages 54 to 56 of this document. There can be no assurance that the Group will not be a party to court and administrative proceedings in the future or that, with respect to its current proceedings, it will not be subject to fines, damages or other penalties which could have a material adverse effect on the Group's business and financial position. Possible unauthorised mining of peat at the Narva opencast mine The Environmental Board informed the Group in April 2013 that it was investigating whether the Group had, in the course of mining oil shale at the Narva opencast mine, undertaken unauthorised mining of peat which is registered in the Environmental Register. In May 2014, the Environmental Board notified the Group’s mining company, Eesti Energia Kaevandused AS, of draft enforcement proposals, which if implemented, could render it liable for the payment of additional extraction charges due to the unauthorised mining of peat. The Group is of the opinion that removal of the peat was permitted under the existing oil shale mining licence for the Narva opencast mine and any potential claim for the payment of additional extraction charges is therefore unfounded. Additionally, the Group believes that the Environmental Board has not determined the quantity of the peat removed in a verifiable and reliable manner. Only peat which is of sufficiently high quality is required to be registered in the Environmental Register. As a result of a third party analysis, of the peat located at the Narva opencast mine, which was commissioned by the Group, large areas of lower quality peat have been removed from the Environmental Register. Discussions with the Environmental Board in relation to this matter are currently ongoing and, as at the date of this document, it is not possible to say what the outcome will be. In the event that it is ultimately determined that the Group has undertaken mining of peat at the Narva mine without an appropriate extraction permit where such a permit was required, the Group could face criminal proceedings for operating without the required extraction permit and, additionally, may be required to pay mineral resource extraction charges both for the quantities of peat extracted without a permit and for any damage caused to the environment as a result. The Group could also be required to pay the costs of remediation of the damage caused. The Group could face criminal proceedings, fines, damages or penalties as a result of this investigation or these circumstances, and this could have a material adverse effect on the Group’s reputation, business and financial position. Going forward, since the mining of oil shale at the Narva opencast mine requires the removal of peat in the upper layers of earth in order to access the oil shale and where that peat remains registered in the Environmental Register, then, unless the Group can successfully argue that this activity is covered by its existing oil shale mining permits, does not require a permit, or the Group successfully applies for an extraction permit for the mining of peat, the mining of oil shale at the Narva opencast mine may be disrupted. Any disruption to the Group’s ability to mine sufficient quantities of oil shale could have a material adverse effect on its business and financial position. Macroeconomic trends A large part of the Group's production facilities are based in Estonia but its business and financial results are increasingly exposed to macroeconomic developments in a wider region, including the Baltic and Nordic countries. Macroeconomic trends in these countries have a significant impact on the Group's business and financial position and any negative macroeconomic trends could have a material adverse effect on the Group's business and financial position.

The Group's business is influenced by: electricity prices on the Nordic markets; by the price of CO2 allowances; and by the price of certain global commodities such as oil, fuel oil and metals. All of these prices are affected by supply and demand constraints in the relevant markets and global macroeconomic trends. Furthermore, the recent global financial crisis and Eurozone sovereign debt crisis has had a significant impact on the world’s economy, banking system and financial markets. If the Eurozone sovereign debt crisis were to worsen and other Eurozone countries were to suffer an increase in borrowing costs, a default on their debt obligations or an economic crisis similar to that of Greece, Italy, Ireland, Spain, Portugal or Cyprus, this could

16

have a negative impact on the Group's activities in Europe, for example, by reducing demand for the Group's electricity within and outside of Estonia and the Group may face liquidity problems and may experience increased costs of funding. This could have a material adverse effect on the Group’s business and financial condition. The Eurozone sovereign debt crisis or Greek debt crisis could lead to the reintroduction of national currencies in one or more Eurozone countries or, in extreme circumstances, the dissolution of the euro entirely. Such reintroduction or dissolution could have a major negative effect on both existing contractual relations and the fulfilment of obligations by the Group and/or its customers, including the Group's financing obligations to its banks and other third parties, all of which could have a significant negative impact on the Group's business and financial position. Factors which are material for the purpose of assessing the market risks associated with the Notes There is no active trading market for the Notes The Notes are new securities which may not be widely distributed and for which there is currently no active trading market. If the Notes are traded after their initial issuance, they may trade at a discount to their initial offering price, depending upon prevailing interest rates, the market for similar securities, general economic conditions and the financial condition of the Issuer. Although applications have been made for the Notes to be admitted to listing on the Official List of the UK Listing Authority and to trading on the London Stock Exchange, there is no assurance that such application(s) will be accepted or that an active trading market will develop. Accordingly, there is no assurance as to the development or liquidity of any trading market for the Notes. Therefore, investors may not be able to sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have a developed trading market. The Notes may be redeemed prior to maturity In the event that the Issuer would be obliged to increase the amounts payable in respect of any Notes due to any withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Estonia or any political subdivision thereof or any authority therein or thereof having power to tax, the Issuer may redeem all outstanding Notes in accordance with the Terms and Conditions of the Notes. Because the Global Notes are held by or on behalf of Euroclear and Clearstream, Luxembourg, investors will have to rely on their procedures for transfer, payment and communication with the Issuer The Notes will be represented by the Global Notes, except in certain limited circumstances described in the Permanent Global Note. The Global Notes will be deposited with a common safekeeper for Euroclear and Clearstream, Luxembourg. Except in certain limited circumstances described in the Permanent Global Note, investors will not be entitled to receive Definitive Notes (as defined on page 32 of this document). Euroclear and Clearstream, Luxembourg will maintain records of the beneficial interests in the Global Notes. While the Notes are represented by the Global Notes, investors will be able to trade their beneficial interests only through Euroclear and Clearstream, Luxembourg. The Issuer will discharge its payment obligations under the Notes by making payments to, or to the order of, the common safekeeper for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of a beneficial interest in a Global Note must rely on the procedures of Euroclear and Clearstream, Luxembourg to receive payments under the Notes. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Notes. Holders of beneficial interests in the Global Notes will not have a direct right to vote in respect of the Notes. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear and Clearstream, Luxembourg to appoint appropriate proxies. Risks related to the Notes generally Set out below is a brief description of certain risks relating to the Notes generally: Modification, waivers and substitution The Terms and Conditions of the Notes contain provisions for calling meetings of Noteholders (as defined in “Terms and Conditions of the Notes”) to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Noteholders including Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary to the majority. The Terms and Conditions of the Notes also provide that the Trustee (as defined in “Terms and Conditions of the Notes”) may, without the consent of Noteholders, (i) agree to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of the provisions of Notes, (ii) determine that any Event

17

of Default (as defined in “Terms and Conditions of the Notes”) or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, in the circumstances described in Condition 13 of the Terms and Conditions of the Notes or (iii) agree to the substitution of another company, being a Subsidiary (as defined in “Terms and Conditions of the Notes”) of the Issuer, as principal debtor under the Notes in place of the Issuer, in the circumstances described in Condition 14 of the Terms and Conditions of the Notes. The Terms and Conditions of the Notes contain provisions allowing the Trustee to take action on behalf of the Noteholders in certain circumstances, subject to the Trustee being indemnified to its satisfaction. It may not be possible for the Trustee to take such action in every case and accordingly in such circumstances the Trustee will be unable to do so, notwithstanding the provision of an indemnity to it, and it will be for Noteholders to take such action directly. EU Savings Directive Under Council Directive 2003/48/EC on the taxation of savings income (the “Savings Directive”), Member States are required to provide to the tax authorities of another Member State details of payments of interest or similar income paid or secured by a person established within its jurisdiction to or for the benefit of an individual resident in another Member State or to certain limited types of entities established in that Member State. For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A number of non-EU countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland) with effect from the same date.

On 24 March 2014, the Council of the European Union adopted a Council Directive (the “Amending Directive”) amending and broadening the scope of the requirements described above. The Amending Directive requires Member States to apply these new requirements from 1 January 2017 and if they were to take effect the changes would expand the range of payments covered by the Savings Directive, in particular to include additional types of income payable on securities. They would also expand the circumstances in which payments that indirectly benefit an individual resident in a Member State must be reported or subject to withholding. This approach would apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union. However, the European Commission has proposed the repeal of the Savings Directive from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member States (subject to on-going requirements to fulfil administrative obligations such as the reporting and exchange of information relating to, and accounting for withholding taxes on, payments made before those dates). This is to prevent overlap between the Savings Directive and a new automatic exchange of information regime to be implemented under Council Directive 2011/16/EU on Administrative Cooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The proposal also provides that, if it proceeds, Member States will not be required to apply the new requirements of the Amending Directive. If a payment is made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any Paying Agent (as defined in “Terms and Conditions of the Notes”) nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuer is required to maintain a Paying Agent in a Member State that will not be obliged to withhold or deduct tax pursuant to the Savings Directive. Change of law The Terms and Conditions of the Notes are based on English law in effect as at the date of this document. No assurance can be given as to the impact of any possible judicial decision or change to English law or administrative practice after the date of this document and any such change could materially adversely impact the value of any Notes affected by it. Trading in the clearing systems As the Notes have a denomination consisting of the minimum denomination of €100,000 plus a higher integral multiple of €1,000, it is possible that the Notes may be traded in amounts in excess of €100,000 that are not integral multiples of €100,000. In such case a Noteholder who, as a result of trading such amounts, holds a principal amount which is less than €100,000 in its account with the relevant clearing system would not be able to sell the remainder of such holding without first purchasing a principal amount of Notes at or in excess of €100,000 such that its holding amounts to €100,000 or a higher integral multiple of €1,000. Further, a Noteholder who, as a result of trading such amounts, holds a principal amount which is less than €100,000 in

18

its account with the relevant clearing system at the relevant time may not receive a Definitive Note in respect of such holding (should Definitive Notes be printed) and would need to purchase a principal amount of Notes such that its holding amounts to the minimum denomination. If such Definitive Notes are issued, holders should be aware that Definitive Notes which have a denomination that is not an integral multiple of €100,000 may be illiquid and difficult to trade. Sovereign Immunity and Immunity of Assets Pursuant to Condition 17.2 of the Terms and Conditions of the Notes, and the Trust Deed, the Issuer has irrevocably and unconditionally waived and agreed not to raise with respect to the Notes and the Coupons (as defined in “Terms and Conditions of the Notes”), to the extent permitted by applicable law, any right to claim sovereign or other immunity from jurisdiction or execution and any similar defence, should any such immunity become available to it. There is no law or jurisprudence of Estonian courts in respect of sovereign immunity. Accordingly, if, notwithstanding the provisions of Condition 17.2, the Issuer sought to claim immunity in respect of any action or proceeding brought in connection with the Notes, there is no guarantee that such claim of immunity by the Issuer would not be successful. In addition, the Estonian Code of Enforcement Procedure (täitemenetluse seadustik) provides a list of assets which may not be attached or sold in the course of enforcement proceedings. It is possible that an Estonian court may consider that the attachment of assets of the Issuer that are necessary for, or employed in, inter alia, the generation or distribution of electricity may conflict with good morals or the public interest (as such terms are interpreted under the Estonian Code of Enforcement Procedure) due to the security of supply obligations of the Issuer. If so, any such assets owned by the Issuer would be immune from attachment in the course of enforcement of any judgement or claim in respect of the Notes or Coupons. Certification of non-Estonian residency in respect of Notes in definitive form Noteholders should be aware that, if Definitive Notes are issued, holders of any Definitive Notes that are not held through Euroclear or Clearstream, Luxembourg, who are natural persons, will be required to present evidence of non-Estonian residency to the relevant Paying Agent or other evidence as required by the Issuer, in order to receive payments of interest free of Estonian withholding tax (which, as at the date of this Prospectus, is charged at a rate of 20 per cent.). The Estonian Law on Restructurings Pursuant to the Estonian Law on Restructurings (saneerimisseadus) (the “Restructuring Act”), companies may make an application to court for the commencement of restructuring proceedings and, in the event that the court commences such restructuring proceedings, any enforcement proceedings against, or bankruptcy applications in respect of, such company will be stayed until the reorganisation plan is approved or restructuring proceedings are terminated. In addition, the Restructuring Act provides that, in connection with any reorganisation plan, creditors may agree to certain modifications to the terms of any obligations owed by the relevant company to its creditors. Each potential investor should note that if restructuring proceedings were commenced and/or a reorganisation plan was approved by the relevant court in respect of the Issuer, there is no guarantee that Noteholders would be able to enforce the payment of amounts due and payable under or in respect of the Notes, either immediately or during restructuring proceedings. If this was approved by the creditors of the Issuer (including creditors of the Issuer other than the Noteholders), modifications to the claims of Noteholders may be made in connection with any such restructuring proceedings and/or reorganisation plan, including, inter alia, the Issuer's payment obligations in relation to amounts due and payable under the Notes being satisfied by issuing Noteholders with shares in the Issuer, an extension of the due date for the payment of any such amounts or a reduction in any such amounts. Similarly, claims under the Notes could also be subject to modification by extension of the due date or reduction of the claim in a compromise agreed amongst the creditors in the course of insolvency proceedings. Risks related to the market generally Set out below is a brief description of the principal market risks, including liquidity risk, exchange rate risk, interest rate risk and credit risk: Exchange rate risks and exchange controls The Issuer will pay principal and interest on the Notes in euro. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the “Investor's Currency”) other than euro. These include the risk that exchange rates may significantly change (including changes due to devaluation of euro or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An

19

appreciation in the value of the Investor's Currency relative to euro would decrease (1) the Investor's Currency- equivalent yield on the Notes, (2) the Investor's Currency-equivalent value of the principal payable on the Notes and (3) the Investor's Currency-equivalent market value of the Notes. Government and monetary authorities may impose (as some have done in the past) exchange controls that could adversely affect an applicable exchange rate. As a result, investors may receive less interest or principal than expected, or no interest or principal. Interest rate risks Investment in the Notes involves the risk that subsequent changes in market interest rates may adversely affect the value of the Notes. Credit ratings may not reflect all risks The Issuer's credit rating by Moody’s is Baa2 (with stable outlook) and by S&P is BBB (with stable outlook). Any adverse change in an applicable credit rating could adversely affect the trading price for the Notes. Credit ratings may not reflect the potential impact of all risks related to structure, market, additional factors discussed above, and other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to suspension, reduction or withdrawal at any time by the assigning rating agency. On issue, the Notes are expected to be rated BBB by S&P and Baa2 by Moody’s. In general, European regulated investors are restricted under the CRA Regulation from using a rating for regulatory purposes if such rating is not issued by a credit rating agency established in the EEA and registered under the CRA Regulation (and such registration has not been withdrawn or suspended), unless (1) the rating is provided by a non-EEA credit rating agency that is endorsed by a credit rating agency established in the EEA and registered under the CRA Regulation or (2) the rating is provided by a credit rating agency not established in the EEA which is certified under the CRA Regulation (and such endorsement action or certification, as the case may be, has not been withdrawn or suspended). Both Moody’s and S&P are established in the European Union and are registered under the CRA Regulation. Legal investment considerations may restrict certain investments The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether and to what extent (1) the Notes are legal investments for it, (2) the Notes can be used as collateral for various types of borrowing and (3) other restrictions apply to its purchase or pledge of any of the Notes. Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the Notes under any applicable risk-based capital or similar rules.

20

TERMS AND CONDITIONS OF THE NOTES The following is the text of the Terms and Conditions of the Notes which (subject to modification) will be endorsed on each Note in definitive form (if issued). The €500,000,000 2.384 per cent. Notes due 2023 (the “Notes”, which expression shall in these Conditions, unless the context otherwise requires, include any further notes issued pursuant to Condition 16 and forming a single series with the Notes) of Eesti Energia Aktsiaselts (the “Issuer”) are constituted by a trust deed dated 22 September 2015 (as amended or supplemented from time to time, the “Trust Deed”) made between the Issuer and Citicorp Trustee Company Limited (the “Trustee”, which expression shall include its successor(s)) as trustee for the holders of the Notes (the “Noteholders”) and the holders of the interest coupons appertaining to the Notes (the “Couponholders” and the “Coupons” respectively). The statements in these Conditions include summaries of, and are subject to, the detailed provisions of and definitions in the Trust Deed and the Agency Agreement (as defined below). Copies of the Trust Deed and the agency agreement dated 22 September 2015 (as amended or supplemented from time to time, the “Agency Agreement”) made between the Issuer and Citibank N.A. as principal paying agent (the “Principal Paying Agent”, and together with any other agents appointed in accordance with such agreement, the “Paying Agents”, which expressions shall include any successor(s)) and the Trustee are available for inspection during normal business hours by the Noteholders and the Couponholders at the principal office for the time being of the Trustee (being at Citigroup Centre, Canada Square, Canary Wharf, London E14 5LB) and at the specified office of each of the Paying Agents. The Noteholders and the Couponholders are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them. 1. FORM, DENOMINATION AND TITLE (1) Form and Denomination The Notes are in bearer form, serially numbered, in the denominations of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000, each with Coupons attached on issue. Notes of one denomination will not be exchangeable for Notes of another denomination. (2) Title Title to the Notes and to the Coupons will pass by delivery. (3) Holder Absolute Owner The Issuer, any Paying Agent and the Trustee may (to the fullest extent permitted by applicable laws) deem and treat the holder of any Note or Coupon as the absolute owner for all purposes (whether or not the Note or Coupon shall be overdue and notwithstanding any notice of ownership or writing on the Note or Coupon or any notice of previous loss or theft of the Note or Coupon). 2. STATUS The Notes and the Coupons are direct, unconditional and (subject to the provisions of Condition 3) unsecured obligations of the Issuer and (subject as provided above) rank and will rank pari passu, without any preference among themselves, with all other outstanding unsecured and unsubordinated obligations of the Issuer, present and future, but, in the event of insolvency, only to the extent permitted by applicable laws relating to creditors’ rights. 3. NEGATIVE PLEDGE So long as any of the Notes remains outstanding (as defined in the Trust Deed), the Issuer will not, and will procure that none of its Subsidiaries (as defined in Condition 9) shall, create or permit to be outstanding any mortgage, lien, charge, pledge or other security interest (each a “Security Interest”), other than a Permitted Security Interest, upon the whole or any part of its undertaking or assets, present or future, to secure any liability (including any contingent liability) in respect of any present or future Relevant Indebtedness without at the same time or prior thereto according to the Notes to the satisfaction of the Trustee either the same security as is granted to or is outstanding in respect of such Relevant Indebtedness or such other security as the Trustee in its absolute discretion shall deem to be not materially less beneficial to the interests of the Noteholders or as shall be approved by an Extraordinary Resolution (which is defined in the Trust Deed as a resolution duly passed by a majority of not less than three-fourths of the votes cast thereon) of the Noteholders. For the purposes of this Condition: “Group” means the Issuer and its Subsidiaries (as defined in Condition 9) from time to time;

21

“Permitted Security Interest” means any Security Interest created over any asset of any company which becomes a member of the Group after the issue of the Notes where such Security Interest is created (a) prior to the date on which the company becomes a member of the Group provided that such Security Interest was not created in contemplation of the acquisition of such company or (b) simultaneously with the acquisition of such company for the sole purpose of financing the acquisition of such company; and “Relevant Indebtedness” means any Indebtedness (as defined in Condition 9) which is in the form of, or represented by, bonds, notes, debentures or other similar securities which are issued by the Issuer or any of its Subsidiaries and which are, or are capable of being, quoted, listed or ordinarily traded on any stock exchange, over-the-counter or other established securities market but shall not include any Project Finance Indebtedness (as defined in Condition 9). 4. INTEREST (1) Interest Rate and Interest Payment Dates The Notes bear interest from and including 22 September 2015 at the rate of 2.384 per cent. per annum, payable annually in arrear on 22 September in each year (each an “Interest Payment Date”). For each period from and including an Interest Payment Date to but excluding the next Interest Payment Date an amount of €23.84 per €1,000 principal amount of the Notes shall be paid. (2) Interest Accrual Each Note will cease to bear interest from and including its due date for redemption unless, upon due presentation, payment of the principal in respect of the Note is improperly withheld or refused or unless default is otherwise made in respect of payment in which event interest shall continue to accrue until whichever is the earlier of: (a) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (b) the day which is seven days after the Principal Paying Agent or the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment). (3) Calculation of Broken Interest When interest is required to be calculated in respect of a period of less than a full year, it shall be calculated on the basis of (a) the actual number of days in the period from and including the date from which interest begins to accrue (the “Accrual Date”) to but excluding the date on which it falls due divided by (b) the actual number of days from and including the Accrual Date to but excluding the next following Interest Payment Date. 5. PAYMENTS (1) Payments in respect of Notes Payments of principal and interest in respect of each Note will be made against presentation and surrender (or, in the case of part payment only, endorsement) of the Note, except that payments of interest due on an Interest Payment Date will be made against presentation and surrender (or, in the case of part payment only, endorsement) of the relevant Coupon, in each case at the specified office outside the United States of any of the Paying Agents. (2) Method of Payment Payments will be made by credit or transfer to a euro account (or any other account to which euro may be credited or transferred) specified by the payee or, at the option of the payee, by euro cheque. (3) Missing Unmatured Coupons Each Note should be presented for payment together with all relative unmatured Coupons, failing which the full amount of any relative missing unmatured Coupon (or, in the case of payment not being made in full, that proportion of the full amount of the missing unmatured Coupon which the amount so paid bears to the total amount due) will be deducted from the amount due for payment. Each amount so deducted will be paid in the manner mentioned above against presentation and surrender (or, in the case of part payment only, endorsement) of the relative missing Coupon at any time before the expiry of 10 years after the Relevant Date (as defined in Condition 7) in respect of the relevant Note (whether or not the Coupon would otherwise have become void pursuant to Condition 8) or, if later, five years after the date on which the Coupon would have become due, but not thereafter.

