Corporate Presentation

January, 2015

Disclaimer

The material that follows is a presentation of general background information about ENEVA S.A. and its subsidiaries (collectively, ENEVA or the Company) as of
the date of the presentation. It is information in summary form and does not purport to be complete. No representation or warranty, express or implied, is made
concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of this information.
This presentation may contain certain forward-looking statements and information relating to ENEVA that reflect the current views and/or expectations of the
Company and its management with respect to its performance, business and future events. Forward looking statements include, without limitation, any statement
that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words like may , plan , believe , anticipate ,
expect, envisages, will likely result, or any other words or phrases of similar meaning. Such statements are subject to a number of risks, uncertainties and
assumptions. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates
and intentions expressed in this presentation. In no event, neither the Company, any of its affiliates, directors, officers, agents or employees nor any of the
placement agents shall be liable before any third party (including investors) for any investment or business decision made or action taken in reliance on the
information and statements contained in this presentation or for any consequential, special or similar damages.
This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities.
Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever.
Recipients of this presentation are not to construe the contents of this summary as legal, tax or investment advice and recipients should consult their own advisors
in this regard.
The market and competitive position data, including market forecasts, used throughout this presentation were obtained from internal surveys, market research,
publicly available information and industry publications. Although we have no reason to believe that any of this information or these reports are inaccurate in any
material respect, we have not independently verified the competitive position, market share, market size, market growth or other data provided by third parties or
by industry or other publications. ENEVA, the placement agents and the underwriters do not make any representation as to the accuracy of such information.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without ENEVAs prior
written consent.

1
ENEVA Overview

ENEVA at a Glance
A Brazilian thermal generator with asset exposure to energy fossil fuels (natural gas and coal)
Company Description

Geographic Footprint

2.9GW inflation-protected long-term PPAs

Amapari Energia

Long-term PPAs guarantee R$2.3 billion in annual inflationadjusted capacity payments

ENEVA 51% / Eletronorte 49%

Diesel - 23MW

Itaqui

ENEVA 100%
Coal - 360MW

PPAs provide hedge against commodity price exposure

Integrated gas E&P assets supply ENEVAs power plants
Competitive portfolio of licensed greenfield wind, coal and gas
fired capacity

Pecm I

ENEVA 50% / EDP 50%

Coal - 720MW

Natural Gas
Exploratory
blocks

Operated by PGN
(Cambuhy PE, ENEVA and
E.ON partnership)
Contracted production
of 8.4MM m3/day

ENEVA ownership structure

Free Float (37.1%)
BNDES

Eike
Batista

28.5%

8.6%

20.0%

ENEVA 50% / E.ON 50%

Coal - 365MW

Solar Tau
ENEVA 100%
Solar - 1MW

Parnaba I

ENEVA 70% / Petra 30%

Natural Gas - 676MW

Controlling Block

Other

Pecm II

Parnaba II
42.9%

50%

ENEVA 100%
Natural Gas - 518MW

Parnaba III
50%

ENEVA Participaes
ENEVA/E.ON
Joint Venture

NOTES: (1) Sale agreement of ENEVAs interest for EDP executed on Dec 2014; (2) Ownership structure assumes future merger of ENEVA Participaes

ENEVA 70% / Petra 30%

Natural Gas - 176MW

Parnaba IV

ENEVA 70% / Petra 30%

Natural Gas - 56MW

2
Operations

2.1
Coal Fleet
Itaqui, Pecm I and Pecm II

Coal Generation Portfolio Overview

1.4 GW of installed capacity in full operation

Itaqui

Pecm II

Pecm I

Capacity: 360MW

Capacity: 720MW

Capacity: 365MW

Fx. Rev.: R$336.7MM/year

Fx. Rev.: R$637.0MM /year

Fx. Rev.: R$302.1MM /year

CVU: R$111/MWh

CVU: R$107/MWh

CVU: R$116/MWh

Auction: A-5/2007

Auction: A-5/2007

Auction: A-5/2008

COD: Feb 2013

COD: Dec 2012

COD: Oct 2013

7
NOTES: (1) Sale agreement of ENEVAs interest for EDP executed on Dec 2014; (2) Fixed revenues are indexed to inflation index IPCA (Database: Nov 2014)

Itaqui
Availability

EBITDA (R$MM)

100%

Auction: 95%

112.1

90%
79.7%
79.2%
77.9%

80%
70%

5.9

24.2

36.1

20.1

60%

-31.3

50%
40%

-95.3

30%
1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

20%
10%
0%

Availability

Historical Availab.

1 year Availab.

6 months Availab.

3Q14 EBITDA hit by reimbursement of past

unavailability cost overpayment(+R$100.5MM)

Technical improvements and additional spares totaling up

to an estimated R$40MM will allow for reduced downtime
8
NOTE: (1) Based on Company and ONS data

Pecm I
Availability

EBITDA (R$MM)

100%
90%

244.1

Auction: 90%

80%
70%

66.3%

40.1

60%

61.7

48.8

32.5

50%
40%

-63.8

30%
20%

-151.2

-143.4

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14

2Q14

3Q14

10%
0%

3Q14 EBITDA hit by reimbursement of past

unavailability cost overpayment(+R$237.0MM)
Unit 1

Unit 2

Historical Availab.

Technical improvements and additional spares totaling up

to an estimated R$30MM will allow for reduced downtime
9
NOTE: (1) Based on Company and ONS data

Pecm II
Availability

EBITDA (R$MM)

100%

Auction: 95%

55.4

90.8%
88.2%

90%

46.3

45.8

80%

33.5

70%
60%
50%
40%
30%
4Q13

20%

1Q14

2Q14

3Q14

10%
0%

Availability

Historical Availab.

1 year Availab.

Improved commissioning resulted in more stable operations,

incorporating lessons learned from other plants

Monitoring of auxiliary equipment to keep good performance