22

(4) Payments subject to Applicable Laws Payments in respect of principal and interest on the Notes are subject in all cases to any fiscal or other laws and regulations applicable thereto in the place of payment, but without prejudice to the provisions of Condition 7. (5) Payment only on a Presentation Date A holder shall be entitled to present a Note or Coupon for payment only on a Presentation Date and shall not, except as provided in Condition 4, be entitled to any further interest or other payment if a Presentation Date is after the due date. “Presentation Date” means a day which (subject to Condition 8): (a) is or falls after the relevant due date; (b) is a Business Day in the place of the specified office of the Paying Agent at which the Note or Coupon is presented for payment; and (c) in the case of payment by credit or transfer to a euro account as referred to above, is a TARGET2 Settlement Day. In this Condition: (i) “Business Day” means, in relation to any place, a day on which commercial banks and foreign exchange markets settle payments and are open for general business (including dealing in foreign exchange and foreign currency deposits) in that place. (ii) “TARGET2 Settlement Day” means any day on which the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system is open. (6) Initial Paying Agents The names of the initial Paying Agents and their initial specified offices are set out at the end of these Conditions. The Issuer reserves the right, subject to the prior written approval of the Trustee, at any time to vary or terminate the appointment of any Paying Agent and to appoint additional or other Paying Agents provided that (a) it will at all times maintain a Paying Agent having its specified office in London, (b) it will ensure that it maintains a Paying Agent in a Member State of the European Union (so long as there is such a Member State) that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced to conform to, such Directive and (c) there will at all times be a Paying Agent in a jurisdiction within Europe, other than the jurisdiction in which the Issuer is incorporated. Notice of any termination or appointment and of any changes in specified offices will be given to the Noteholders promptly by the Issuer in accordance with Condition 12. (7) Partial payments If a Paying Agent makes a partial payment in respect of any Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment. 6. REDEMPTION AND PURCHASE (1) Redemption at Maturity Unless previously redeemed or purchased and cancelled as provided below, the Issuer will redeem the Notes at their principal amount on 22 September 2023. (2) Redemption for Taxation Reasons If the Issuer satisfies the Trustee immediately before the giving of the notice referred to below that (a) as a result of any change in, or amendment to, the laws or regulations of the Republic of Estonia (“Estonia”), or any change in the official interpretation of the laws or regulations of Estonia, which change or amendment becomes effective after 15 September 2015 on the next Interest Payment Date the Issuer would be required to pay additional amounts as provided or referred to in Condition 7 and (b) the requirement cannot be avoided by the Issuer taking reasonable measures available to it, the Issuer may at its option, having given not less than 30 nor more than 60 days’ notice to the Noteholders in accordance with Condition 12 (which notice shall be irrevocable), redeem all the Notes, but not some only, at any time at their principal amount together with interest accrued to but excluding the date of redemption, provided that no notice of redemption shall be given earlier than 90 days before the earliest date on which the Issuer would be required to pay the additional amounts were a payment in respect of the Notes then due. Prior to the publication of any notice of redemption

23

pursuant to this paragraph, the Issuer shall deliver to the Trustee a certificate signed by two Directors of the Issuer stating that the requirement referred to in (a) above will apply on the next Interest Payment Date and cannot be avoided by the Issuer taking reasonable measures available to it and the Trustee shall be entitled to accept the certificate as sufficient evidence of the satisfaction of the conditions precedent set out above, in which event it shall be conclusive and binding on the Noteholders and the Couponholders. (3) Redemption on a Change of Control If at any time there occurs (a) a Change of Control and within the Change of Control Period (if at the relevant time there are Rated Securities) a Rating Downgrade in respect of that Change of Control occurs or (b) a Change of Control (if at the relevant time there are no Rated Securities) (each a “Put Event”), the Issuer shall, at the option of any Noteholder (in respect of the Notes held by such Noteholder), redeem such Notes on the Put Redemption Date (as defined below), at their principal amount plus interest accrued to but excluding the date fixed for redemption. The Issuer shall promptly notify the Noteholders in accordance with Condition 12 of the occurrence of a Put Event and shall, in the notice, specify a date being not more than 90 nor less than 60 days after the date on which the notice was given as the Put Redemption Date. To exercise such option the Noteholder must deposit each Note to be redeemed, together with all Coupons relating to it maturing after the Put Redemption Date, with any Paying Agent together with a duly completed redemption notice in the form obtainable from the specified office of any of the Paying Agents, not less than 30 nor more than 60 days before the Put Redemption Date. No Note so deposited may be withdrawn without the prior consent of the Issuer. If 80 per cent. or more in principal amount of the Notes then outstanding have been redeemed or purchased pursuant to the foregoing provisions of this Condition 6(3), the Issuer may, on not less than 30 nor more than 60 days’ notice to the Noteholders given within 30 days after the Put Redemption Date, redeem, at its option, the remaining Notes as a whole at their principal amount plus interest accrued to be excluding the date of such redemption. If the rating designations employed by any of S&P or Moody’s are changed from those which are described in the definition of “Ratings Downgrade” below, the Issuer shall determine, with the agreement of the Trustee, the rating designations of S&P or Moody’s as are most nearly equivalent to the prior rating designations of S&P or Moody’s and this Condition shall be construed accordingly. For the purposes of this Condition 6(3): a “Change of Control” shall be deemed to have occurred if, at any time, Estonia ceases to own, directly or indirectly, at least 51 per cent. of the issued share capital of the Issuer; “Change of Control Period” means the period commencing on the first to occur of (i) a Change of Control and (ii) any official public announcement by the Issuer or any shareholder of the Issuer that states that a Change of Control shall occur and ending 30 days after the Change of Control occurs; “Rated Securities” means (i) the Notes so long as they shall have an effective rating from any Rating Agency at the invitation of the Issuer and (ii) any unsecured and unsubordinated debt of the Issuer (or any Subsidiary of the Issuer which is guaranteed on an unsecured and unsubordinated basis by the Issuer) which is rated at the invitation of the Issuer by one or more of the Rating Agencies; “Rating Agency” means Moody’s Investors Service Limited (“Moody's”) or Standard & Poor’s Credit Market Services Europe Limited (“S&P”), and their respective successors; and a “Rating Downgrade” shall be deemed to have occurred in respect of a Change of Control if within the Change of Control Period the rating assigned to the Rated Securities by any Rating Agency is (a) withdrawn or (b) changed from an investment grade rating (BBB-/Baa3, or their respective equivalents for the time being, or better) to a non-investment grade rating (BB+/Ba1, or their respective equivalents for the time being, or worse) or (c) (if the rating assigned to the Rated Securities by any Rating Agency shall be below an investment grade rating (as described above)) lowered one full rating category (by way of example, from BB+ to BB or such lower or equivalent rating), provided that a Rating Downgrade otherwise arising by virtue of a particular change in rating shall be deemed not to have occurred in respect of a Change of Control if the Rating Agency making the change in rating to which this definition would otherwise apply has not announced or confirmed (whether publicly or in writing to the Issuer and/or the Trustee) that the withdrawal or the reduction was wholly or substantially the result of the Change of Control.

24

(4) Purchases The Issuer or any of its Subsidiaries may at any time purchase Notes (provided that all unmatured Coupons appertaining to the Notes are purchased with the Notes) in any manner and at any price. Such Notes may be held, reissued, resold or surrendered by the purchaser through the Issuer for cancellation. Notes held by or for the account of the Issuer or any of its Subsidiaries for their own account will cease to carry the right to attend and vote at meetings of Noteholders and will not be taken into account in determining how many Notes are outstanding for the purposes of these Conditions and the provisions of the Agency Agreement. (5) Cancellations All Notes which are (a) redeemed or (b) purchased by or on behalf of the Issuer or any of its Subsidiaries and are surrendered for cancellation by the Issuer will forthwith be cancelled, together with all relative unmatured Coupons attached to the Notes or surrendered with the Notes, and accordingly may not be reissued or resold. (6) Notices Final Upon the expiry of any notice as is referred to in paragraphs (2) and (3) above the Issuer shall be bound to redeem the Notes to which the notice refers in accordance with the terms of such paragraph. No notice may be given under Condition 6(2) if a notice has previously been given under Condition 6(3) and no notice may be given under Condition 6(3) if a notice has previously been given under Condition 6(2). 7. TAXATION (1) Payment without Withholding All payments in respect of the Notes and the Coupons by or on behalf of the Issuer shall be made without withholding or deduction for, or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature (“Taxes”) imposed or levied by or on behalf of Estonia, unless the withholding or deduction of the Taxes is required by law. In that event, the Issuer will pay such additional amounts as may be necessary in order that the net amounts received by the Noteholders and Couponholders after the withholding or deduction shall equal the respective amounts which would have been receivable in respect of the Notes or, as the case may be, Coupons in the absence of the withholding or deduction; except that no additional amounts shall be payable in relation to any payment in respect of any Note or Coupon: (a) presented for payment by or on behalf of a holder who is liable to the Taxes in respect of the Note or Coupon by reason of his having some connection with Estonia other than the mere holding of the Note or Coupon; or (b) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any law implementing or complying with, or introduced in order to conform to, such Directive; or (c) presented for payment by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note or Coupon to another Paying Agent in a member state of the European Union; or (d) presented for payment more than 30 days after the Relevant Date except to the extent that a holder would have been entitled to additional amounts on presenting the same for payment on the last day of the period of 30 days assuming that day to have been a Presentation Date. (2) Interpretation In these Conditions “Relevant Date” means the date on which the payment first becomes due but, if the full amount of the money payable has not been received by the Principal Paying Agent or the Trustee on or before the due date, it means the date on which, the full amount of the money having been so received, notice to that effect shall have been duly given to the Noteholders by the Issuer in accordance with Condition 12. (3) Additional Amounts Any reference in these Conditions to any amounts in respect of the Notes shall be deemed also to refer to any additional amounts which may be payable under this Condition or under any undertakings given in addition to, or in substitution for, this Condition pursuant to the Trust Deed.

25

(4) Jurisdiction If the Issuer becomes subject at any time to any taxing jurisdiction other than Estonia, references in these Conditions to Estonia shall be construed as references to Estonia and/or such other jurisdiction. 8. PRESCRIPTION Notes and Coupons will become void unless presented for payment within periods of 10 years (in the case of principal) and five years (in the case of interest) from the Relevant Date in respect of the Notes or, as the case may be, the Coupons, subject to the provisions of Condition 6. 9. EVENTS OF DEFAULT (1) Events of Default The Trustee at its discretion may, and if so requested in writing by the holders of at least one-fifth in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders shall, (subject in each case to being indemnified and/or secured and/or prefunded to its satisfaction) give notice to the Issuer that the Notes are, and they shall accordingly thereby forthwith become, immediately due and repayable at their principal amount, together with accrued interest as provided in the Trust Deed, in any of the following events (“Events of Default”) shall occur and be continuing: (a) Non-payment the Issuer fails to pay any amount of principal or interest due on the Notes within five London Banking Days of the due date for payment thereof; or (b) Breach of other obligations the Issuer defaults in the performance or observance of any of its other obligations under or in respect under these Conditions or the Trust Deed and (except in any case where the Trustee considers the failure to be incapable of remedy when no continuation or notice as is hereinafter mentioned will be required) such default remains unremedied for the period of 45 days (or such longer period as the Trustee may permit) next following the service by the Trustee on the Issuer of notice requiring the same to be remedied; or (c) Cross-default (i) any Indebtedness the Issuer or any of its Subsidiaries (other than in respect of Project Finance Indebtedness) is not paid when due or, as the case may be, within any applicable grace period; (ii) any Indebtedness by the Issuer or any of its Subsidiaries (other than in respect of Project Finance Indebtedness) becomes due and payable prior to its stated maturity as a result of an event of default howsoever described thereunder; or (iii) the Issuer or any of its Subsidiaries fails to pay when due any amount payable by it under any guarantee or indemnity in respect of any Indebtedness (other than in respect of Project Finance Indebtedness); provided that the amount of any such Indebtedness referred to in sub-paragraph (i) and/or sub-paragraph (ii) above and/or the amount payable under any such guarantee or indemnity referred to in sub-paragraph (iii) above either individually or in the aggregate exceeds an amount equal to €25,000,000 (or its equivalent in other currencies); or (d) Security enforced a secured party (other than the Issuer or any of its Subsidiaries) takes possession, or a receiver, manager or other similar officer is appointed, of the whole or a substantial part of the undertaking, assets and revenues of the Issuer or any of its Material Subsidiaries; or (e) Insolvency etc (i) the Issuer and its Material Subsidiaries cease, or threaten to cease, to carry on all or a substantial part of the Issuer’s and its Material Subsidiaries’ business (taken as a whole) other than (in respect of any such substantial part, but not all, of such business): (I) pursuant to any sale, disposal, demerger, amalgamation, reorganisation or restructuring or any cessation, or threat of cessation, of business in each case on a solvent basis (each a “Solvent Reorganisation”) or (II) for the purposes of, or pursuant to, any amalgamation, reorganisation or restructuring on terms approved in writing by the Trustee or an Extraordinary Resolution of Noteholders; or

26

(ii) the Issuer or any of its Material Subsidiaries stops or threatens to stop payment of, or is unable to, or admits inability to pay its debts as they fall due or is adjudicated or found bankrupt or insolvent by a court of competent jurisdiction; or (iii) the management or supervisory board of the Issuer or any of its Material Subsidiaries incorporated in Estonia resolves to initiate restructuring proceedings under the Estonian Law on Restructurings (as defined below); or (iv) if (I) proceedings are initiated against the Issuer or any of its Material Subsidiaries under any applicable liquidation, insolvency, composition or other similar laws or an application is made (or documents filed with a court) for the appointment of an administrative or other receiver, manager, administrator or other similar official, or an administrative or other receiver, manager, administrator or other similar official is appointed, in relation to the Issuer or any of its Material Subsidiaries or, as the case may be, in relation to the whole or any substantial part of the undertaking or assets of any of them or an encumbrancer takes possession of the whole or any substantial part of the undertaking or assets of any of them, or a distress, execution, attachment, sequestration or other process is levied, enforced upon, sued out or put in force against the whole or any substantial part of the undertaking or assets of any of them and (II) in any such case (other than the appointment of an administrator), unless initiated by the relevant company, is not discharged within 45 days and (III) in any such case this does not result from, or relate to, proceedings pursuant to the Estonian Law on Restructurings (Saneerimisseadus) of 2008, as amended (the “Estonian Law on Restructurings”); or (v) if (I) the Issuer or any of its Material Subsidiaries (or their respective directors or shareholders) applies for commencement of or consents to judicial proceedings relating to the Issuer or any of its Material Subsidiaries under any applicable liquidation, insolvency, composition or other similar laws (including, without limitation, any application by the Issuer or any of its Material Subsidiaries for the commencement of restructuring proceedings pursuant to the Estonian Law on Restructurings and/or the obtaining of a moratorium) or (II) the Issuer or any of its Material Subsidiaries makes a conveyance or (other than as a result of, or relating to, proceedings pursuant to the Estonian Law on Restructurings) assignment for the benefit of, or enters into any composition or other similar arrangement with, its creditors generally (or a substantial part of its creditors by value) or (III) any meeting is convened to consider a proposal for such a composition or arrangement with its creditors generally (or a substantial part of its creditors by value). (f) Winding up etc an order is made by a court of competent jurisdiction or an effective resolution is passed for the winding up, liquidation or dissolution of the Issuer or any of its Material Subsidiaries (otherwise than, in the case of a Material Subsidiary, for the purposes of or pursuant to an amalgamation, reorganisation or restructuring on terms previously approved in writing by the Trustee or by an Extraordinary Resolution of the Noteholders); or (g) Analogous event any event occurs which under the laws of Estonia has an analogous effect to any of the events referred to in paragraphs (d) to (f) above; provided that, in the case of any Event of Default other than those described in paragraphs (a) and (f) (in the case of a winding up, liquidation or dissolution of the Issuer) and (g) (to the extent the relevant event is analogous to the winding up, liquidation or dissolution of the Issuer) above, the Trustee shall have certified to the Issuer that the Event of Default is, in its opinion, materially prejudicial to the interests of the Noteholders. (2) Interpretation In these Conditions: “Consolidated Net Worth” means at any time the aggregate of: (i) the amount paid up or credited as paid up on the issued share capital of the Issuer; and (ii) the amounts standing to the credit of the consolidated capital stock, retained earnings and legal reserves of the Issuer calculated by reference to the latest audited consolidated accounts of the Issuer; “Indebtedness” means any indebtedness (whether being principal, premium, interest or other amounts) for or in respect of (a) moneys borrowed (other than from the Issuer to any of its wholly- owned Subsidiaries), (b) liabilities (other than to the Issuer from any of its wholly-owned

27

Subsidiaries) under or in respect of any acceptance or acceptance credit, or (c) any bonds, notes, debentures or other debt securities (other than those beneficially owned by the Issuer or any of its wholly-owned Subsidiaries); “London Banking Day” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London; “Material Subsidiary” means: (i) any Subsidiary of the Issuer whose net worth (consolidated in the case of a Subsidiary which itself has Subsidiaries and in each case calculated in the same way as Consolidated Net Worth) represents not less than 10 per cent. of the Consolidated Net Worth, all as calculated by reference to the then latest audited accounts (consolidated or, as the case may be, unconsolidated) of such Subsidiary and the then latest audited consolidated accounts of the Issuer; or (ii) any Subsidiary of the Issuer whose sales (consolidated in the case of a Subsidiary which itself has Subsidiaries, and excluding any sales made to members of the Group) represent not less than 10 per cent. of the consolidated net sales of the Issuer, all as calculated by reference to the then latest audited accounts (consolidated or, as the case may be, unconsolidated) of such Subsidiary and the then latest audited consolidated accounts of the Issuer; or (iii) any Subsidiary of the Issuer (the “receiving Subsidiary”) to which is transferred either (A) all or substantially all the assets of another Subsidiary of the Issuer which immediately prior to the transfer was a Material Subsidiary (the “disposing Subsidiary”) or (B) sufficient assets of the Issuer such that the receiving Subsidiary would have been a Material Subsidiary had the transfer occurred on or before the date of the most recent audited consolidated accounts of the Issuer. A certificate or report of two Directors of the Issuer as to whether, in their opinion, a Subsidiary of the Issuer is or is not or was or was not at any particular time or throughout any particular period a Material Subsidiary may be relied upon by the Trustee without further enquiry or evidence and, if relied upon by the Trustee, shall, in the absence of manifest or proven error, be conclusive and binding on all parties. Such certificate may, if requested by the Trustee be accompanied by a report from the Auditors (as defined in the Trust Deed) addressed to the Directors of the Issuer as to the proper extraction of figures from the appropriate financial statements used by the Directors of the Issuer in determining whether a Subsidiary is a Material Subsidiary and as to the mathematical accuracy of the calculations used; “Person” means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality; “Project Finance Indebtedness” means any Indebtedness incurred by a debtor or debtors to finance the ownership, acquisition, construction, development and/or operation of an asset, assets or portfolio of assets in respect of which the Person or Persons to whom such Indebtedness is, or may be, owed has/have no recourse whatsoever to any member of the Group for the repayment thereof other than: (i) for amounts limited to the aggregate cash flow or net cash flow (other than historic cash flow or historic net cash flow) from such asset, assets or portfolio of assets; and/or (ii) recourse under any form of assurance, undertaking, representation or other obligation, which recourse is limited to a claim for damages (other than liquidated damages and damages required to be calculated in a specified way) for breach of an obligation, representation or warranty (not being a payment obligation, representation or warranty or an obligation, representation or warranty to procure payment by another or an obligation, representation or warranty to comply or to procure compliance by another with any financial ratios or other test of financial condition) by any member of the Group; and/or (iii) if such debtor or debtors have been established specifically for the purpose of constructing, developing, owning and/or operating the relevant asset, assets or portfolio of assets and they own no other significant assets and carry on no other business, recourse to all of the assets and undertaking of such debtors and the shares in the capital of such debtors; and/or (iv) recourse for the purpose only of enabling amounts to be claimed in respect of such Indebtedness in an enforcement of any encumbrance given over such asset or the income, cash flow or other proceeds deriving therefrom (or given by any shareholder or the like in the borrower over its shares or the like in the capital of the borrower) to secure such Indebtedness, provided that (1) the extent of such recourse is limited solely to the amount of

28

any recoveries made on any such enforcement, and (2) such person or persons is/are not entitled, by virtue of any right or claim arising out of or in connection with such Indebtedness, to commence proceedings for the winding up or dissolution of any member of the Group or to appoint or procure the appointment of any receiver, trustee or similar person or officer in respect of any member of the Group or any of its assets (save for the assets the subject of such encumbrance); and/or (v) recourse under any form of guarantee, bond, indemnity, security, assurance, undertaking or support, where that recourse is designed to be withdrawn or cease to apply to, in accordance with its terms, prior to the repayment of that Indebtedness. “Subsidiary” means, in relation to any Person (the “first Person”) at any particular time, any other Person (the “second Person”) whose financial statements are, in accordance with applicable law and generally accepted accounting principles, consolidated with those of the first Person.

10. ENFORCEMENT (1) The Trustee may at any time, at its discretion and without notice, take such proceedings against the Issuer as it may think fit to enforce the provisions of the Trust Deed, the Notes and the Coupons, but it shall not be bound to take any such proceedings or any other action in relation to the Trust Deed, the Notes or the Coupons unless (a) it shall have been so directed by an Extraordinary Resolution of the Noteholders or so requested in writing by the holders of at least one-fifth in principal amount of the Notes then outstanding, and (b) it shall have been indemnified to its satisfaction. (2) No Noteholder or Couponholder shall be entitled to proceed directly against the Issuer unless the Trustee, having become bound so to proceed, fails so to do within a reasonable period and the failure shall be continuing.

11. REPLACEMENT OF NOTES AND COUPONS Should any Note or Coupon be lost, stolen, mutilated, defaced or destroyed it may be replaced at the specified office of the Principal Paying Agent, upon payment by the claimant of the expenses incurred in connection with the replacement and on such terms as to evidence and indemnity as the Issuer or the Principal Paying Agent may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

12. NOTICES All notices to the Noteholders will be valid if published in a leading English language daily newspaper published in London or such other English language daily newspaper with general circulation in Europe as the Issuer may, with the prior written approval of the Trustee, decide. It is expected that publication will normally be made in the Financial Times. The Issuer shall also ensure that notices are duly published in a manner which complies with the rules and regulations of any stock exchange on which the Notes are for the time being listed. Any such notice will be deemed to have been given on the date of the first publication or, where required to be published in more than one newspaper, on the date of the first publication in all required newspapers.

13. MEETINGS OF NOTEHOLDERS AND MODIFICATION (1) Provisions for Meetings The Trust Deed contains provisions for convening meetings of the Noteholders to consider any matter affecting their interests, including the modification by Extraordinary Resolution of any of these Conditions or any of the provisions of the Trust Deed. The quorum at any meeting for passing an Extraordinary Resolution will be one or more persons present holding or representing more than 50 per cent. in principal amount of the Notes for the time being outstanding, or at any adjourned meeting one or more persons present whatever the principal amount of the Notes held or represented by him or them, except that at any meeting the business of which includes the modification of certain of these Conditions and certain of the provisions of the Trust Deed, the necessary quorum for passing an Extraordinary Resolution will be one or more persons present holding or representing not less than two-thirds, or at any adjourned meeting not less than one-third, of the principal amount of the Notes for the time being outstanding. An Extraordinary Resolution passed at any meeting of the

29

Noteholders will be binding on all Noteholders, whether or not they are present at the meeting, and on all Couponholders. (2) Modification The Trustee may agree, without the consent of the Noteholders or Couponholders, to any modification of, or to the waiver or authorisation of any breach or proposed breach of, any of these Conditions or any of the provisions of the Trust Deed, or determine, without any such consent as aforesaid, that any Event of Default or Potential Event of Default (as defined in the Trust Deed) shall not be treated as such, which in any such case is not, in the opinion of the Trustee, materially prejudicial to the interests of the Noteholders or may agree, without any such consent as aforesaid, to any modification which, in its opinion, is of a formal, minor or technical nature or to correct a manifest error or an error which is proven to the satisfaction of the Trustee. (3) Interests of Noteholders as a class In connection with the exercise by it of any of its trusts, powers, authorities and discretions (including, without limitation, any modification, waiver, authorisation, substitution or determination), the Trustee shall have regard to the general interests of the Noteholders as a class but shall not have regard to any interests arising from circumstances particular to individual Noteholders or Couponholders (whatever their number) and, in particular but without limitation, shall not have regard to the consequences of any such exercise for individual Noteholders or Couponholders (whatever their number) resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder or Couponholder be entitled to claim, from the Issuer, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders or Couponholders except to the extent already provided for in Condition 7 and/or any undertaking given in addition to, or in substitution for, Condition 7 pursuant to the Trust Deed. (4) Notification to Noteholders Any modification, waiver, authorisation or determination shall be binding on the Noteholders and the Couponholders and, unless the Trustee agrees otherwise, any modification shall be notified by the Issuer to the Noteholders as soon as practicable thereafter in accordance with Condition 12.

14. SUBSTITUTION The Trustee may, without the consent of the Noteholders or Couponholders, agree with the Issuer to the substitution in place of the Issuer (or of any previous substitute under this Condition) as the principal debtor under the Notes, the Coupons and the Trust Deed, of any other company being a Subsidiary of the Issuer, subject to: (a) the Notes being unconditionally and irrevocably guaranteed by the Issuer; (b) the Trustee being satisfied that the interests of the Noteholders will not be materially prejudiced by the substitution; and (c) certain other conditions set out in the Trust Deed being complied with.

15. INDEMNIFICATION OF THE TRUSTEE AND ITS CONTRACTING WITH THE ISSUER The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from taking action unless indemnified to its satisfaction. The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (i) to enter into business transactions with the Issuer and/or any of the Issuer’s Subsidiaries and to act as trustee for the holders of any other securities issued or guaranteed by, or relating to, the Issuer and/or any of the Issuer’s Subsidiaries, (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.

16. FURTHER ISSUES

30

The Issuer is at liberty from time to time without the consent of the Noteholders or Couponholders to create and issue further notes or bonds either (a) ranking pari passu in all respects (or in all respects save for the first payment of interest thereon) and so that the same be consolidated and form a single series with the outstanding notes or bonds of any series (including the Notes) constituted by the Trust Deed or any supplemental deed or (b) upon such terms as to ranking, interest, conversion, redemption and otherwise as the Issuer may determine at the time of the issue. Any further notes or bonds which are to form a single series with the outstanding notes or bonds of any series (including the Notes) constituted by the Trust Deed or any supplemental deed shall, and any other further notes or bonds may (with the consent of the Trustee), be constituted by a deed supplemental to the Trust Deed. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of notes or bonds of other series in certain circumstances where the Trustee so decides.

17. GOVERNING LAW AND SUBMISSION TO JURISDICTION (1) Governing Law The Trust Deed, the Notes and the Coupons and any non-constructional obligations arising out of or in connection with the Trust Deed, the Notes and the Coupons are governed by English law. (2) Jurisdiction of English Courts The Issuer has in the Trust Deed (i) agreed for the benefit of the Trustee and the Noteholders that the courts of England shall have exclusive jurisdiction to settle any dispute (a “Dispute”) arising out of or in connection with the Notes (including any non-contractual obligation arising out of or in connection with the Notes); (ii) agreed that those courts are the most appropriate and convenient courts to settle any Dispute and, accordingly, that it will not argue that any other courts are more appropriate or convenient; (iii) designated a person in England to accept service of any process on its behalf; (iv) consented to the enforcement of any judgment; and (v) to the extent that it may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process, and to the extent that in any such jurisdiction there may be attributed to itself or its assets or revenues such immunity (whether or not claimed), agreed not to claim and irrevocably waived such immunity to the full extent permitted by the laws of such jurisdiction. The Trust Deed also states that nothing contained in the Trust Deed prevents the Trustee or any of the Noteholders from taking proceedings relating to a Dispute (“Proceedings”) in any other courts with jurisdiction and that, to the extent allowed by law, the Trustee or any of the Noteholders may take concurrent Proceedings in any number of jurisdictions.

18. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT 1999 No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of Third Parties) Act 1999 but this does not affect any right or remedy of any person which exists or is available apart from that Act.

31

SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM

The Notes will be in bearer form and will initially be represented by the Temporary Global Note which will be deposited on or around the Closing Date with a common safekeeper for Euroclear and Clearstream, Luxembourg. The Notes will be issued in new global note (“NGN”) form. On 13 June 2006 the European Central Bank (the “ECB”) announced that notes in NGN form are in compliance with the “Standards for the use of EU securities settlement systems in ESCB credit operations” of the central banking system for the euro (the “Eurosystem”), provided that certain other criteria are fulfilled. At the same time the ECB also announced that arrangements for notes in NGN form will be offered by Euroclear and Clearstream, Luxembourg as of 30 June 2006 and that debt securities in global bearer form issued through Euroclear and Clearstream, Luxembourg after 31 December 2006 will only be eligible as collateral for Eurosystem operations if the NGN form is used. The Notes are intended to be held in a manner which would allow Eurosystem eligibility, that is in a manner which would allow the Notes to be recognised as eligible collateral for Eurosystem monetary policy and intra day credit operations by the Eurosystem either upon issue or at any or all times during their life. Such recognition will depend upon satisfaction of the Eurosystem eligibility criteria. The Temporary Global Note will be exchangeable in whole or in part for interests in the Permanent Global Note not earlier than 40 days after the Closing Date upon certification as to non U.S. beneficial ownership. No payments will be made under the Temporary Global Note unless exchange for interests in the Permanent Global Note is improperly withheld or refused. In addition, interest payments in respect of the Notes cannot be collected without such certification of non U.S. beneficial ownership. The Permanent Global Note will become exchangeable in whole, but not in part, for Notes in definitive form (“Definitive Notes”) in the denomination of €100,000 and integral multiples of €1,000 in excess thereof up to and including €199,000 each at the request of the bearer of the Permanent Global Note against presentation and surrender of the Permanent Global Note to the Principal Paying Agent if either of the following events (each, an “Exchange Event”) occurs: (a) Euroclear or Clearstream, Luxembourg is closed for business for a continuous period of 14 days (other than by reason of legal holidays) or announces an intention permanently to cease business or (b) any of the circumstances described in Condition 9 of the Terms and Conditions of the Notes occurs. So long as the Notes are represented by a Temporary Global Note or a Permanent Global Note and the relevant clearing system(s) so permit, the Notes will be tradeable only in the minimum authorised denomination of €100,000 and higher integral multiples of €1,000, notwithstanding that no Definitive Notes will be issued with a denomination above €199,000. Whenever the Permanent Global Note is to be exchanged for Definitive Notes, the Issuer shall procure the prompt delivery (free of charge to the bearer) of such Definitive Notes, duly authenticated and with Coupons attached, in an aggregate principal amount equal to the principal amount of the Permanent Global Note to the bearer of the Permanent Global Note against the surrender of the Permanent Global Note to or to the order of the Principal Paying Agent within 30 days of the occurrence of the relevant Exchange Event. In addition, the Temporary Global Note and the Permanent Global Note will contain provisions which modify the Terms and Conditions of the Notes as they apply to the Temporary Global Note and the Permanent Global Note. The following is a summary of certain of those provisions: Payments: All payments in respect of the Temporary Global Note and the Permanent Global Note will be made against presentation and (in the case of payment of principal in full with all interest accrued thereon) surrender of the Temporary Global Note or (as the case may be) the Permanent Global Note to or to the order of any Paying Agent and will be effective to satisfy and discharge the corresponding liabilities of the Issuer in respect of the Notes. On each occasion on which a payment of principal or interest is made in respect of the Temporary Global Note or (as the case may be) the Permanent Global Note, the Issuer shall procure that the payment is entered pro rata in the records of Euroclear and Clearstream, Luxembourg. Payments on business days: In the case of all payments made in respect of the Temporary Global Note and the Permanent Global Note “business day” means any day (other than a Saturday or a Sunday) which commercial banks are open for business and foreign exchange markets settle payments and are open for general business (including dealings in foreign exchange and foreign currency deposits) in London. Exercise of put option: In order to exercise the option contained in Condition 6(3) of the Terms and Conditions of the Notes the bearer of the Permanent Global Note must, within the period specified in the Terms and Conditions for the deposit of the relevant Note and put notice, give written notice of such exercise to the Principal Paying Agent specifying the principal amount of Notes in respect of which such option is being exercised. Any such notice will be irrevocable and may not be withdrawn.

32

Notices: Notwithstanding Condition 12 of the Terms and Conditions of the Notes, while all the Notes are represented by the Permanent Global Note (or by the Permanent Global Note and/or the Temporary Global Note) and the Permanent Global Note is (or the Permanent Global Note and/or the Temporary Global Note are) deposited with a common safekeeper for Euroclear and Clearstream, Luxembourg, notices to Noteholders may be given by delivery of the relevant notice to Euroclear and Clearstream, Luxembourg and, in any case, such notices shall be deemed to have been given to the Noteholders in accordance with Condition 12 on the date of delivery to Euroclear and Clearstream, Luxembourg.

33

USE OF PROCEEDS The Notes will be issued by the Issuer in order to fund the acquisition from Deutsche Bank AG, London Branch of certain existing debt securities of the Issuer, which were purchased by Deutsche Bank AG, London Branch pursuant to a tender offer launched by Deutsche Bank AG, London Branch on 1 September 2015. Any additional net proceeds of the issue of the Notes will be used by the Issuer for its general corporate purposes, including financing its capital expenditure programme.

34

DESCRIPTION OF THE GROUP Introduction The Issuer's legal and commercial name is Eesti Energia Aktsiaselts. The Issuer is a public limited company (aktsiaselts), whose sole shareholder is the Republic of Estonia. The Issuer was incorporated under the Commercial Code in Estonia as a public limited company on 31 March 1998 with the name “Eesti Energia Aktsiaselts'”. The Issuer is registered in the Estonian Commercial Register under number 10421629. The principal legislation under which the Issuer operates is the law of Estonia. The Group is an energy company operating in the Baltic and Nordic countries’ energy markets. Outside of Estonia, the Group operates under the “Enefit” brand name. The principal business lines of the Group are: (i) the oil shale to energy business, which includes oil shale mining, generation of electricity and heat from oil shale and production of shale oil; (ii) generation of electricity and heat from renewables and co-generation capacities; (iii) the distribution of electricity; (iv) the supply of energy to industrial, commercial and household customers. The financial reporting of the Group is organised around the three major products generated by these businesses: (i) electricity; (ii) distribution and (iii) shale oil. Except where stated otherwise, the financial information presented in this section (“Description of the Group”) has been extracted from the audited consolidated financial statements of the Group for the years ended 31 December 2014 (contained in pages 69 to 139 of the Eesti Energia Annual Report 2014) and 31 December 2013 (contained in pages 65 to 141 of the Eesti Energia Annual Report 2013), and from the unaudited consolidated interim condensed financial statements of the Group for the six-month period ended June 2015 (contained in pages 26 to 42 of the Eesti Energia Interim Report for 1 April 2015 - 30 June 2015) (for further information, see "Documents Incorporated by Reference" on page 3 of this document). The table below provides an overview of the Group's key performance indicators:

6 months 6 months Full year Full year 2015 2014 2014 2013 (unaudited) (unaudited) Total electricity sales GWh 3,894 4,478 9,137 11,368

Split of total electricity sales between wholesale and retail: Wholesale electricity sales GWh 968 1,424 3,125 4,271 Retail electricity sales GWh 2,926 3,054 6,012 7,097 Electricity distributed GWh 3,239 3,200 6,294 6,280

Shale oil sales th 137 79 231 208 tonnes Oil shale sales th 1 436 837 889 tonnes Heat sales GWh 634 629 1,063 1,021

The table below provides an overview of the Group's financial performance and key ratios:

6 months 6 months Full year Full year 2015 2014 2014 2013 (unaudited) (unaudited) Revenue million € 400.8 430.9 880.0 966.4 EBITDA(1) (unaudited) million € 156.8 151.1 312.3 310.5 Depreciation, amortisation and million € impairment 70.6 63.7 126.2 135.0 Operating profit million € 86.2 87.4 186.1 175.5 Net financial income (expense) million € -1.6 -1.3 -0.7 -1.2 Gain (loss) from associates using million € 0.0 0.0 -2.4 -0.8

35

equity method Corporate income tax expense million € 23.1 28.8 23.7 14.0 Profit for the period million € 61.5 57.3 159.3 159.5

Fixed assets million € 2,587.3 2,427.1 2,509.7 2,368.3 Equity million € 1,562.4 1,467.5 1,619.4 1,547.7 Net debt(2) million € 735.1 723.6 834.7 744.3 Investments(3) million € 137.7 130.4 275.9 418.9 Cash flow from operating activities million € 225.6 131.8 228.2 244.6

Net debt/12-months rolling times EBITDA(4) 2.3 2.3 2.7 2.4 Leverage(5) % 32.0% 33.0% 34.0% 32.5% EBITDA margin(6) % 39.1% 35.1% 35.5% 32.1% Operating profit margin(7) % 21.5% 20.3% 21.1% 18.2%

(1) EBITDA refers to net profit after adding back depreciation, amortisation and impairment, corporate income tax expense, loss from associates using equity method, and net financial expense. EBITDA is calculated by the Issuer and is not a figure that has been audited, but has been included to assist investors in assessing the performance of the Group’s business. EBITDA is a non-IFRS measure and, as we calculate it, may not be comparable to similarly titled measures reported by other companies.

(2) Net debt refers to borrowings minus cash and cash equivalents (including bank deposits with maturity exceeding 3 months) as at the end of the relevant period. This figure is not contained in the Financial Statements and has not been audited but has been calculated by the Issuer using figures contained in the Financial Statements.

(3) Investments refer to the amount spent during the relevant period on fixed assets. This figure is not contained in the Financial Statements and has not been audited but has calculated by the Issuer using figures contained in the Financial Statements.

(4) The net debt/EBITDA ratio has been calculated by dividing net debt as at the end of the relevant period by 12-months rolling EBITDA.

(5) The leverage ratio has been calculated by dividing net debt by the sum of net debt and total equity as at the end of the relevant period. This figure is not contained in the Financial Statements and has not been audited but has been calculated by the Issuer using figures contained in the Financial Statements.

(6) EBITDA margin has been calculated by dividing EBITDA by revenue.

(7) Operating profit margin has been calculated by dividing operating profit by revenue. This figure is not contained in the Financial Statements and has not been audited but has been calculated by the Issuer using figures contained in the Financial Statements.

Shareholder The Republic of Estonia is the sole shareholder of the Issuer. As at the date of this document, the Issuer is unaware of any plans that may result in a change of ownership. The Ministry of Finance holds all of the shares in the Issuer on behalf of the Republic of Estonia and, accordingly, is the registered shareholder of the Issuer in the Estonian Central Depositary for Securities (the “Shareholder”). The relationship between the Shareholder and the Issuer is conducted through members of the Supervisory Board. Members of the Supervisory Board are nominated by the Shareholder. Day-to-day management of the Issuer, however, is undertaken by the Issuer's Management Board. Under the Commercial Code, the shareholders of a public limited company (including the State) are neither liable for the debts of the company nor obligated to supply additional capital in the event of a financial crisis. Save for an obligation of the Issuer's subsidiary, Elektrilevi OÜ (“Elektrilevi”), as distribution network operator, to notify the Estonian Competition Authority (the “ECA”) should bankruptcy procedures be initiated against it, there are no special laws in Estonia applying to the bankruptcy of public service entities, nor are there any derogations from the normal bankruptcy procedures. The General Part of the Economic Activities Code Act also authorises the ECA to require companies that are deemed to be either a provider of a service of general interest or a service of vital importance (for example, in the areas of generation or distribution of electricity) to maintain their operations to ensure the continuous provision of these services. This may impact such companies' ability to cease operations in the event of bankruptcy proceedings. The Minister of Finance has approved a document entitled “Owner’s expectations for Eesti Energia” dated 25 February 2014 outlining its expectations as the Shareholder of the Issuer. The document includes strategic as well as financial objectives for the Group. Regarding dividend policy the document envisages the Issuer paying dividends corresponding to 50-100% of its net profit. Given that the Estonian Government is the sole

36

shareholder of the Issuer, it can direct the frequency and amount of dividends to be paid by the Issuer, subject to customary applicable legal requirements, including that dividends can only be paid out of distributable profits available for that purpose. The policy document also sets out limits for the financial ratios of the Group (for further information, see "Description of the Group - Financing" on pages 51 to 52 of this document). In 2012 the Issuer received a €150.0 million equity injection from the Estonian Government to finance its investment programme. It is possible that support of this sort may also be provided in the future but there is no commitment from the Shareholder to do this. A provisional amount for share capital increases of state owned companies in the amount of €100 million was set out in the Estonian State Budget for 2014 and in the explanatory notes of the budget the Issuer was named as the potential recipient. This amount however was not included in the Estonian State Budget for 2015. In any event, there is no certainty that the Issuer will receive all or any part of this amount as the Estonian Government has to decide on each equity injection separately. The ability of the Estonian Government to support the Issuer and the Group through subsidies, allocation of mining rights, loans, capital or other financial injection is restricted by and subject to the relevant rules regarding State Aid. Strategy The Group operates in the increasingly interlinked Baltic and Nordic energy markets and believes that it is well positioned to maximise the value of Estonia’s oil shale. The Group currently follows the strategy described below for its main lines of business. Oil shale to energy The oil shale to energy business line is the Group’s largest both in terms of assets as well as revenues and earnings. The Group aims to add value to the Estonian oil shale resource that it has access to and thereby also to grow its own business. The business line primarily comprises the mining of oil shale, the generation of heat and power and the production of shale oil. The Group’s oil shale to energy operation is vertically integrated, so that the Group mines the majority of the oil shale that it needs for its power generation and oil production activities itself. In addition, most of the oil shale the Group mines is used by its own production facilities. Accordingly, the ability of the Group’s mining operation to produce oil shale at a reasonable cost is important for the competitiveness of the Group’s power units and oil production business. Given the current low energy prices for both oil and electricity, the Group is increasingly focused on improving the efficiency of its mining operations to bring down the cost of oil shale. In addition, the Group is seeking to make its mining operations more flexible to enable it to respond to market price movements in the Baltic and Nordic energy markets and trends and varying demand from the Group’s electricity generation and oil production units. The Group has been carrying out a large investment programme over the past few years; in particular, it has built the new Enefit280 oil plant and has been constructing a new 300 MW (gross) CFB unit in Auvere, which is scheduled to be completed by the end of 2015. The Group is now focused on completing, and starting up the new Auvere Power Plant and achieving design capacity for the Enefit280 oil plant. At the same time, some of the Group’s older power generation units are entering the final phase of their life- cycle. The Group is currently looking for ways to run these units to the end of their life-cycles as efficiently as possible, subject to compliance with the applicable environmental regulations and power market conditions. The Group generally needs to improve the flexibility of its power units to respond to the volatility and low prices currently prevailing in the Baltic-Nordic power markets. The Estonian power market has converged with the Finnish market to a significant extent since the EstLink2 interconnector between Estonia and Finland became operational. The NordBalt cable being built between Sweden and Lithuania will increase transmission capacity between the Baltic and Nordic countries even further. The Group has been exploring ways to operate its power units more efficiently under current challenging market circumstances. This includes mothballing some of the older generation units to cut fixed costs and base investments as well as keeping some of the power units available for only part of the year. The Group’s existing CFB units at the Eesti Power Plant and Balti Power Plant, as well as the new Auvere Power Plant are capable of firing biomass and peat alongside oil shale. Provided that the regulatory framework develops in a supportive way, the Group expects to see quite significant opportunities for renewable based electricity generation to lower its CO2 emissions and for trading in renewable energy certificates. Provided that the Group can achieve satisfactory operating results for the Enefit280 plant, the Group may consider expanding the oil production side of its business further, subject to economic viability of such projects and appropriate funding being available. The Enefit280 technology is expected to enable more efficient usage of the oil shale resource compared to the Group’s other production technologies. The primary product of the Enefit280 process is shale oil. Retort gas and semi-coke are by-products that can be fired for generating electricity. The combined production of oil and electricity through such technology is potentially much more efficient when compared to the available alternatives.

37

In addition to its Estonian businesses, the Group is also seeking to exploit its oil shale expertise internationally, particularly in Jordan (through the Group’s associated companies) and the United States. Renewables and co-generation The Group has accumulated a portfolio of renewable and co-generation assets. This business line is closely linked with the subsidies that have been made available by the Estonian Government for power generated from renewable resources and through efficient co-generation. Given that a draft Act is being prepared which may reduce the amount of subsidies available for such production, the Group does not currently foresee that it will be actively expanding its portfolio of renewable and co-generation assets further. Distribution network The distribution network, as a regulated business, adds stability to the Group's revenues and earnings in comparison to the more volatile power generation and shale oil businesses. The Group currently aims to gradually improve the quality of its distribution network in order to provide a more reliable service for its customers and to reduce network losses. In addition to on-going grid investments, the Group is installing smart meters to all its customers, which is currently scheduled to be completed by the end of 2016. This will enable customers to track and adjust their consumption more accurately as well as allowing the distribution company to assess service disruptions remotely. The distribution network also intends to make its operations more efficient with the aim of improving its return on capital and cash flow generation. Supply The Group is the largest supplier of electricity in Estonia with 61 per cent. market share in the first six months of 2015. It also has operations in Latvia and Lithuania (with 14 per cent. and 4 per cent. market share in the first six months of 2015, respectively). For a period the Group stopped its sales of power in the Latvian and Lithuanian markets as a result of the market rules for allocating the transmission capacity on the Latvian and Estonian border which did not enable hedging of associated transmission costs. However, the situation has improved somewhat with some physical transmission rights now being auctioned by the transmission system operators. While the Group considers that the maturity and the amount of the rights being auctioned is still not sufficient, it has been able to slowly resume its power sales in Latvia and Lithuania. Over the next few years, the focus of the Group’s supply business shall be to grow its market share in all three of these Baltic countries as well as to improve the efficiency of its operations. The Group has recently also expanded its product offering and has started supplying gas to business customers in Estonia. The Group’s market share for gas supply to such business customers in Estonia amounted to 12 per cent. in the first six months of 2015.

38

Group Structure

Eesti Energia Aktsiaselts Attarat Power Company

65% Eesti Energia SIA Enefit Enefit Jordan B.V. Õlitööstus AS 65% Jordan Oil Shale Energy Company

65% Elektrilevi OÜ UAB Enefit Enefit Outotec Technology OÜ 60% Orica Eesti OÜ 35% Eesti Energia Eesti Energia Aulepa Pogi OÜ Kaevandused AS Tuuleelektrijaam OÜ 66.5%

Narva Soojusvõrk

AS Eesti Energia Narva Eesti Energia 100% Enefit US LLC Elektrijaamad AS Tabasalu Koostootmisjaam OÜ 55% Eesti Energia

Hoolduskeskus AS Eesti Energia Enefit American Oil Tehnoloogiatööstus Enefit Power and Co. AS Heat Valka OÜ 90% Eesti Energia Testimiskeskus OÜ

Attarat Holding EAO Real Estate AS Nordic Energy N.E.L. Finland OY

OÜ Corp Link 50% (likvideerimisel) EAO Federal Lease LLC 50% EAO State Leases LLC EAO Technology Attarat Mining LLC Company B.V. EAO Orion LLC 50%

Attarat Power Holding Company B.V. 65%

Attarat Operation and Maintenance Legend: Company B.V. The Issuer or its subsidiaries 25%

Associates

39

Operational Structure The Group divides its operations into four major business lines: (i) the oil shale to energy business; (ii) renewables and co-generation; (iii) distribution; and (iv) supply. The Group’s financial reporting is organised around the major products of the Group: (i) electricity; (ii) distribution; and (iii) shale oil. The Group's operational structure is as follows:

Eesti Energia

Group

Oil shale to energy Renewables and co-generation Supply Distribution

Mining

Power and heat generation

Oil production

Technology development and production

International projects

Financial Performance The following table provides selected financial information in relation to the major products of the Group.

6 months ended on 30 June 2015 (unaudited) Electricity Distribution Shale oil Other Total Revenue 184.6 122.6 49.2 44.4 400.8 EBITDA 52.0 52.9 35.0 16.9 156.8 Operating profit(1) 18.0 29.3 26.9 12.0 86.2 6 months ended on 30 June 2014 (unaudited) Electricity Distribution Shale oil Other Total Revenue 223.0 122.2 33.2 52.5 430.9 EBITDA 68.0 48.4 22.4 12.3 151.1 Operating profit(1) 37.7 23.7 18.9 7.1 87.4 (1) Operating profit split per segment is not contained in the Financial Statements and is sourced from the Issuer’s own unaudited data.

The Oil Shale to Energy Business The oil shale to energy business forms the largest part of the Group by assets and generates most of its revenue and EBITDA. The principal operations of the oil shale to energy business are: (i) the mining of oil shale; (ii)

40

the generation of electricity and heat from oil shale; (iii) the production of shale oil; (iv) technology development and production and (v) international projects.

6 months 2015 6 months 2014 FY 2014 FY 2013 Production Oil shale mined million tonnes 8.0 8.3 16.5 16.8

Electricity generation (Eesti and Balti Power Plants) GWh 3,727 4,576 9,343 10,278

Heat production (Eesti and Balti Power Plants) GWh 255 264 462 477

Oil production th tonnes 158 118 265 214

incl. Enefit140 oil production th tonnes 101 110 221 213

incl. Enefit 280 oil production th tonnes 57 8 45 1

Solid waste

Mining residue rock million tonnes 3.3 3.1 6.4 6.3

incl. recycled million tonnes 1.1 0.9 1.8 4.4

Oil shale ash million tonnes 3.3 3.8 7.9 8.1

Emissions

CO2 emissions million tonnes 5.2 6.2 12.8 13.4

Fly ash th tonnes 3.9 4.8 8.5 9.1

NOX th tonnes 3.0 4.1 8.5 8.8

SO2 th tonnes 8.4 10.9 24.2 20.9

Environmental and resources taxes

Environmental taxes EUR mln 16.0 15.5 31.8 24.5

Resources fees EUR mln 14.4 14.3 28.5 28.3

Mining Oil shale assets are a key strategic resource for the Group. Oil shale is a sedimentary rock that contains organic matter called kerogen. Once mined, oil shale can be crushed and either used as fuel for power generation or processed to produce shale oil. The shale oil is produced by heating the rock to a sufficiently high temperature without oxygen for it to decompose and the liquid hydrocarbons to be released. Oil shale is not one of the porous varieties of shale in which gas is trapped naturally (such as Barnet shale in the United States). Oil shale is also different to oil sands, which are a natural mixture of sand or clay, water and a dense and viscous form of petroleum called bitumen. Oil shale is mined in open pit mines or in underground mines using the conventional room-and-pillar method. The Group mines more oil shale than any other oil shale mining company in Estonia. Oil shale is processed at the Group's own plants to provide fuel for the vast majority of the Group's current electricity generation activities as well as acting as feedstock for the Group's oil production activities. Only a small proportion of the oil shale produced by the Group is sold to external customers (external sales have recently declined as the contract with VKG Oil AS was terminated). For further information on the contract with VKG Oil AS, please see “Description of the Group - Litigation” on pages 54 to 56 of this document. Other companies active in oil shale mining in Estonia include: OÜ VKG Kaevandused, Kiviõli Keemiatööstuse OÜ and AS Kunda Nordic Tsement. The Group’s principal operating mines are the Narva opencast mine and the Estonia underground mine, each of which are located in the North-East of Estonia. The Group also operates an enrichment plant (at the Estonia mine). Oil shale is transported to power plants and oil plants by the Group's own rail transport business as well as by other carriers. The Group also looks from time to time to purchase oil shale from other mines in Estonia if it is economical to do so. As at 30 June 2015, the Group held 12 extraction permits in respect of geological oil shale resources amounting to 19 million tonnes per annum. The Group's mining operations in Estonia are summarised in the following table (resource figures are based on the Issuer's own statistics):

41

Mines Operation Open for Permit expiry date Geological oil shale resource, type operations 31 December 2014 (million tonnes) Estonia Underground 1972 Aug 2019 185.0 Narva Opencast 1936 Aug 2019 88.8 Uus-Kiviõli Underground TBD Oct 2036 207.8 Other N/R N/R N/R 24.9 Total 506.5

The Group is currently exploring the possibility of commencing underground mining at the Narva mine, but such mining would not be expected to commence for at least a couple of years. The Group has not yet started mining activities at its newest Uus-Kiviõli underground mine. The Group currently expects the Uus-Kiviõli mine to provide the group with additional oil shale in the medium term. The Group leases the majority of the land on which the mines are situated from the Estonian Government and holds exclusive mining licences to conduct its mining activities. In contrast, the majority of the land on which the Group’s facilities for its other activities are carried out is owned outright by the Group. Each of the Group's sites has a mining limit set out in its relevant extraction permit, which, when aggregated, equals a mining limit of 19 million tonnes of geological oil shale per annum. The Group is permitted to allocate its production between the mines as it sees fit, subject to an overall mining limit of 15 million tonnes of geological oil shale per annum, and not exceeding its annual extraction limit on any particular licence. In Estonia, a mining company may explore for, and extract, mineral resources only on the basis of an exploration or extraction permit granted by either the Ministry of Environment, or the Environmental Board, depending on whether the mine is of national or local importance. The granting of an extraction permit is dependent on the mining company fulfilling the criteria set by the Commission of Estonian Mineral Resources, part of the Ministry of Environment, and the relevant local government authority. The procedure for the grant of exploration and extraction permits is set out in the Estonian Earth's Crust Act. The Group has an active procedure of applying for and acquiring new licences. Most of the Group's current extraction permits are due to expire in 2019. However, the Group expects to be able to apply for extension of its extraction permits for further 10 year periods provided, in each case, that geological oil shale resource remains unmined. Estonian law currently sets an annual extraction limit of 20 million tonnes on geological oil shale mined in the country, of which, as mentioned above, the Group is allocated 15 million tonnes. Recently, amendments were made to the relevant legislation, which now allows an increase to this 20 million tonnes annual limit if in the past seven years some of the limit has been left unmined. There have been discussions and there is an ongoing review, as to what Estonia’s total mining limit should be and how it should be allocated between the various companies using oil shale as raw material. These discussions are driven on the one hand by environmental concerns but on the other hand also by an awareness of the importance of the to Estonia’s economy. Accordingly, the Ministry of Environment has proposed revising the Earth’s Crust Act which regulates oil shale mining. The current coalition government has included in its action plan a review of the legislative framework applicable to Estonia’s oil shale sector with the aim of increasing its competitiveness. Significantly, the review is expected to cover both the principles of how the oil shale resource is allocated between the various companies and how the sector is taxed. An example of how to improve the sector’s competitiveness would be to link the resource fees on oil shale mined with the market price of the end product, i.e. electricity or oil. This would transfer part of the market price risk from producers to the Estonian Government. Further details on this can be found in the section “Risk Factors – Resource risk” on pages 12 to 14 of this document. The Group’s extraction permits include, as is customary in Estonia, requirements for land restoration, remediation and recultivation. The Ministry of Environment, in conjunction with the relevant local government authority, requires any land restoration to be carried out in a manner approved by the Environmental Board. Recultivation work is outsourced to the State Forest Management Centre. The Ministry of Environment may take enforcement action and levy penalties against permit holders who fail to fulfil the terms of any restoration plan. The extraction permit holder's liability for any environmental damage in the restoration area continues for 10 years after completion of the relevant mining activities. The Group has provisions, which it currently considers to be adequate, for the anticipated costs of such land restoration and recultivation. The majority of the oil shale mined by the Group is used in its own operations for producing shale oil and generating electricity and heat. There is currently no real commodity market for oil shale. A small proportion of the oil shale mined is sold locally in Estonia, primarily to other Estonian producers of shale oil. The demand for

42

the oil shale mined by the Group is therefore directly linked to how much electricity and shale oil it produces. In turn, the efficiency of its mining operations also determines the production cost for the Group’s power generation and oil processing units and therefore their competitiveness at global commodity markets. Given that the Nordic power markets as well as world oil markets have recently seen increased volatility and low price levels, the Group is very focused on improving the cost efficiency of its mining operation. Production of Electricity and Heat from Oil Shale Generation portfolio Oil shale based electricity and heat generation is one of the Group’s oldest and largest businesses. The Group’s total oil shale based electricity generation capacities amounted to 1,822 MW, as of 30 June 2015. The Group's principal electricity generation plants are the Eesti Power Plant and the Balti Power Plant, both located near the town of Narva. These two power plants, which are the world's largest oil shale fired power stations, have a combined net capacity of 1,787 MW, and generated approximately 85 per cent. of the total electricity produced in Estonia in 2014. In addition to the Eesti Power Plant and the Balti Power Plant, a smaller 35 MW CFB unit has been integrated with the new Enefit280 oil plant. However, the CFB unit has not yet achieved its design performance parameters and long-term test runs have not yet been completed. The newer CFB units in the Balti Power Plant and Eesti Power Plant, as well as in the new Auvere Power Plant, once operational, can co-fire up to 50 per cent. of biomass and peat in addition to oil shale. Using biomass in the form of sawdust and woodchips reduces the environmental impact of the generation process since less oil shale is required, thereby reducing the levels of CO2 emissions and the build-up of oil shale ash deposits. Provided that the regulatory framework develops in a supportive way, biomass based generation of renewable electricity could also offer the Group opportunities for selling renewable energy certificates. The Group is also conducting tests to assess the feasibility of using other fuels (such as a mixture of coal and mining residues) in the existing generating units, in order to diversify the fuel sources and allow for more efficient mining operations. The Group’s oil shale based electricity generation portfolio

Net Installed Net Installed Net Installed Net Installed Capacity Capacity Capacity Capacity Built Fuel (MW (MW (MW heat) (MW heat) electricity) electricity) 30-June-2015 Planned status for 2016

Eesti Power Plant Oil (7 x 200MW pulverised) 1,161 84 1,161 84 1963-1973 Shale incl available all the time 1,161 84 509 36 incl available 3 months per 0 0 326 24 year incl mothballed 0 0 326 24 Oil (1 x 215 MW CFB) 194 0 194 0 2005 Shale, biomass Balti Power Plant (1 x 180 MW, 1 x 190 MW Oil 240 0 130 0 1956-1966 pulverised) Shale incl available all the time 240 0 0 0 incl mothballed 0 0 130 0 Oil (1 x 215MW CFB) 192 160 192 160 2005 Shale, biomass Gas boiler house 0 240 0 240 2005 Gas Oil Auvere Power Plant 0 0 274 0 Shale, biomass

Oil Oil plant Enefit 280 35 0 35 0 2009-2013 Shale Total 1,822 484 1,986 484

43

The Group’s oil shale based generation activities are subject to environmental regulation at both the EU and national level. Starting from 2016, stricter regulations imposed by the IED (as defined in the section entitled “Risk Factors”) will become effective and will necessitate the closing down and limitation of the operating hours of some of the Group’s power units at Narva. Specifically, one power unit at the Balti Power Plant with net capacity of 110 MW will be decommissioned and four power units at the Balti Power Plant and Eesti Power Plant with total net capacity of 619 MW are expected to be run on limited hours until 2023. The Group expects shortly to complete an investment programme (installation of desulphurisation and denitrification equipment to four of its older pulverised generation units and upgrade of electrostatic precipitators for two CFB units) which would bring these units in line with current IED requirements (with total net capacity of 1,332 MW). In addition to environmental restrictions, prevailing market prices are likely to be a key determinant in how many, and which, of the Group’s generation capacities are operated. The Group’s different generating capacities have different running costs and in general terms newer units tend to be more efficient. Given that the Estonian power market now has a number of connections to the broader Nordic market, the Estonian power price has converged with the Finnish power price to a significant extent. This brings about higher volatility of the hourly power price as well as current low price levels in line with the rest of the Nordic region. The Group is therefore working on increasing the flexibility of its power generation units, in order to regulate their production more quickly depending on the hourly and daily power prices. Given the current low power prices, the Group is also seeking to optimise its generation capacity to cut maintenance investments and fixed costs. This is expected to be achieved by closing down some of the Group’s power units at the Eesti Power Plant and the Balti Power Plant, and reducing the availability period of some of the power units. As a result of the environmental constraints and its efforts to optimise generation capacity, the Group currently expects to be operating the following power units from the beginning of January 2016:  Two newer CFB generation units with total net capacity of 386 MW (one at the Balti Power Plant with 192 MW capacity and one at the Eesti Power Plant with 194 MW capacity) are among the Group’s most efficient oil shale based power units and are thus expected to be kept fully operational.  Three older pulverised combustion power units with total net capacity of 509 MW at the Eesti Power Plant are expected to be kept fully operational (of these units, two units are expected to have desulphurisation and denitrification equipment installed and as a result to be compliant with the IED from 2016 while the third block is expected to be run on limited hours until 2023).  Another two older pulverised blocks at the Eesti Power Plant which are expected to become compliant with the IED with total net capacity of 326 MW are expected to be kept available for three months per year during winter. A shorter availability period should enable the reduction of fixed costs and maintenance investments.  The remaining two pulverised power units at the Eesti Power Plant and one pulverised unit at the Balti Power Plant with total net capacity of 456 MW are expected to be mothballed from 2016 but it should be possible to restart them with sufficient notice to run for limited hours until 2023.  One old pulverised combustion power unit at the Balti Power Plant (with 110 MW net capacity) is expected to be decommissioned. Additionally, the Group’s power generation capacity is expected to be enhanced by the completion of the new Auvere Power Plant, next to the Eesti Power Plant. The net capacity of this new CFB plant will be 274 MW and the plant will allow oil shale to be burnt alongside biofuels, such as woodchips, in equal proportions. The mechanical construction of the plant has been substantially completed and the EPC partner Alstom is currently working on starting up the plant. The plant is scheduled to be commissioned by the end of 2015. Please refer to further details in section “Business Description – Material Contracts” on pages 56 to 58 of this document. The Group has been awarded approximately 17.7 million tonnes of free CO2 allowances as support for the construction of the CFB unit out of which it has already received 9.3 million tonnes and is due to receive a further 8.4 million tonnes until 2017. Power sales The electricity that is generated is sold on the wholesale market (through the Nord Pool Spot power exchange) or through the Group’s supply business to retail customers. The Group’s total electricity sales amounted to 3,894 GWh in the six months ended on 30 June 2015, which comprised wholesale electricity sales of 968 GWh and retail electricity sales of 2,926 GWh. On the wholesale side, the Group operates in an increasingly integrated Baltic and Nordic power market. Each of Estonia, Latvia, and Lithuania are part of the Nord Pool Spot power exchange. The Estonian and Finnish power markets are linked by two EstLink submarine cables with total transmission capacity of 1000 MW. There is insufficient transmission capacity on the border of Estonia and Latvia. However, it is expected that this bottleneck will be somewhat eased with the commissioning of the new 700 MW NordBalt interconnector between Lithuania and Sweden which should become operational towards the end of 2015. The NordBalt cable will have an impact on the Baltic power

44

prices but especially on those in Latvia and Lithuania, given that these markets currently have a power deficit and as a consequence relatively high power prices compared to the rest of the Nord Pool Spot markets. Additionally, a 500 MW cable between Lithuania and Poland is expected to be commissioned in 2016 (with potential for expansion of transmission capacity to 1000 MW in around 2020). A new connection between Estonia and Latvia is also planned and could be completed by 2020. Growing transmission capacity between countries is expected to result in the further convergence of market prices. The price of electricity in the Nord Pool Spot Estonia price area is one of the key factors influencing the Group’s financial results. The following table depicts the average electricity prices in key Nord Pool Spot price areas:

6 months 6 months Full Year Full Year 2015 2014 2014 2013 Average price of NPS Estonia €/MWh 31.3 35.4 37.6 43.0 Average price of NPS Latvia(1) €/MWh 37.8 46.4 50.1 48.4 Average price of NPS Finland €/MWh 29.0 35.0 36.0 41.1 % of hours where Estonian and % 82% 93% 91% 69% Finnish prices are equal Group’s average electricity sales €/MWh 45.2 48.3 47.9 46.2 price (including the impact of hedging) Group’s average electricity sales €/MWh 40.3 42.3 42.8 45.3 price (excluding the impact of hedging)

(1) Latvia joined Nord Pool Spot on 3 June 2013 As can be seen from the table, Estonian and Finnish power prices were equal in over 90% of the hours in 2014 when the second EstLink cable became operational. In the first six months of 2015 the proportion of equal hourly prices has been slightly lower at 82% due to outages of the EstLink cables which temporarily reduced the transmission capacity between the two countries. Overall, as was expected, the increased transmission capacity between the two countries has converged Estonian power prices with Finnish prices to a significant degree. This means that the Group is exposed to the wider Nordic power market and the price fluctuations in the Nordics. The Group has a policy in place to hedge the price risks affecting its power generation activities. The hedge positions in relation to electricity include financial market hedges as well as fixed price contracts signed with the customers of the Supply business. The Group’s financial results are also affected by the prevailing price of CO2 allowances given that the Group has to surrender the allowances for its emissions. Accordingly, the Group also hedges the CO2 price. The table below depicts the Group’s hedge positions and average hedge prices for the second half of 2015 and for the full year 2016 in each case as of 30 June 2015. The prevailing low power prices also affect the forward market so based on its hedging policy the Group has entered into fewer new hedge contracts as old hedge positions mature. The Group’s current preference is to keep some market exposure rather than to completely lock itself into the currently low prices. Hedge positions as of 30 June 2015

Electricity CO2 allowances Closed position, Average price of Closed position Average price of (TWh) closed position (thousand tonnes) closed position (€/MWh) (€/tonne) Q3-Q4 2015 3.4 40.2 8.8 3.8 2016 3.4 37.8 13.0 5.2

Oil Production A key pillar of the Group's strategy, as referred to above, is the extraction of value from oil shale reserves. The Group employs the Enefit technology to produce oil out of oil shale. The Enefit technology uses all of the oil shale that is mined, including fine oil shale particles, in an efficient industrial process. There are two other companies operating in Estonia that process oil shale to produce oil. These are VKG Oil AS (a subsidiary of Viru Keemia Grupp AS) and Kiviõli Keemiatööstuse OÜ. The Group's shale oil production facilities are situated in the Narva area. The first shale oil plant was originally constructed in 1980. The Narva oil plant comprises two Enefit140 units with a combined designed production

45

capacity of up to 240,000 tonnes of shale oil per annum. The Enefit technology does not require material quantities of water, thereby reducing the environmental impact of its operation and cost. In conjunction with its joint venture partner Outotec GmbH & Co. KG (“Outotec”), the Group has constructed another oil plant, the first Enefit280 unit, near Narva on the same site as the Group’s main power plants and the old Enefit140 oil plant. The Enefit280 unit is expected to produce up to 280,000 tonnes of shale oil per annum once it reaches full capacity. The start-up of the plant took longer than expected and the plant has still not yet achieved design capacity for an extended period but it is now operational. The quantity of oil produced by the plant during the six months ending 30 June 2015 amounted to 57 thousand tonnes. Once the Enefit280 achieves a reliable operating track record, the Group expects to consider the construction of an additional Enefit280 unit as long as the investment is economically viable and appropriate financing is available. Alongside shale oil, the production process also generates retort gas, which is currently fired in the Eesti Power Plant to generate electricity. The Enefit280 technology is designed to enable more efficient production of shale oil as well as generation of electricity from gas which is a by-product of the oil production process. Assuming that the technology consistently performs as anticipated, this process is potentially more efficient as a larger share of the energy contained in oil shale is turned into saleable end products. The sale price for shale oil is unregulated and tends to follow the global market for heavy fuel oil which in turn broadly follows crude oil market movements. The Group hedges the sale price of part of its shale oil production to fuel oil with 1 per cent. sulphur content. The actual sale price of shale oil tends to follow the price of such fuel oil with a discount that reflects, among other things, the differential in the technical parameters of shale oil compared to the standard fuel oil product as well as higher logistical costs. Shale oil qualities differ from standard heavy fuel oil, so the market for it is limited. Primarily, export demand comes from producers of bunker or marine fuels, who buy the shale oil, blend it with other products and sell it to shipping companies, while domestic demand for shale oil comes from local boiler houses and producers of asphalt. The following two tables provide an overview of the key price developments relating to the Group’s oil sales and its hedging positions as of 30 June 2015 for the second half of 2015 and for the full year 2016 (respectively):

6 months 6 months Full Full 2015 2014 Year Year (unaudited) (unaudited) 2014 2013 Group’s average shale oil sales price €/tonne 356 415 397 443 (including the impact of hedges) Group’s average shale oil sales price €/tonne 252 419 351 435 (excluding the impact of hedges) Average price of 1% heavy fuel oil(1) €/tonne 274 451 414 457

(1) Source:

Hedge positions as of 30 June 2015 Closed position (thousand tonnes) Average price of closed position (€/tonne) Q3-Q4 2015 105 415 2016 131 366

The Group has a policy in place which is designed to hedge the cash flow from its oil sales. Recently, the proportion of future sales that has been hedged has been declining due to low forward prices of oil which the Group has not wanted to lock in for future periods.

Technology development and production Enefit Outotec Technology OÜ In 2009, the Group established a joint venture with Outotec, a leading international minerals and metals processing technology provider. The joint venture is called Enefit Outotec Technology OÜ. The Issuer holds a 60 per cent. stake in Enefit Outotec Technology OÜ, with Outotec holding the remaining 40 per cent. The purpose of the joint venture company is to develop a new generation of shale oil production technology. Enefit Outotec Technology OÜ provides licences and related services for the use of the Enefit shale oil production

46

technology. The Enefit280 oil plant in Auvere is the first practical application of the Enefit280 shale oil production technology. Eesti Energia Tehnoloogiatööstus AS The Group operates an engineering business called Eesti Energia Tehnoloogiatööstus AS, which provides a range of technological project solutions and maintenance services, mostly to other business units in the Group. This business focuses on the maintenance, design, manufacture and installation of mining, oil and power plant equipment. To a lesser extent, it also sells its products and services to some external customers.

International projects Whilst the Group’s principal focus has been and remains on its Estonian businesses, the Group has also been seeking to exploit its shale oil production expertise internationally, particularly in Jordan (through the Group’s associated companies) and the United States although the Group does not expect to make substantial commitments of new capital to these international projects in the near future. In Jordan, the Group (through its associated companies) in 2010 entered into a 44 year concession agreement with the Jordanian Government for an area of land in the Attarat region estimated to hold circa 3.5 billion tonnes of oil shale, which is expected to be used for two separate projects: a power generation project and an oil production project. The Pre-Development Licence issued to the Group under the Jordan Concession Agreement expired in August 2015 which grants the Jordanian Government the right to terminate the Concession Agreement. While the Group has not received any notice of termination and is currently in discussions with the Jordanian Government regarding amending the Concession Agreement and extending the pre-development period, there is no certainty that the Group will succeed in extending the pre-development period. The Group (through its associated companies) is in discussions with regards to the construction and operation of an up to 460 MW (net) oil-shale fired power station in the Attarat region, Jordan. In October 2014, the Group signed a 30-year power purchase agreement with NEPCO, the Jordanian national energy company, whose obligations are backed by the Hashemite Kingdom of Jordan. Other associated project agreements with Jordanian Government representatives were also signed in October 2014. In addition, the Group has signed an EPC agreement for the power plant with Guangdong Power Engineering Corporation in October 2014 and financing due diligence and documentation discussion are ongoing with Bank of China and Industrial and Commercial Bank of China, supported by China Export & Credit Insurance Corporation (Sinosure), mandated to arrange debt financing for the project. The Group is looking to sell down a large portion of its 65% stake in the Jordan power project. Discussions with YTL Power International Berhad, which is an existing participant in the project, and other interested parties in relation to such a sell down are ongoing and may reach the preliminary agreement in near future. In order to sell down its interest in the Jordanian project, the Group requires the consent of the Jordanian Government, although such consent is only to be withheld in limited circumstances, including where there are concerns relating to national security or unlawful acts by the acquirer of the shares. Furthermore, advanced discussions are ongoing with banks regarding the debt financing of the Jordan power project. Agreement to the proposed sell down, as well as debt financing of the power project, may or may not be reached in the near to medium term, or at all. Whether or not the sell down occurs in the near to medium term, in accordance with the plans of the Group, and in line with the expectations of its Shareholder, the Group does not currently intend to make further significant capital investment into the Jordanian power project. Were the Group not able to sell down its interest or agree satisfactory terms for its debt financing, this is likely to mean that the Jordanian project would not proceed and the investment which the Group has made in it to-date, together with the US$3 million bond that has been provided to the Jordanian Government by APCO, would be lost. A previous minority investor, Near East Group, has decided to exit the Jordan power project at the construction and operations phase. The Group is also carrying out pre-development operations to explore the viability of establishing a shale oil production industry in the Attarat region. The Group is currently conducting a feasibility study in respect of the oil shale resource, carrying out technical studies to adapt the Enefit technology for Jordanian oil shale and arranging for other preparatory works. This phase of the project is expected to last until at least 2016. The Group is not under a legal obligation to develop a shale oil industry and will not suffer any financial penalties if it does not do so. In 2011, the Group acquired the entire issued share capital of Enefit American Oil Co. (formerly known as Oil Shale Exploration Company) for €29.6 million, giving it access to what is currently estimated at approximately 6.4 billion tonnes of oil shale in Utah in the United States. Enefit American Oil Co.’s objective is the evaluation of the exploitation potential of these oil shale reserves through the development of a commercial shale oil industry (including mines and processing facilities) with a capacity of up to 50,000 BBL/D. The pre-

47

development phase of the project, which includes exploration, testing, engineering, approvals and feasibility evaluations, is ongoing.

Renewables and Co-generation Generation capacities The Group has built up a portfolio of renewable and co-generation assets. The renewables assets contribute to diversifying the Group’s mainly oil shale based generation portfolio and reducing the Group’s carbon emissions. The Group seeks to lower the CO2 intensity of its generation capacities and the existing renewables and co-generation portfolio contributes to this aim.

The Group’s generation portfolio of renewables and co-generation Net Installed Net Installed Net Installed Net Installed Capacity Capacity Capacity Capacity Built Fuel (MW (MW (MW heat) (MW heat) electricity) electricity) 30-June-2015 Planned status for 2016

Iru 156 634 156 634 1980-1982 Gas

Iru Waste-to- Household 17 50 17 50 2011-2013 Energy waste Wind 111 0 111 0 2002-2012 Wind Other renewables 4 21 5 29 2002-2015 Renewables Other non- 2 38 2 38 1971-2003 Oil/Diesel/Gas renewables Total 290 743 292 751

Electricity and heat produced by the Group’s renewables and co-generation assets 6 months 6 months Full year Full year 2015 2014 2014 2013 Electricity production by renewables and GWh 203 160 329 280 co-generation assets Heat production by renewables and co- GWh 426 414 694 642 generation assets

The Group has a total of 111 MW of wind based generation capacity. This includes the Group's largest wind park at Aulepa as well as the Narva and Paldiski wind parks. In terms of co-generation capacities, the Group’s largest production unit is the plant for the co-generation of heat and/or electricity at Iru. The Iru power plant is a gas/heavy oil based co-generation plant. The Iru power plant contains two gas fired generating units and three heat only boilers. One of the gas fired generating units can work for limited hours until the end of 2015 and will have to be closed thereafter. It is expected that the second unit will be able to work for limited hours until 2023. It is expected that the Group will be able to keep the heat only boilers running after the end of 2015 subject however to certain operating restrictions. In addition, there is a municipal waste-to-energy CHP unit in Iru which burns around 250,000 tonnes of waste per year, transforming about 85 per cent. of the energy contained in waste into a combination of electricity and heat. The Group also has a number of mini-CHP plants across the Baltics. These include a co-generation plant in Valka, Latvia, with net installed capacity of 2 MWe and 8 MWth and another plant in Paide with net installed capacity of 2 MWe and 8 MWth.

48

Renewable subsidies Based on the Issuer’s own unaudited figures, in the 2014 financial year and during the six months ended on 30 June 2015, the Group received a total of €13.2 million and €8.8 million in renewables subsidies respectively. Renewable subsidies are a key aspect of the Group’s renewables and co-generation business. Under the EMA, producers of electricity may receive state support if electricity is generated: (i) from renewable energy sources (for example wind generators and efficient co-generation plants burning biomass); or (ii) in an efficient co-generation plant using waste, peat or oil shale processing retort gas as fuel, or of no more than 10 MW electrical capacity (“qualifying co-generation plant”). Electricity generated from renewable sources currently receives a subsidy from Elering, the transmission system operator of €53.7/MWh in addition to the market price. Electricity generated in qualifying co-generation plants currently receives a subsidy from Elering of €32/MWh in addition to the market price. There are also limits to the amount of support that can be claimed: wind energy producers may use the subsidy for up to a maximum of 600 GWh of electricity produced by wind energy producers, in aggregate, in Estonia in a calendar year. Proposals have been made to reduce the amount of renewable subsidies and tie the amount of such subsidies to the following indicators or a combination thereof: prices on the Estonian power exchange, market prices of CO2 allowances and the average price of biomass; the specific combination will depend on the renewable energy resource used and the capacity of the generation installation. In the event that the price of electricity on the exchange is equal to or higher than the proposed new reduced subsidy, no subsidy will be paid. A draft Act was discussed in the Estonian Parliament, however, as a result of the change in the composition of the Parliament following the general election in March 2015, the draft Act was removed from the agenda of the Parliament. For the time being, it remains unclear whether and to what extent the available renewable subsidies may be reduced and indeed when the discussions on the draft Act will continue.

Energy Supply This business line includes the supply of electricity to industrial, commercial and household customers. The Group is active in the supply business in Estonia, Latvia and Lithuania. For the year ended 31 December 2014, total estimated electricity demand in Estonia, Latvia and Lithuania amounted to 25.5 TWh. The Group’s retail electricity sales amounted to 6,012 GWh in the year ended 31 December 2014 and 2,926 GWh in the six months ended 30 June 2015. Fixed price electricity supply contracts can benefit the Group as they can provide a price hedge in relation to the Group’s electricity generation business. In addition to the supply of electricity, the Group has recently started selling gas to business customers in Estonia. The Group’s market share in gas supply in Estonia reached 12 per cent. in the first six months of 2015. The Estonian electricity market is fully liberalised and the Group competes with a number of companies in the electricity supply business. The Group's main competitor in the Estonian supply market is Elektrum Eesti OÜ, a subsidiary of AS Latvenergo, which is the main power company in Latvia. The Group’s market share in the Estonian electricity supply market equalled 61 per cent. for the first six months of 2015. Since 2010, the Group has also been developing a presence in both Latvia and Lithuania, whose electricity supply markets have been undergoing a similar liberalisation process. The Latvian market has been fully liberalised since January 2015. Parts of the Lithuanian market are still effectively regulated since household customers (29 per cent. of the country’s total market size in the first six months of 2015) have access to regulated prices. The Issuer has wholly owned subsidiaries in both Latvia and Lithuania that are licensed to sell electricity directly to end customers in their respective countries. The Group’s market share in the electricity supply market of Latvia and Lithuania amounted to 14 per cent. and 4 per cent. respectively during the first six months of 2015. The Group’s total market share in the three Baltic markets amounted to 26 per cent. during the same period. The Group’s main competitors in Latvia and Lithuania include Latvenergo, Lietuvos Tiekimas, and Inter Rao. The Group’s supply business in Latvia and Lithuania is constrained by the limited transmission capacity on the Estonian-Latvian border, i.e. the transmission capacity is not sufficient to equalise the prices in the Estonian and Latvian price area. The Group’s generation capacities are located in Estonia. Therefore, the Group must effectively sell electricity in the Estonian price area of the Nord Pool Spot system and purchase back the electricity in the Latvian or Lithuanian price area to supply its retail customers in these countries. There have been periods of time where there were no opportunities for hedging the risk of the Estonia-Latvia price differential but recently the transmission system operators have introduced auctions of physical transmission rights which provide a mechanism for the Group to fix the transmission cost in relation to its retail portfolio in Latvia and Lithuania. The Issuer believes however that the quantity and the maturity of the transmission rights being auctioned is currently insufficient and this still limits the Group’s ability to sell power in Latvia and Lithuania.

49

Distribution Network The Group’s distribution network is operated by Elektrilevi OÜ, a standalone subsidiary within the Group. Elektrilevi’s network includes approximately 61,000km of 0.4-35 kV underground and overhead lines and more than 22,000 substations at 6-35 kV. The Group has the largest share of the distribution market in Estonia, covering about 91 per cent. of the Estonian population, and having approximately 660,000 metering points. Electricity distribution companies operate as natural monopolies. Therefore, the Group’s distribution network is not subject to direct competition from other market participants. Other distribution network operators in their respective areas in Estonia include OÜ VKG Elektrivõrgud and Imatra Elekter AS. The Group's distribution activities are regulated by the ECA under the EMA and the Estonian Grid Code. Electricity distribution is a natural monopoly and the Group is subject to price regulation in relation to the provision of network services. The ECA approves the distribution tariff by taking into account the legal obligations of the distribution network operator as well as allowing it to obtain a reasonable rate of return. The calculation of tariff is based on the distribution network’s weighted average cost of capital (“WACC”) that is applied to its regulated asset base (“RAB”), regulatory depreciation, uncontrollable costs (such as fees of the transmission system operator) and reasonable operating costs. The current tariff of the distribution services was approved based on regulatory WACC of 6.76 per cent. in December 2013 and has been effective since April 2014. As a result of certain changes to the regulatory regime which became applicable to Elektrilevi in 2014, fixed regulatory periods are no longer used and there are no regular reviews of the tariff, the tariff only being reviewed if the relevant distribution network company applies for a review, or if the ECA initiates a review on the basis that unjustified profits were being made by the relevant distribution network company. As long as the distribution network company does not apply for a new tariff, or the ECA initiates a review on the limited basis above, the existing tariff is to remain in effect and changes in regulatory WACC do not affect it. If Elektrilevi was to apply for a tariff change as at the date of this Prospectus, the applicable regulatory WACC used for calculating the new tariff would be 5.02 per cent. The change in the regulatory regime is intended to incentivise distribution network companies to apply for less frequent tariff increases. The EMA obliges all distribution network operators to treat all electricity market participants equally and to protect information about market participants. The Group has taken this into account when designing its operational structure. Elektrilevi is a separate subsidiary of the Issuer, which has its own independent management board and management structure. The Group’s distribution network company has implemented a significant expenditure programme with the aim of improving the reliability of the distribution network and increasing the efficiency of the network as well as full adoption of smart meter reading by 2017. Network losses have been declining over the past years and amounted to 5.5 per cent. in 2014 and to 5.3 per cent. in the six months ended 30 June 2015. The following table provides an overview of the losses in the Group's distribution network in recent reporting periods:

6 months 2015 6 months 2014 Full Year (unaudited) (unaudited) Full Year 2014 2013 Network losses % 5.3 5.9 5.5 5.2 Network losses GWh 186 207 381 359

The Group is also working towards improving customer satisfaction with the network which involves reducing the number and duration of faults. A large share of the outages in the network is attributable to adverse weather conditions and trees falling on the lines. The Group is replacing wires with aerial insulated cables and underground cables to reduce such outages. Due to a lower than optimal level of investment in the 1980s and 1990s, a large share of the network equipment is relatively old and susceptible to breakdown. This increases the capital expenditure needs of the distribution network. Metrics including cashflow targets have been agreed with Elektrilevi with a view to appropriately managing and planning for this capital expenditure. The table below depicts some of the Issuer's distribution assets by their useful remaining lives as at 30 June 2015:

More than 0-10 years 10-20 years 20-30 years 30-40 years 40 years Wires 15% 12% 16% 42% 15%

50

Cables 51% 15% 12% 12% 11% MV/LV Substations 31% 30% 12% 14% 14%

Source: Elektrilevi OÜ

Capital expenditure The last few financial years have been periods of relatively high capital expenditure for the Group as it has developed new production facilities. These projects are now close to completion and it is expected that the capital expenditure will be considerably lower from 2016. In addition to declining development investments, the Group is working on optimising its power generation and mining capacity which should enable curbing maintenance investments. Overall, the Group's budgeted future capital expenditures reflect the Group's strategy which is focused on the oil shale to energy business and improving the performance of the distribution network. In addition to the investment projects detailed below, the Group’s maintenance capex is expected to average €44 million annually in 2016 to 2019. Committed investments The Group has recently completed the construction of several sizable projects and has not committed to any new substantial investments. However, in 2015 the level of the Group’s investments is still expected to remain sizable. Oil Shale to Energy Business In June 2011, the Group commissioned Alstom to construct a new oil shale and biomass fired CFB unit with a total capacity of 300 MW (gross) to be located near the existing Eesti Power Plant. Construction of the unit commenced during 2011. The CFB unit has improved thermal efficiency and lowered associated CO2, SO2 and NOx emissions. The total cost of the CFB unit is currently estimated at €638 million. Mechanical construction of the plant has been completed and Alstom is currently in the commissioning process. The plant is scheduled to be completed at the end of 2015. The Issuer also had an option to commission Alstom to construct a second CFB unit but this option has now expired. Distribution The Group currently intends to invest approximately €63 million annually in 2016 to 2019 to improve the quality of its distribution network, net of connection fees from customers. One of the distribution network’s main projects is to install new smart meters to replace existing meters for all its customers. This project is expected to be completed by the end of 2016 and is expected to cost approximately €47 million in the period 2015-2016 (this investment is in addition to the annual investment amount indicated in the previous paragraph). The new smart meters will enable Elektrilevi to conduct remote meter reading which will provide a more efficient and accurate billing service for customers as well as allowing Elektrilevi to assess service disruptions remotely. The distribution network is also investing in its IT system, improving the reliability of the IT network and installing new cabling connections. Non-committed investments The Group is also reviewing a number of capital expenditure projects which are not yet committed. These include: Eesti Power Plant Construction of second Enefit280 unit The Group has finished the construction of the first Enefit280 oil plant at Narva. The plant is operational but has not yet achieved design parameters. Provided that the Enefit280 plant achieves a reliable operational track record, the investment is economically viable and appropriate funding is available, the Group may consider constructing another similar oil plant. Construction of such a plant would in any event be unlikely to start before 2017. It is estimated that a second Enefit280 plant would cost approximately €250 million.

Financing The Group has funded, and expects to fund, its capital expenditures using a combination of internally generated funds and external sources of funding, including bank loans and financing through the capital markets. While the Estonian Government has previously made equity injections to the Group (€150.0 million in 2012) there is no assurance that such funds will be available to finance the Group’s investment plans in the future.

51

As of 30 June 2015, the Group’s total borrowings in nominal value amounted to €936.4 million (amortised cost amounted to €934.2 million), including: (i) €400 million of euro-denominated 4.25 per cent. fixed rate bonds due 2 October 2018; (ii) €300 million of euro-denominated 4.5 per cent. fixed rate bonds due 18 November 2020; and (iii) €236.5 million of loans received from the European Investment Bank (due and payable in instalments with a final maturity date of 2026). As of 30 June 2015, the Group had the following committed undrawn loans available: (i) €100 million loan available from the EIB – this loan can be drawn no later than in October 2015; and (ii) three bilateral revolving credit facilities in an aggregate principal amount of €150 million with Nordea Bank Finland plc, SEB Pank AS and Pohjola Bank Plc. These facilities were terminated by the Group in July 2015 as it signed two new extended bilateral revolving credit facilities in an aggregate amount of €150 million with SEB Pank AS and Pohjola Bank Plc. The term of these new revolving facilities is five years expiring in July 2020. The Group’s financing agreements contain representations, events of default and affirmative and negative covenants. The Group’s non-financial covenants restrict, among other things, the Group’s ability to grant security, dispose of assets, incur debt and merge or demerge. The Group’s loan agreements with the EIB contain various financial covenants including (i) a net debt to Group EBITDA ratio, (ii) an interest coverage ratio, and (iii) a net debt to Group equity ratio. As of 30 June 2015, the Group complied with these financial covenants. The weighted average interest rate of the Group's borrowings was 3.95 per cent. as of 30 June 2015. The Group has predominantly addressed the risk arising from fluctuations in the base interest rate (for 80% of borrowings the base interest rate is locked until maturity, for 15% until July 2016 and 5% of borrowings have floating interest rates). The margin applied on top of the base interest rate is fixed for a large part of the Group’s borrowings, but for some loans the applicable margin depends on the Issuer’s credit rating (such borrowings constituted 25% of total outstanding debt as of 30 June 2015). All borrowings are denominated in euros. The Group paid out dividends in the amount of €93.6 million in 2014. The Issuer is expected to pay net dividends in the amount of €95 million in 2015. The Issuer must also pay tax on top of the dividends, calculated as 25 per cent. of the net dividends. A policy document by the Minister of Finance outlining its expectations as the Shareholder referred to above, sets out its expectation for dividends of between 50- 100% of the Issuer’s net profits in the future. The policy document by the Shareholder also sets out limits for certain financial ratios applicable to the Group. In line with the Shareholder’s expectations, the financial policy recently adopted by the Issuer’s Management Board and approved by the Supervisory Board envisages a ceiling for net debt at 3.5 times EBITDA. The Group’s net debt divided by the last 12 months’ rolling EBITDA stood at 2.3 as of 30 June 2015. Credit rating As at the date of this document, the Issuer's credit rating by Moody's is Baa2 (with stable outlook) and by S&P BBB (with stable outlook).

Management of the Issuer Overview In shareholders' meetings of the Issuer, the Shareholder is represented by the Minister of Finance. The Minister exercises all of the Shareholder's powers in a general meeting. For certain corporate actions, the Minister needs government approval prior to casting his vote at the shareholders' meetings. Such corporate actions include, amongst other things: (i) amending the Issuer's share capital; (ii) commencing liquidation proceedings; (iii) entering into a merger agreement with another entity; (iv) re-organising the Issuer; (v) amending the Issuer's Articles of Association if this results in amendments to rights pertaining to the Issuer's shares; and (vi) determining the dividend level to be paid. The Supervisory Board and the Management Board are responsible for the management of the Issuer. The Supervisory Board is a non-executive body responsible for, amongst others: (i) overseeing the Group's strategy; (ii) approving major strategic and tactical decisions; and (iii) supervising the work of the Management Board. The Supervisory Board also approves the annual budget and business plan. The Supervisory Board is constituted on the basis of the requirements specified in the State Assets Act, the Commercial Code and the Issuer's Articles of Association. The Management Board's rules of procedure are set out in the State Assets Act,

52

the Commercial Code and the Issuer's Articles of Association. The Management Board is responsible for representing and managing the Group's affairs in all day-to-day activities and administration. Supervisory Board The Supervisory Board comprises seven members. The work of the Supervisory Board is organised by the Chairman. The compensation of the members of the Supervisory Board is determined by the Minister of Finance, as Shareholder, within the generally applicable limits established by the Minister of Finance. The Supervisory Board is responsible for approving major strategic and tactical decisions and supervising the work of the Management Board of the Issuer. The members of the Issuer's Supervisory Board are set out in the table below: Name Function External activities Erkki Raasuke Chairman Member of the management board of AS LHV Group, Eesti Jalgratturite Liit and MTÜ Soela Sadama Selts Chairman of the supervisory board of AS LHV Varahaldus and AS LHV Pank, and member of the supervisory board of AS TREV-2 Grupp and EfTEN Kinnisvarafond AS.

Meelis Virkebau Member Member of the management board of Eesti Rõiva- ja Tekstiililiit and Tallinna Direktorite Klubi.

Danel Tuusis Member Member of the management board of OÜ Kaanon Kinnistud, OÜ Hospidali Setter, Gildi Investeeringud OÜ, OÜ Kromotek Holding and OÜ Prokter. Liquidation manager of AS Valma Tekstiilitööstus.

Peep Siitam Member Member of the management board of OÜ Stehlin, OÜ MapPartner, OÜ Vool, OÜ Maardu Graniidikaevandus, OÜ Tammepärja Kodu and Eesti Tuuleenergia Assotsiatsioon.

Randel Länts Member Member of the management board of OÜ Prime Member of the supervisory board of AS Tallinna Sadam and Sihtasutus Viljandi Hariduse Arengufond.

Väino Kaldoja Member Member of the management board of AS Silberauto, OÜ Veerenni Autokeskus, Keila-Joa Sadam OÜ, Eesti Kaubandus-Tööstuskoda, Eesti Suurettevõtjate Assotsiatsioon, Eesti Jalgratturite Liit, Tallinna Tehnikaülikooli Vilistlaskogu, Korteriühistu Carl Engeli Maja. Chairman of the supervisory board of Sihtasutus Tallinna Tehnikaülikooli Arengufond, and member of the supervisory board of OÜ Tarfurgo.

Märt Vooglaid Member Member of management board of Almi Capital OÜ and Private Group OÜ. Member of the supervisory board of Aadu Luukase SA.

The business address of each member of the Supervisory Board is Lelle 22, 11318 . Save for the matters disclosed in the table above under the heading "External Activities", no member of the Supervisory Board has any potential conflict of interest between his duties to the Issuer and his private interests and/or other duties. Furthermore, no member of the Supervisory Board has any actual conflict of interest between his duties to the Issuer and his private interests and/or other duties. Management Board The Issuer’s Management Board comprises five members elected by the Supervisory Board. A chairman is separately appointed to organise the work of the Management Board and act as Chief Executive Officer. The Management Board generally meets once a week and is responsible for fulfilment of the objectives of the Group. The members of the Issuer's Management Board are set out in the table below:

Name Date appointed from Date appointed until Function

53

Name Date appointed from Date appointed until Function Hando Sutter 1 December 2014 30 November 2017 Chairman, CEO Andri Avila 1 March 2015 30 November 2017 Member, CFO Andres Vainola 1 December 2014 30 November 2017 Member, Mining and Maintenance Raine Pajo 1 December 2014 30 November 2017 Member, Energy Production Margus Vals 1 December 2014 30 November 2017 Member, Projects, Technology and New Business

The previous CEO Sandor Liive and the previous CFO Margus Kaasik left the Group at the end of November 2014 and ceased to be members of the Management Board at that time. Margus Rink, previous head of the Energy Supply business left the company in Q2 2015 and has also ceased to be a member of the Management Board. The new CEO Hando Sutter took office in December 2014 and put together his own management team. Some of the new Management Board members joined from outside the Group (including new CFO Andri Avila and Andres Vainola). However, Raine Pajo has long experience of working in the Group (he has been a member of the Management Board since 2006 and in other positions with the Group since 2000). Similarly, Margus Vals has worked in the Group since 2002 and has now been promoted to the Management Board. The business address of each member of the Management Board is Lelle 22, 11318 Tallinn. No member of the Management Board has any actual or potential conflict of interest between his duties to the Issuer and his private interests and/or other duties.

Employees The Group employed 6,443 employees as of 30 June 2015 (compared to 6,601 as of 31 December 2014). There are 15 unions and eight collective agreements. However, there have been no stoppages owing to employment disputes. The Group does not provide any employer funded pension schemes.

Insurance The Group currently has insurance against property damage, machinery breakdown and business interruption in its major production units. The assets of the Eesti and Balti Power Plants, the Iru power plant and the Narva oil plant are insured with an indemnity limit of €250 million per claim. The windparks are insured with an indemnity limit of €12.5 million. Two smaller CHP plants and some other major property are insured with an indemnity limit of €25 million. The Group does not insure against all potential losses where it is not economical to do so. The Group does not have insurance against damage to its distribution network and equipment or against damage to its mining operations. The Group also has public, product liability and casualty insurance against claims related to its operations, with the exception of its mining operations. This policy also has additional sub-limits for professional liability insurance, motor-third party insurance, employers' liability insurance, pure financial loss insurance and care custody and control insurance. Finally, the Group also has directors' and officers' liability insurance.

Anti-corruption investigation In 2015, the Issuer's internal audit team uncovered a possible case of corruption and bribery at the Narva Power Plant involving three former employees of Eesti Energia Narva Elektrijaamad AS, an operating subsidiary of the Issuer. The employment of the three employees was consequently terminated, and the Issuer's internal audit team notified the Estonian authorities. Neither the Issuer, nor any member of the Group, is implicated in the matter, and the police investigation into the alleged corruption by the three former employees is ongoing. The Group’s internal procedures have been updated and improved to prevent occurrences of such a nature in the future, and the Group is embarking on a review of its procurement processes.

Litigation Except as described below, there are no governmental, legal or arbitration proceedings (including any such proceedings pending or threatened against the Issuer of which the Issuer is aware) during the 12 months prior to the date of this document that may have, or have had in the recent past, significant effects on the Issuer and/or the Group's financial position or profitability.

54

Uus-Kiviõli mining licence The Group was allocated a mining licence by the Ministry of Environment at the Uus-Kiviõli mine which gave it access to 207.8 million tonnes of geological oil shale. OÜ VKG Kaevandused and TLA Invest OÜ, who also applied for licences at the same mine, submitted applications to the Tallinn Administrative Court, claiming against the Estonian Government that due process was not followed in the award to the Group as an auction process was not conducted in the allocation of the licences. The Group believes that the licence was validly allocated due to an exception under the Earth's Crust Act which provides for a preferential right of allocation in order to replace supply which will be exhausted within five years. The Tallinn Administrative Court found in favour of OÜ VKG Kaevandused and TLA Invest OÜ and annulled the decree of the Ministry of Environment allocating the mining licence at the Uus-Kiviõli mine to Eesti Energia Kaevandused AS, a subsidiary of the Issuer. All the parties involved in the dispute have appealed the referred decision of the Tallinn Administrative Court and the matter is currently being reviewed by the Tallinn Circuit Court. Estonia mining licence The Group applied for an amendment of some of its mining licences relating to the Estonia mine in order to extend the term of some of the licences and to amend the maximum annual amount allowed to be mined under the respective licences. The Ministry of Environment approved the amendments to the mining licences applied for by the Group. OÜ VKG Kaevandused submitted an application to the Tallinn Administrative Court requesting annulment of the respective decree of the Ministry of Environment. The Group believes that the claims made by OÜ VKG Kaevandused are unfounded. The proceedings are currently ongoing at the Tallinn Administrative Court. Possible unauthorised mining of peat at the Narva opencast mine The Environmental Board in Estonia is investigating whether as part of the Group’s operations at the Narva opencast mine and the removal of layers of peat to enable the mining of oil shale, the Group had undertaken unauthorised mining of peat which is registered in the Environmental Register. As a result of these investigations the Environmental Board notified Eesti Energia Kaevandused AS in May 2014 of draft enforcement proposals, which could, if implemented, render it liable for the payment of additional extraction charges due to unauthorised mining of peat. Eesti Energia Kaevandused AS is of the view that the removal of the peat was permitted under the existing oil shale mining licence for the Narva opencast mine and any potential claim for payment of additional extraction charges is therefore unfounded. The proceedings are currently ongoing. Further details on this can be found in the section “Risk Factors – Possible unauthorised mining of peat at the Narva opencast mine” on page 16 of this document. Pricing structure of oil shale and shale oil In March 2013 the ECA published a non-binding market analysis concerning the competition situation in the oil shale sector. As the Group is the largest seller of oil shale in Estonia, the ECA's analysis largely focused on the pricing structure of the Group's oil shale sales within the Group and to third parties. The Group is not aware of any irregularities in the way it has priced sales of oil shale and shale oil. Further details on this can be found in the section “Risk factors – Competition and unbundling” on page 15 of this document. Following termination of the ECA’s investigations into the Group’s pricing structure of sales of oil shale and shale oil new proceedings were initiated by the ECA in March 2014 with regards to Eesti Energia Kaevandused AS in connection with alleged abuse of dominant position. The referred proceedings were initiated by the ECA on the basis of a complaint submitted by Viru Keemia Grupp AS and claim that Eesti Energia Kaevandused AS applied discriminatory pricing practices to sales of oil shale. The Group believes that these claims are unfounded and that the pricing structure of sales of oil shale of the Group is in compliance with applicable competition law requirements. The proceedings are currently ongoing. VKG Oil AS, a subsidiary of Viru Keemia Grupp AS filed a claim for damages against Eesti Energia Kaevandused AS in January 2015 in connection with the sale of oil shale by Eesti Energia Kaevandused AS to VKG Oil AS. VKG Oil AS claims that the price of oil shale set out in the respective sale agreement is discriminatory and therefore not in compliance with the Competition Act. The Issuer believes that this referred claim is unfounded. Furthermore, Eesti Energia Kaevandused AS terminated the agreement for the sale of oil shale to VKG Oil AS due to a breach of the terms of the agreement by VKG Oil AS and filed a claim against Viru Keemia Grupp AS and VKG Oil AS for damages. Both claims are at an early stage and the parties are still in the process of finalising and exchanging their positions. No hearing time has been set by the Viru County Court. Constitutional Review of the Renewable Energy Subsidy A request to verify whether the renewable energy subsidy generally is in conformity with the Constitution was referred to the Supreme Court en banc in February 2015. The Supreme Court has asked various different parties (including the Chairman of the Estonian Parliament, the Estonian Chancellor of Justice, the Estonian Minister of Justice and representatives of the Estonian Government as well as the Issuer to be party to the 55

resultant proceedings) to outline their views on whether certain provisions of the EMA which provide for the renewable energy subsidy are in conformity with the Constitution and whether the renewable energy subsidy should be considered as a financial obligation in public law within the meaning of the Constitution. The Issuer is of the view that the renewable energy subsidy is in conformity with the Constitution. Should the Supreme Court find that the respective provisions of the EMA which provide for the renewable energy subsidy are in conflict with the Constitution, it may repeal the respective provisions.

Material Contracts Except as described below, the Issuer has not entered into any material contracts outside the ordinary course of business, which could result in either the Issuer or another member of the Group being under an obligation or entitlement which is material to the Issuer's ability to meet its obligations to Noteholders in respect of the Notes: Alstom EPC Agreement In 2011, the Group commissioned Alstom to construct up to two new oil shale and biomass fired CFB units near the Eesti Power Plant (each unit with an installed capacity of 300 MW). The Group is committed to the construction of one CFB unit under the EPC agreement at an estimated cost of €638 million (out of which the Alstom EPC contract makes up €559 million). The Group had an option to construct the second CFB, however, decided not to exercise it. The first unit is expected to be commissioned by the end of 2015. Under the contract, Alstom has generally undertaken to do everything necessary for the commissioning of the plant and risks associated therein lie with Alstom. The Group has a very limited scope of work and there are some risks specified in the contract for which Alstom is not liable. All risk of damage to or loss of any item of the works and the plant shall be borne by Alstom until provisional acceptance, that is, until the moment when all performance tests have been successfully passed and the plant has been delivered to the Group. Under the contract, Alstom shall issue all guarantees customary to turnkey contracts. Pursuant to the contract, Alstom has an obligation to pay liquidated damages for delay, for the failure to meet performance guarantees, for the failure to meet reliability requirements after delivery of the plant and to deliver documentation. The contract specifies the maximum amount payable for each type of liquidated damages and also the maximum aggregate amount of liquidated damages payable by Alstom. Outotec Joint Venture Agreement In 2009, the Issuer and Outotec, a leading international minerals and metals processing technology provider, established a joint venture called Enefit Outotec Technology OÜ to further develop and exploit the Group's Enefit technology. The Issuer holds a 60 per cent. stake in Enefit Outotec Technology OÜ. Under the shareholders' agreement, the Issuer and Outotec are each entitled to nominate three members of the supervisory board and one member of the management board of Enefit Outotec Technology OÜ. All key decisions have to be taken by consensus. Both the Issuer and Outotec have agreed to provide to Enefit Outotec Technology OÜ reasonable access to, and use of, their respective intellectual property and know-how relevant to the Enefit technology. Any and all new intellectual property relating to the Enefit technology created as a result of the parties cooperation shall belong to Enefit Outotec Technology OÜ. Neither shareholder may transfer or create any security over its share in Enefit Outotec Technology OÜ without the consent of the other shareholder. In the event of deadlock, either shareholder and in the event of an un- remedied default by one shareholder, the other shareholder will have a right to issue a termination notice. Upon service of the termination notice, the Issuer is required to purchase and Outotec is required to sell its share in Enefit Outotec Technology OÜ at a fair market price agreed between the parties or failing that in accordance with a specified valuation procedure. Jordan Concession Agreement The Jordanian Government and Jordan Oil Shale Energy Company (“JOSE”, a company in which the Group currently has a 65 per cent. share) signed a surface retort concession agreement on 11 May 2010. Under the agreement, the Jordanian Government grants JOSE the exclusive right to conduct oil shale operations within a defined area in the Attarat region over a period of 44 years plus a possible extension of 10 years. The Jordanian Government has the right to requisition the Group's products in the event of a national emergency. JOSE has committed to: (i) spend at least US$15 million over the pre-development period (four years) and must produce (and annually renew) a guarantee from a reputable bank as security for that amount; (ii) whilst JOSE has not committed to construct a shale oil plant, if a shale oil plant is built JOSE must pay the Jordanian

56

Government a bonus of US$10 million when cumulative shale oil sales reach 10 million barrels; (iii) pay the Jordanian Government a monthly royalty of up to 5 per cent. of monthly sales of shale oil; and (iv) pay various other taxes and charges levied by the Jordanian Government. JOSE has also committed to comply with environmental obligations. Simultaneously with the concession agreement, the Issuer entered into a direct agreement with the Jordanian Government setting out certain sell down restrictions. A reduction of the Issuer's stake in JOSE below 50 per cent. requires Jordanian Government consent (such consent to be withheld on limited grounds related to national security or unlawful acts of the acquirer), and a reduction below 10 per cent. is not possible during the lock-in period (being the period until the date of payment of a commercial production bonus or 10 years from the effective date, whichever is later). After the lock-in period, the Issuer will require Jordanian Government consent to reduce its stake below 10 per cent., but consent can only be refused in the limited circumstances related to national security or unlawful acts of the acquirer. The Jordanian Government has the right to terminate the concession agreement if JOSE: (i) fails to commence development within a specified time limit; (ii) fails to apply for the necessary licences; (iii) ceases operations for more than 2 years; or (iv) commits a material breach of any of its obligations. JOSE may terminate the concession agreement if the Jordanian Government expropriates any of the oil shale operations or facilities, unreasonably withholds its consent/approval for licences or withdraws any rights that materially hinder JOSE's ability to carry out its obligations. The agreement also contains provisions on compensation upon termination due to Jordanian Government default. The Pre-Development Licence issued to the Group under the Jordan Concession Agreement expired in August 2015 which grants the Jordanian Government the right to terminate the Concession Agreement. While the Group has not received any notice of termination and is currently in discussions with the Jordanian Government regarding amending the Concession Agreement and extending the pre-development period, there is no certainty that the Group will succeed in extending the pre-development period. The Jordan power project is in the final phase before work is expected to commence on the construction of the power plant and mining operations. Jordan Power Project Agreements On 1 October 2014 APCO, a company in which the Group currently has 65 per cent. share), entered into a power purchase agreement with National Electric Power Company (“NEPCO”), the Jordanian national electricity company, and an implementation agreement, a land lease agreement and mining agreement with the Jordanian Government. Under the power purchase agreement, NEPCO undertakes to purchase at an agreed tariff all of the capacity of the 554 MW (gross) oil shale fired power plant to be constructed and operated by APCO on a take or pay basis for a period of 30 years from financial close plus a possible extension, which, if exercised by NEPCO, will result in the term expiring 40 years from the commissioning of the second unit of the power plant. The obligations of NEPCO are backed by the Jordanian Government. APCO may not sell or deliver capacity produced by the power plant to any other entity than NEPCO. APCO has committed to achieve financial close within twelve months from signing of the implementation agreement and has issued a guarantee in the amount of US$3 million as security for this commitment. After achievement of financial close APCO has an obligation to do everything necessary to engineer, procure and construct the power plant and operate it. APCO has an obligation to pay liquidated damages for delay in commissioning of the power plant and for a failure to meet capacity and reliability requirements. The power purchase agreement specifies the maximum amount payable for each type of liquidated damages and also the maximum aggregate amount of liquidated damages payable by APCO. At financial close APCO is required to produce a guarantee from a reputable bank as security for the maximum aggregate amount of the liquidated damages. APCO has also committed to comply with environmental obligations, pay a monthly royalty on the oil shale energy consumed at the plant and pay various other taxes and charges, subject to certain tax exemptions provided for in the implementation agreement. Simultaneously with the above referenced agreements, the Issuer entered into a direct agreement with the Jordanian Government setting out certain sell down restrictions. For an initial lock-in period (being the period until 30 months after the commissioning of the second unit of the power plant) the Issuer together with other initial shareholders (being any shareholder who at financial close owns at least 25 per cent. stake) shall collectively retain a stake in APCO at the level on 50 per cent. plus one share. After the initial lock-in period the Issuer may reduce its stake to 10 per cent. only with Jordanian Government consent (such consent to be withheld on limited grounds related to national security or unlawful acts of the acquirer). A reduction below 10 per cent. is not possible during the lock-in period (being the period until 10 years from signing of the agreements or five years from the commissioning of the second unit of the power plant, whichever is later). After the lock-in period, the Issuer will require Jordanian Government consent to reduce its stake below 10 per

57

cent., but consent can only be refused in the limited circumstances related to national security or unlawful acts of the acquirer. NEPCO and/or the Jordanian Government have the right to terminate the project agreements if APCO: (i) fails to achieve financial close by the specified deadline; (ii) fails to provide the guarantee as security for the maximum aggregate amount of the liquidated damages; (iii) fails to attain material licenses; (iv) fails to commission the units of the power plant by the specified deadline; (v) abandons construction or operation of the power plant; (vi) fails to achieve specified capacity and reliability requirements; (vii) commits a material breach which is not remedied within the agreed cure period. NEPCO and/or the Jordanian Government also have the right to terminate the project agreements in case any initial shareholder transfers its stake in APCO in breach of the direct agreement. APCO may terminate the project agreements if the Jordanian Government expropriates any shares in APCO or any material assets thereof; or withdraws any rights that materially hinder APCO’s ability to carry out its obligations; or in case NEPCO and/or the Jordanian Government fail to make payments under the project agreements; or commit a material breach which is not remedied within the agreed cure period. The implementation agreement also contains provisions on compensation upon termination due to NEPCO and/or Jordanian Government default. Jordan Power Project EPC Agreement On 31 October 2014 APCO entered into an EPC contract with Guangdong Power Engineering Corporation (“GPEC”), a subsidiary of China Energy Engineering Group Co. Ltd., for the engineering, procurement and construction of the oil shale fired power plant at Attarat um Ghudran in the Hashemite Kingdom of Jordan. GPEC will, on a turnkey basis, undertake the design, engineering, procurement, construction, erection, interconnection, commissioning, start-up, testing, completion, placing in operation and delivery of the oil shale fired electric generation plant. The contact price to the Group is US$ 1.2 billion, payable against monthly applications. Under the contract, GPEC has agreed to issue guarantees customary in turnkey contracts. Liquidated damages are payable if trial run completions, reliability tests, performance guarantees or minimum performance requirements are failed at certain dates. These liquidated damages are specified in the contract. The contract also specifies the maximum amount payable for each type of liquidated damages and also the maximum aggregate amount of liquidated damages payable by GPEC. GPEC has also given security under the contract. Under the contract, GPEC has generally undertaken to do everything necessary for the commissioning of the plant and risks associated therein lie with GPEC. Additionally, there are latent defect periods 24–48 months after provisional acceptance of each unit of the plant, during which GPEC continues to have liability. The Group has some risks specified in the contract for which GPEC is not liable. Either party may terminate the contract if the progress of all or substantially all of the works is prevented for a continuous period of 12 months by reason of an event of force majeure. Related Party Transactions In preparing the Group's consolidated financial statements, related parties include associates of the Group, members of the Supervisory and Management Board of the Issuer, and other individuals and entities who can control or significantly exercise influence over the Group's financial and operating decisions. As Estonia is the sole owner of all the shares of the Issuer, the related parties also include entities under the control or significant influence of Estonia. Associates include entities over which the Group exercises significant influence but not control, generally holding between 20 per cent. and 50 per cent. of the voting rights in the relevant entity. Subsidiary undertakings The Issuer is the holding company of the Group. It has the following subsidiaries and associates:

Business name Country of incorporation Proportion of ownership Subsidiaries: Eesti Energia Aulepa Tuuleelektrijaam OÜ Estonia 100% Elektrilevi OÜ Estonia 100% Eesti Energia Kaevandused AS Estonia 100% Eesti Energia Narva Elektrijaamad AS Estonia 100% Eesti Energia Õlitööstus AS Estonia 100% Eesti Energia Tabasalu Koostootmisjaam OÜ Estonia 55% Eesti Energia Tehnoloogiatööstus AS Estonia 100% Eesti Energia Testimiskeskus OÜ* Estonia 100%

58

Business name Country of incorporation Proportion of ownership Enefit American Oil Co.* United States 100% Enefit US, LLC United States 100% EAO Real Estate Corp* United States 100% EAO Federal Lease LLC* United States 100% EAO State Leases LLC* United States 100% EAO Technology LLC* United States 100% EAO Orion LLC* United States 100% Enefit Outotec Technology OÜ Estonia 60% Narva Soojusvõrk AS* Estonia 100% SIA Enefit Latvia 100% UAB Enefit Lithuania 100% Pogi OÜ Estonia 66.5% Enefit Power and Head Valka SIA Latvia 90% Eesti Energia Hoolduskeskus AS* Estonia 100% Attarat Holding OÜ Estonia 100% Associates: Enefit Jordan B.V. Netherlands 65% Attarat Mining Company B.V. Netherlands 50% Attarat Operation and Maintenance Company Netherlands 25% B.V. Attarat Power Holding Company B.V. Netherlands 65% Jordan Oil Shale Energy Company* Jordan 65% Attarat Power Company* Jordan 65% Orica Eesti OÜ* Estonia 35% AS Nordic Energy Link (likvideerimisel) Estonia 50% N.E.L. Finland OY* Finland 50%

(*) Denotes companies which are indirectly owned by the Issuer.

59

REGULATION The Group operates under a wide and complex set of regulations and directives. A brief overview of the regulatory framework to which the Group is subject is set out below.

Electricity Regulation The Estonian electricity market is mainly regulated by the Electricity Market Act (''EMA''). The Ministry of Economic Affairs and Communications and the Estonian Competition Authority (''ECA'') share responsibility for the overall supervision and regulation of the Estonian electricity sector.

Electricity generation and supply Since 1 January 2013 Estonia’s electricity market has been fully liberalised and all customers are required to purchase electricity on the open market. As a result several pieces of previously applicable price regulation with regards to the sale of oil shale mined in Estonia to the Eesti and Balti Power Plants for the production of heat and electrical energy; the sale of electricity to non-eligible customers; and the sale of electricity by the Eesti and Balti Power Plants to distribution network companies or sellers designated by distribution network companies for onward sale to non-eligible customers were removed from the EMA. However, the Group may be considered dominant in some of the above mentioned markets and as a result may be subject to Estonian and/or EU competition enquiries and ex-post control by the respective competition authorities.

Universal service obligation In connection with the liberalisation of the Estonian electricity market, a new public service obligation was introduced into the EMA. As a result, under the EMA, small-scale consumers (i.e. households and business customers whose electricity installations are connected to the network at low voltage) can buy electricity under what is known as the universal service obligation, i.e. if they have not chosen an electricity supplier, the network operator to whose network the consumers' installations are connected will either sell the electricity itself or appoint a supplier who will provide this universal service. The price of electricity sold under the universal service obligation is the weighted average price calculated on the basis of the hourly consumption of electricity during any month and the hourly prices of the electricity exchange during such month. A reasonable sales margin will be added to such weighted average price. Under the EMA, the ECA approves the terms and conditions of the respective supply contracts. The ECA is also authorised to review and control whether the price charged for electricity sold under the universal service obligation is in compliance with the EMA.

Network Services Price regulation remains in place with regards to the sale of network services. All network charges must be transparent and in compliance with the principle of equal treatment for all customers. The ECA approves a maximum price the Group can charge its customers for network services. Under the EMA, a network operator (TSOs and DNOs) is entitled to charge for each of the following network services: (i) connection to the network; (ii) amendments to agreed levels of generation or load at point of connection; (iii) standing charge for maintaining the connection; (iv) transmission of electricity; (v) additional services directly related to network services; and (vi) supply of reactive power to the network and acquisition of reactive power from the network. The ECA approves the Group's pricing methodology for connection charges, whilst charges for network services are approved by the ECA in accordance with its own pricing methodology. Upon approving network charges, the necessity of ensuring security of supply, efficiency and integration of markets must be taken into account.

Security of supply obligation The EMA permits the Estonian Government to take, for a specified period, certain measures in case the security of supply is endangered; there is fuel scarcity; or there is a danger to humans or to the integrity of a network or electrical installation. In such an eventuality, the Estonian Government must establish a scheme for compensating those affected financially. The measures that may be taken include: imposing stocking obligations on generators; suspending or restricting market participants' rights; limiting or interrupting electricity supply to particular market participants; and restricting or amending the obligation to provide network services.

60

Renewable Energy Regulation The Group's generation of heat and electricity is largely based on oil shale. However, the Group also has a small renewables and co-generation portfolio which provides some diversification of the Group’s primary energy sources. For example, the Group has a CHP generating unit in Iru (with 17 MWe and 50MWth capacity) that uses municipal waste as a fuel source. The Group also uses wind and water power to produce electricity. The Group operates three wind farms with combined generating capacity of 111 MW. It is also possible to burn biomass in the CFB units of the Balti and Eesti Power Plants, and the new Auvere Power Plant (once operational) in combination with oil shale. In terms of renewable energy regulation, the EMA provides for a support scheme per kWh to be paid by the TSO (and ultimately by the end customers) to a producer of electricity where the electricity is produced from a renewable energy source or qualifying co-generation plant. A renewable energy source is defined as: water, wind, solar, wave, tidal and geothermal, landfill gas, sewage treatment plant gas, biogas and biomass. There are limits to the amount of support that can be claimed: wind energy producers may use the subsidy for up to a maximum of only 600 GWh of electricity produced from wind in Estonia in a calendar year, for example. Further, plants using biomass qualify for the renewables subsidy only if they are also qualifying co- generation plants. As of 2012 a draft Act has been discussed in the Estonian Parliament which proposed a material reduction of the renewable energy subsidy, tying the amount of such subsidies to the following indicators or a combination thereof: electricity prices on the Estonian power exchange, market prices of CO2 allowances and average price of biomass. According to the draft Act the specific combination would depend on the renewable energy resource used and the capacity of the generation installation, and in the event that the price of electricity on the exchange was equal to or higher than the reduced new subsidy, no subsidy would be paid. In connection with the change in the composition of the Estonian Parliament following the general election in March 2015 this draft Act was removed from the agenda of the Parliament. At the same time, the revised support scheme as set out in the above described draft Act had been submitted for review by the European Commission resulting in a decision of no objection by the European Commission on 28 October 2014. For the time being, it remains unclear whether and to what extent the available renewable subsidies may be reduced and indeed when and if the discussions on the draft Act will continue.

Environmental Regulation The Group's businesses are subject to environmental regulation which is monitored in Estonia by the Environmental Inspectorate, which enforces applicable EU and Estonian law. The Group aims to act in a way that minimises its environmental impact by increasing its efficiency, using new and cleaner technology and finding ways to lower the environmental impact of its current equipment and facilities. The Group has certain legal responsibilities to prevent negative environmental effects. The Group's operational range covers all of the processes connected with energy generation, from oil shale mining to electricity distribution and sales, and all of these processes have a significant impact on the environment, as summarised below:

 emission of pollutants generated by the use of fossil fuels, including CO2, NOx, SO2, particulates and volatile organic compounds;  generation of large amounts of oil shale ash during the course of electricity generation and shale oil production, which, during hydro-transportation, makes the water, which circulates in the closed system and is used as transportation agent, alkaline;  release of water during oil shale mining as a result of the need to dewater the mining zone, containing sulphates and suspended solids; and  use of oil switches and transformers causing oil pollution in the case of accidents or malfunction. The Group is subject to a range of EU environmental regulations and legislation, including: (i) the LCPD; (ii) the NECD; (iii) the IED; (iv) the Landfill Directive; (v) the IPPCD; (vi) the EU ETS; (vii) the Fuel Quality Directive; and (viii) the Mining Waste Directive. The IED came into force at the beginning of 2011, bringing together seven different Directives including the LCPD and IPPCD. The IED has been incorporated into Estonian legislation as of 1 June 2013. Estonia's EU accession agreement provides for certain exemptions from these Directives for the Group’s existing combustion plants, such exemptions are valid until the end of 2015. In 2016, the Group's new combustion plants will be subject to stricter requirements and the conditions of use for the Group's current combustion facilities will be set out more precisely.

61

Negotiations have reopened between the EU and Member States about revising the NECD to lower the annual volumes of permitted emissions for Member States and to bring the EU requirements into line with the Gothenburg Protocol of the Convention on Long-range Trans-boundary Air Pollution. Such revisions would mean stricter pollution limits for Estonia. It is expected that the revision will result in the adoption of the Thematic Strategy on Air Pollution (“TSAP”) by the European Commission which will set out new national emission ceilings for 2020 and further emission reduction measures for up to 2030. In December 2013 the European Commission published the European Clean Air Policy Package. The package included: (i) a new Clean Air Programme for Europe with measures to ensure that existing targets are met in the short term, and new air quality objectives for the period up to 2030; (ii) revised NECD with stricter national emission ceilings for the main pollutants; and (iii) a proposal for a new Directive to reduce pollution from medium-sized combustion installations and small industry installations. This proposal for a new Directive has been approved by the European Parliament. The Group is also subject to the following Estonian environmental legislation including: (i) the Earth's Crust Act; (ii) the Mining Act, which imposes various obligations designed to ensure the safety of persons and property involved in mining operations; (iii) the Environmental Charges Act, which controls the application and regulation of environmental charges that are payable by the Group; (iv) the Environmental Liability Act, which implements Directive 2004/35/EC of the European Parliament and of the Council on environmental liability with regard to the prevention and remedying of environmental damage; (v) the Waste Act, which regulates the issuance of waste permits in relation to the amount of oil shale ash that can be produced and approved incineration methods of other waste products; (vi) the Water Act, which stipulates that a permit for the special use of water is required for the abstraction of specified volumes of water from both surface water and groundwater supplies, the dredging and damming of water bodies, the treatment activities of ground water and the discharge of effluent or other polluted water; (vii) the Ambient Air Act, which regulates the pollutants and permitted quantities of such pollutants a holder of an ambient air pollution permit may emit; and (viii) the Industrial Emissions Act, which regulates the issuance of an integrated environmental permit.

CO2 Emissions The Group's electricity generation and oil production installations are subject to the EU ETS. The Group's activities released a total of 12.8 million tonnes of CO2 into the atmosphere during the year ended 31 December 2014. The EU ETS requires that companies which are subject to its regulatory framework and which obtain emission quotas, surrender those quotas according to the amount of their yearly emissions. The EU ETS is based on a cap and trade system whereby a cap is defined for the total combined permitted CO2 emissions. Within the cap, emission allowances may be sold or purchased as required. The EU ETS is divided into four trading periods: Phase I (2005-2007); Phase II (2008-2012); Phase III (2013- 2020); and Phase IV (2021-2028). For Phases I and II, the CO2 allowances were allocated by the European Commission according to the approved Member State's National Allocation Plan. From 2013 with the start of EU ETS Phase III, the Group is no longer allocated free CO2 allowances for electricity generation but will have to acquire CO2 allowances by auction process or from the market. Decreasing quantities of free allowances are however still available for heat generation, pursuant to the EU ETS Art 10A. The EU ETS also allows Member States to give limited amounts of free CO2 allowances to electricity generators under strict conditions for investment in building new and environmentally sustainable generating capacity according to the EU ETS Art 10C. Estonia applied for approximately 19 million tonnes of allowances for Phase III, of which approximately 17.7 million tonnes were earmarked for the Group’s investments into new generation capacities (i.e the new CFB power plant being constructed). The European Commission approved this application in May 2012.

Oil Shale Ash Thermal treatment of oil shale to generate electricity, heat and liquid fuel creates a significant amount of ash. In 2014, the Group stored a total of 7.9 million tonnes of fly and bottom ash in the ash fields of the Balti and Eesti Power Plants. The Group uses a closed hydro transportation system to remove and store the oil shale ash, which helps to ensure that the whole system meets environmental requirements. The Group has also increased the environmental safety of the whole ash removal system through systematic maintenance, sediment removal from the water return system and extensive continuous monitoring of ground and surface water. In addition to developing ways to reuse oil shale ash as a product, the Group's environmental principles include efforts to reuse and recycle the mining residue rock produced from its operations. There is potential for the mining residue rock left over from the oil shale enrichment process to be used as an alternative resource for road construction and in other areas.

62

Health and Safety Regulation The Group's business carries an inherent risk that there may be incidents which could lead to personal injury or death of employees, contractors or other third parties. Estonian legislation, such as the Occupational Health and Safety Act, imposes obligations on employers in relation to the occupational health and safety of its employees. According to the Occupational Health and Safety Act an employer must ensure compliance with the occupational health and safety requirements in every aspect related to its work. Specific technical and safety requirements arise from the Equipment Safety Act and the Grid Code.

63

GLOSSARY “BBL/D” The rate of oil production per day; i.e. barrels of oil produced a day. “Calorific value” The amount of heat released during the combustion of a specified amount of that substance. “CFB” Circulating Fluidised Bed technology is a low temperature combustion technology that is widely used in burning low-grade fuels, such as oil shale. “CHP” Combined Heat and Power technology—heat which is not used in conventional thermal power generation plants is captured and used as steam or hot water. This increases the fuel efficiency of a power plant. See Co-generation. “Co-generation” Combined generation of electricity and useful heat by combustion of one primary fuel. “Distribution” The system that delivers electricity from a substation to a customer’s premises at voltages of 110 kV or less. “Efficiency” In energy conversion, the ratio of useful work performed to total energy expended. In thermal power stations, the efficiency is the percentage of thermal energy contained in the fuel which can be converted to electricity. The higher the efficiency the lower the loss of the fuel’s energy content. “Estlink 1” A set of high-voltage, direct current submarine cables between Estonia and Finland with the capacity of 350MW.

“Estlink 2” A set of high-voltage, direct current submarine cables between Estonia and Finland, with the capacity of 650MW. “Flue gas” The combustion gas that is produced in power plants, consisting of a mixture of N2, NOx, SO2, CO2, CO, particulate matters and water vapor. “Geological oil shale” Pure oil shale. This term is relevant for calculating compliance with extraction limits set out by law or specified in extraction permits. “Grid Code” A body of regulation which is established on the basis of subsection 42(2) of the EMA. It prescribes the requirements for the connection of electrical installations to the power network and the rights and obligations of market participants. “Generation” Electricity is produced in generating stations where a propulsion unit (for example, a thermal or hydro unit) turns a large electric generator that produces electricity. A generating station may consist of several generating units. “GW” Gigawatts, a unit for measuring the capacity to produce electricity. One gigawatt equals 1,000,000,000 watts. “GWh” Gigawatt hours, a unit for measuring the generation and consumption of electricity. “Installed capacity” The level of output that may be sustained continuously without significant risk of damage to plant and equipment. “kV” Kilovolts, a unit for measuring voltage or electrical tension. One kilovolt equals 1,000 volts. “kWh” Kilowatt hours, a unit for measuring the generation and consumption of electricity. One thousand watts over the period of an hour. “MW” Megawatts, a unit for measuring the capacity to produce electricity. One megawatt equals 1,000,000 watts. “MWh” Megawatt hours, a unit for measuring the generation and consumption of electricity. One million watts over the period of an hour. “MWe” The capacity to produce electrical energy. “MWth” The capacity to produce thermal energy. “Saleable oil shale” Oil shale containing limestone. This is the amount of oil shale that is sold to customers and used for power generation and oil production.

64

“Transmission” The part of the electric power system that carries electricity from power stations to distribution networks at voltages between 330 kV and 110 kV. “TW” Terawatts. A unit for measuring the capacity to produce electricity. One terawatt equals 1,000,000,000,000 watts. “TWh” Terawatt hours, a unit for measuring the generation and consumption of electricity. One terawatt hour is equal to sustained electricity consumption of approximately 114 MW for a period of one year.

65

TAXATION Estonian taxation The following summary describes Estonian tax consequences to Noteholders. It is a general summary and should not be considered as a comprehensive description of all the tax considerations which may be relevant to a decision to purchase, own or dispose of the Notes. Purchasers of the Notes should consult with their tax advisers as to the consequences of holding or transferring Notes under the tax laws of the respective countries of which they are resident for tax purposes. The taxation summary below is based on the laws in force in Estonia as of the date of this document and are subject to any changes in law occurring after such date, which changes could be made on a retrospective basis.

Taxation of interest Estonian Resident Noteholders Pursuant to Article 17(1) of the Estonian Income Tax Act, as amended (the “EITA”), income tax at the rate of 20 per cent. is charged on all interest received by individuals who are resident in Estonia. Income tax payable in respect of interest payments to be made to Estonian resident individuals (except for registered sole proprietors) is to be withheld by the Issuer. The Issuer will not withhold income tax if the Estonian resident Noteholder, who is an individual, has notified the Issuer that the interest was received on financial assets acquired for money held in an investment account as specified in Article 172 of the EITA. In general, interest income earned by resident legal entities is not subject to income tax or withholding tax. Such income is included in their profits and taxed upon distribution of profit pursuant to the respective procedures. Non-resident Noteholders The Issuer does not withhold any income tax on interest payments to non-residents of Estonia, irrespective as to whether they have a permanent establishment in Estonia. The income earned by non-resident Noteholders may be subject to taxation in their country of residence.

Taxation of capital gains Estonian Resident Noteholders Income earned by resident individuals from the sale of Notes is taxed as capital gain from the transfer of property which is subject to income tax at the rate of 20 per cent. A Noteholder has to declare the income and pay the income tax. Pursuant to Article 37(1) of the EITA, a resident individual has the right to deduct certified expenses directly related to the sale of Notes from the resident's gain or to add such expenses to the resident's loss. The gain or loss derived from the transfer of Notes is the difference between the acquisition cost and the selling price of the Notes sold. Different taxation rules apply for the sale of Notes if the Noteholder uses an investment account as specified in Article 172 of the EITA for acquiring Notes and deposits the proceeds from the transfer of Notes in the investment account. Income earned by resident legal entities from the sale of Notes is not subject to income tax. Such income is included in their profits and taxed upon distribution of profits pursuant to relevant procedures. Non-resident Noteholders Income earned from the sale of Notes is not subject to income tax in Estonia for non-resident Noteholders. Such income may be subject to taxation in their country of residence.

EU Savings Directive Under the Savings Directive, Member States are required to provide to the tax authorities of another Member State details of payments of interest or similar income paid or secured by a person established within its jurisdiction to or for the benefit of an individual resident in another Member State or to certain limited types of entities established in that other Member State. For a transitional period, Austria is required (unless during that period it elects otherwise) to operate a withholding system in relation to such payments (the ending of such transitional period being dependent upon the conclusion of certain other agreements relating to information exchange with certain other countries). A

66

number of non-EU countries and territories including Switzerland have adopted similar measures (a withholding system in the case of Switzerland) with effect from the same date. On 24 March 2014, the Council of the European Union adopted the Amending Directive amending and broadening the scope of the requirements described above. The Amending Directive requires Member States to apply these new requirements from 1 January 2017 and if they were to take effect the changes would expand the range of payments covered by the Savings Directive, in particular to include additional types of income payable on securities. They would also expand the circumstances in which payments that indirectly benefit an individual resident in a Member State must be reported or subject to withholding. This approach would apply to payments made to, or secured for, persons, entities or legal arrangements (including trusts) where certain conditions are satisfied, and may in some cases apply where the person, entity or arrangement is established or effectively managed outside of the European Union. However, the European Commission has proposed the repeal of the Savings Directive from 1 January 2017 in the case of Austria and from 1 January 2016 in the case of all other Member States (subject to on-going requirements to fulfil administrative obligations such as the reporting and exchange of information relating to, and accounting for withholding taxes on, payments made before those dates). This is to prevent overlap between the Savings Directive and a new automatic exchange of information regime to be implemented under Council Directive 2011/16/EU on Administrative Cooperation in the field of Taxation (as amended by Council Directive 2014/107/EU). The proposal also provides that, if it proceeds, Member States will not be required to apply the new requirements of the Amending Directive. If a payment is made or collected through a Member State which has opted for a withholding system and an amount of, or in respect of tax were to be withheld from that payment, neither the Issuer nor any Paying Agent (as defined in “Terms and Conditions of the Notes”) nor any other person would be obliged to pay additional amounts with respect to any Note as a result of the imposition of such withholding tax. The Issuer is required to maintain a Payment Agent in a Member State that will not be obliged to withhold or deduct tax pursuant to the Savings Directive. Proposed Financial Transactions Tax (“FTT”) On 14 February 2013, the European Commission published a proposal (the “Commission’s Proposal”) for a Directive for a common FTT in Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “participating Member States”). The Commission’s Proposal has very broad scope and could, if introduced, apply to certain dealings in the Notes (including secondary market transactions) in certain circumstances. Under the Commission’s Proposal the FTT could apply in certain circumstances to persons both within and outside of the participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is a financial institution, and at least one party is established in a participating Member State. A financial institution may be, or be deemed to be, “established” in a participating Member State in a broad range of circumstances, including (a) by transacting with a person established in a participating Member State or (b) where the financial instrument which is subject to the dealings is issued in a participating Member State. Joint statements issued by participating Member States indicate an intention to implement the FTT by 1 January 2016. However, the FTT proposal remains subject to negotiation between the participating Member States and the scope of any such tax is uncertain. Additional Member States may decide to participate. Prospective holders of any Notes are advised to seek their own professional advice in relation to the FTT. U.S. Foreign Account Tax Compliance Withholding Whilst the Notes are in global form and held within Euroclear, or Clearstream, Luxembourg (together, the “ICSDs”), it is not expected that the new reporting regime and potential withholding tax imposed by sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (“FATCA”) will affect the amount of any payments made under, or in respect of, the Notes by the Issuer, any paying agent and the common depositary, given that each of the entities in the payment chain between the Issuer and the ICSDs is a major financial institution whose business is dependent on compliance with FATCA and that any alternative approach introduced under an intergovernmental agreement between the United States and a relevant jurisdiction will be unlikely to affect the Notes. The documentation expressly contemplates the possibility that the Notes may go into definitive form and therefore that they may be taken out of the ICSDs. If this were to happen, then a non- FATCA compliant holder could be subject to FATCA withholding. However, definitive Notes will only be printed in remote circumstances.

67

THE REPUBLIC OF ESTONIA General description Estonia is located on the eastern coast of the Baltic Sea in the Nordic region. The territory of Estonia covers approximately 45,000 square kilometres and it is larger in area than Denmark, Switzerland and The Netherlands. Estonia is bordered to the north by the Gulf of Finland, to the west by the Baltic Sea, to the south by Latvia, and to the east by the Russian Federation. The nearest overseas neighbour to Tallinn (capital of Estonia) is Finland, which lies 85 kilometres across the Baltic Sea. The population of Estonia is approximately 1.31 million with 68% of the total population living in urban areas. (Source: Statistics Estonia) Estonia, along with Finland, Lithuania and Latvia, first attained independence in 1918. Estonia was later occupied by the Soviet Union in 1940 and regained its independence in 1991 with the collapse of the communist regime. In June 1992, Estonia replaced the Russian rouble with the Estonian kroon and immediately began a programme of free market reforms. Estonia has been a member of the European Union since 1 May 2004. On 1 January 2011, Estonia adopted the euro, becoming the seventeenth member of the euro zone. Estonia's constitution (introduced in 1992) provides for a unicameral 101-seat Parliament (Riigikogu) whose members are elected directly by proportional representation. The current government coalition (formed in April 2015) consists of three political parties: Estonian Reform Party (Eesti Reformierakond), Social Democratic Party (Sotsiaaldemokraatlik Erakond) and the Pro Patria and Res Publica Union (Isamaa ja Res Publica Liit). According to the World Bank database, Estonia is listed as a High-Income Economy and is also ranked as a High-Income Member of the Organisation for Economic Co-operation and Development (OECD). The United Nations lists Estonia as a developed country with a very high Human Development Index. Estonia is a member of a number of international organisations including the United Nations (UN), North Atlantic Treaty Organization (NATO), the OECD, the World Trade Organisation (WTO), the International Monetary Fund (IMF), the World Bank, the European Bank for Reconstruction and Development (EBRD) and the Organisation for Security and Co-operation in Europe (OSCE).

The Estonian Economy General Estonia has a modern market-based economy. Successive Estonian governments have pursued a free market and pro-business economic agenda. The government has followed fiscal policies that have resulted in balanced budgets and low public debt. The economy also benefits from strong trade ties with Finland and Sweden. Manufacturing, wholesale and retail trade and real estate activities together amounted to 39% of Estonia’s total annual GDP in 2014. Economic Growth Between 2010 and 2014, Estonia's GDP increased at an average rate of approximately 4.1% per annum. Rising exports to Sweden and Finland led to an economic recovery in 2010, succeeding the contraction of the economy between 2008 and 2009. The average annual GDP growth in the last ten years has been 1.6%. The table below shows the percentage change in Estonian GDP between 2010 and 2014, compared to the average of the 28 EU Member States, as determined by Eurostat.

Annual GDP change (%) 2010 2011 2012 2013 2014 Estonia 2.5 8.3 4.7 1.6 2.1 EU-28 average 2.1 1.7 -0.5 0.1 1.3

Source: Eurostat (unaudited)

Inflation The rate of inflation, as measured by the harmonised consumer price index (HICP), peaked in 2008 when prices increased on average by 10.6% compared to the previous year. However, prices were subject to a correction after the introduction of the euro in 2011 and changes in the rate of inflation in Estonia have since then been to a large extent a result of external factors, such as the appreciation or depreciation of oil, other raw materials and fuels as well as price inflation of food and beverages. For industrial goods and services in particular, the price pressures have been notable. The table below shows the percentage change in HICP in Estonia between 2010 and 2014, compared to the average of the 28 EU Member States, as determined by Eurostat.

68

Annual HICP change (%) 2010 2011 2012 2013 2014 Estonia 2.7 5.1 4.2 3.2 0.5 EU-28 average 2.1 3.1 2.6 1.5 0.6

Source: Eurostat (unaudited)

Unemployment Unemployment rates in Estonia rose in the years of economic downturn. Unemployment rate has been decreasing annually since its peak in 2010 when 12.4% of total labour force was unemployed. The table below shows the average percentage of registered unemployment in the total labour force between 2010 and 2014, as determined by the Estonian Unemployment Insurance Fund.

Annual average rate of registered 2010 2011 2012 2013 2014 unemployment in labour force (%) Estonia 12.4 8.5 6.7 5.8 4.7

Source: Estonian Unemployment Insurance Fund (unaudited)

Foreign Trade Estonia's geographical position favours foreign trade in the region, with the availability of ice-free ports and a well-developed railway and road transport infrastructure. Estonia's total exports amounted to €12.1 billion for 2014, decreasing by 1.7% compared to 2013. Estonia's imports amounted to €13.7 billion for 2014, decreasing by 1.0% compared to 2013. Estonia's trade deficit amounted to €1.7 billion in 2014, compared to €1.6 billion deficit in 2013. During 2014, the largest proportion of Estonia's exports were bound for Sweden (18% of total exports), followed by Finland (15%), Latvia (11%) and Russia (10%). Together these countries accounted for 54% of total national exports. In 2014, Estonia's biggest exports were machinery and transport equipment (35% of total exports). Manufactured goods classified chiefly by material and other manufactured goods together amounted to 30% of total exports and mineral fuels, lubricants and related materials amounted to 11% of total exports. In total these main export categories accounted for 76% of total national exports in 2014. During 2014 the largest proportion of Estonia's goods were imported from Finland (15% of total imports), followed by Germany (12%), Sweden and Latvia (each 9%). Together these countries accounted for 44% of total national imports. The main goods imported in 2014 were machinery and transport equipment (37% of total imports); manufactured goods classified chiefly by material (15%); mineral fuels, lubricants and related materials (13%) and chemicals and related products (11%). Together these imported goods accounted for 76% of total imports in 2014. Estonian main foreign trade item has been machinery and transport equipment which has on average formed 35% of total Estonian exports and 37% of imports over the last five years. (Source: Statistics Estonia) Balance of Payments Historically, the current account of Estonia has been in deficit and financed through capital inflow in the form of foreign direct investments and bank loans to the private sector. In the period of 2010-2011, the current account balance was positive due to increased exports. Current account balance fell to negative territory in 2012 mainly due to trade deficit increase (trade deficit increased 118% in 2012 compared to the previous year). The table below shows the Estonian current account balance as a percentage of GDP between 2010 and 2014, as determined by Eurostat.

Current account balance 2010 2011 2012 2013 2014 (% of GDP) Estonia 1.8 1.4 -2.5 -1.1 -0.1

Source: Eurostat (unaudited)

Public Finances Maintaining a balance of public expenditures and revenues has been a key priority of the Estonian government. The table below shows the government surplus or deficit as a percentage of GDP in Estonia between 2010 and 2014, compared to the average of the 28 EU Member States, as determined by Eurostat.

69

Government surplus/(-)deficit 2010 2011 2012 2013 2014 (% of GDP) Estonia 0.2 1.2 -0.2 -0.2 0.6 EU-28 average n/a -4.5 -4.2 -3.2 -2.9

Source: Eurostat (unaudited) Government debt has remained at low levels over the last 10 years compared to average of the 28 EU Member States. During years of economic growth, the government has generally provided a budget surplus (with the exception of 2012 and 2013). Over the last 10 years, Estonia has consistently had the lowest public sector debt among the EU Member States. The table below shows the government's gross debt as a percentage of GDP in Estonia between 2010 and 2014, compared to the average of the 28 EU Member States, as determined by Eurostat.

Government gross debt 2010 2011 2012 2013 2014 (% of GDP) Estonia 6.5 6.0 9.7 10.1 10.6 EU-28 average n/a 80.9 83.7 85.5 86.8

Source: Eurostat (unaudited)

70

SUBSCRIPTION AND SALE Barclays Bank PLC, Deutsche Bank AG, London Branch and Nordea Bank Danmark A/S (together, the “Joint Lead Managers”) and Swedbank AB (publ) (together with the Joint Lead Managers, the "Managers") have, in a subscription agreement dated on or around 15 September 2015 (the “Subscription Agreement”) and made between the Issuer and the Managers, upon the terms and subject to the conditions contained therein, jointly and severally agreed to subscribe for the Notes at the issue price of 100 per cent. of their principal amount. The Issuer has agreed to pay the Joint Lead Managers a combined management and underwriting commission in connection with the issue of the Notes. The Issuer has also agreed to reimburse the Managers for certain of their expenses incurred in connection with the management of the issue of the Notes. The Managers are entitled in certain circumstances to be released and discharged from its obligations under the Subscription Agreement prior to the closing of the issue of the Notes.

United States of America The Notes have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in certain transactions exempt from the registration requirements of the Securities Act. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act. The Notes are subject to U.S. tax law requirements and may not be offered, sold or delivered within the United States or its possessions or to a United States person, except in certain transactions permitted by U.S. Treasury regulations. Terms used in this paragraph have the meanings given to them by the U. S. Internal Revenue Code of 1986 and Treasury regulations promulgated thereunder. Each Manager has agreed that, except as permitted by the Subscription Agreement, it will not offer, sell or deliver the Notes, (a) as part of their distribution at any time or (b) otherwise, until 40 days after the later of the commencement of the offering and the issue date of the Notes, within the United States or to, or for the account or benefit of, U.S. persons, and that it will have sent to each dealer to which it sells Notes during the distribution compliance period a confirmation or other notice setting forth the restrictions on offers and sales of the Notes within the United States or to, or for the account or benefit of, U.S. persons. Terms used in this paragraph have the meanings given to them by Regulation S under the Securities Act. In addition, until 40 days after commencement of the offering, an offer or sale of Notes within the United States by a dealer (whether or not participating in the offering) may violate the registration requirements of the Securities Act.

United Kingdom Each Manager has further represented and agreed that: (a) it has complied and will comply with all applicable provisions of the Financial Services and Markets Act 2000 (the “FSMA”) with respect to anything done by it in relation to the Notes in, from or otherwise involving the United Kingdom; and (b) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue or sale of any Notes in circumstances in which section 21(1) of the FSMA does not apply to the Issuer.

Republic of Estonia The offer of the Notes has not been and will not be registered under the Estonian Securities Market Act (the “Securities Market Act”) as a public offering. Accordingly, each Manager has represented and agreed that it will not offer or sell any Notes, directly or indirectly, in Estonia or to or for the benefit of any resident of Estonia (which term as used in this paragraph means any person resident in Estonia, including any corporation or other entity incorporated under the laws of Estonia), or to others for re-offering or resale, directly or indirectly, in Estonia or to a resident of Estonia except in compliance with the Securities Market Act and any other applicable laws or regulations of Estonia. The Notes may not be offered or sold to natural persons residing in Estonia unless such persons have purchased the Notes with money held in an investment account as specified in Article 172 of the EITA. General No action has been or will be taken in any jurisdiction by the Issuer or the Managers that would, or is intended to, permit a public offering of the Notes, or possession or distribution of this document or any other offering material, in any country or jurisdiction where action for that purpose is required. Each Manager has represented, warranted and agreed that it has complied and will comply with all applicable laws and regulations

71

in each country or jurisdiction, in which it purchases, offers, sells or delivers Notes or possesses, distributes or publishes this document or any other offering material relating to the Notes. Persons into whose hands this document comes are required by the Issuer and the Managers to comply with all applicable laws and regulations in each country or jurisdiction in which they purchase, offer, sell or deliver Notes or possess, distribute or publish this document or any other offering material relating to the Notes, in all cases at their own expense.

72

GENERAL INFORMATION 1. The Issuer is incorporated in Estonia with its registered and head office at Lelle 22, 11318 Tallinn. The telephone number of the Issuer’s registered office is +372 715 2222. 2. The Issuer is entered in the Estonian Commercial Register under number 10421629. 3. On 10 September 2015 the Management Board of the Issuer resolved to issue €500,000,000 2.384 per cent. Notes due 2023 to be constituted by the Trust Deed. The issue of the Notes has been approved by way of a resolution of the Supervisory Board of the Issuer by its resolution dated 10 September 2015. 4. There has been no material adverse change in the prospects of the Issuer since 31 December 2014 (being the date of the last published audited consolidated financial statements of the Group for the year ended 31 December 2014). There has been no significant change in the Group’s financial or trading position since 30 June 2015 (i.e. the date of the unaudited consolidated interim condensed financial statements of the Group for the six-month period ended 30 June 2015). 5. AS PricewaterhouseCoopers of Pärnu mnt 15, 10141 Tallinn, Estonia, certified auditors, are the auditors of the Group and have audited the Group’s consolidated financial statements as at and for the year ended 31 December 2014 and as at and for the year ended 31 December 2013 and issued respective audit reports, without qualification, in accordance with International Standards on Auditing. AS PricewaterhouseCoopers have also performed a review of the Group’s unaudited consolidated interim condensed financial statements as at and for the six months ended 30 June 2015. The Group’s consolidated financial statements as at and for the year ended 31 December 2014 and as at and for the year ended 31 December 2013 have been prepared in accordance with International Financial Reporting Standards as adopted by the EU (“IFRS”). The Group’s unaudited consolidated interim condensed financial statements as at and for the six months ended 30 June 2015 have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the EU. 6. Application has been made to the UK Listing Authority for the Notes to be admitted to the Official List and to the London Stock Exchange for the Notes to be admitted to trading on the London Stock Exchange. The listing of the Notes is expected to be granted on or about 22 September 2015. 7. Copies of the following documents (together with accurate English translations of the originals) may be inspected during normal business hours at the offices of the Trustee for 12 months from the date of this document: (a) the constitutional documents of the Issuer (in the event of a discrepancy between the original Estonian document and the English translation thereof, the Estonian document shall prevail); (b) the Trust Deed, which includes the forms of the Notes; (c) the audited consolidated financial statements of the Group as at and for the year ended 31 December 2014 and as at and for the year ended 31 December 2013, together with the respective audit reports and the unaudited consolidated interim condensed financial statements of the Group as at and for the six months ended 30 June 2015. The Group and the Issuer each currently prepares audited consolidated and stand-alone accounts, respectively, on an annual basis; and (d) the Agency Agreement. 8. The Notes and the Coupons will bear a legend to the following effect: “Any United States person who holds this obligation will be subject to limitations under the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the Internal Revenue Code”. 9. The Issuer estimates that the amount of expenses related to the admission to trading of the Notes will be approximately £6,950. 10. The Notes have been accepted for clearance through Euroclear and Clearstream, Luxembourg. The Notes will have the ISIN XS1292352843 and the Common Code 129235284. The address of Euroclear is Euroclear Bank SA/NV, 1 Boulevard du Roi Albert II, B-1210 Brussels and the address of Clearstream, Luxembourg is Clearstream Banking, société anonyme, 42 Avenue JF Kennedy, L- 1855 Luxembourg. 11. On the basis of the issue price of the Notes of 100 per cent. of the principal amount, the yield of the Notes is 2.384 per cent. on an annual basis. This yield is calculated on the Closing Date on the basis of the issue price of the Notes, and is not an indication of future yield.

73

THE ISSUER Eesti Energia Aktsiaselts Lelle 22 11318 Tallinn Estonia TRUSTEE Citicorp Trustee Company Limited Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom PRINCIPAL PAYING AGENT Citibank, N.A., London Branch Citigroup Centre Canada Square Canary Wharf London E14 5LB United Kingdom

LEGAL ADVISERS To the Issuer as to Estonian law: To the Issuer as to English law: Raidla Ellex Slaughter and May Roosikrantsi 2 One Bunhill Row 10119 Tallinn London EC1Y 8YY Estonia United Kingdom

To the Managers as to Estonian law: To the Managers and the Trustee as to English law: Advokaadibüroo SORAINEN AS Allen & Overy LLP Pärnu mnt. 15 One Bishops Square 10141 Tallinn London E1 6AD Estonia United Kingdom

AUDITORS TO THE COMPANY AS PricewaterhouseCoopers Pärnu mnt. 15 10141 Tallinn Estonia

530213336

74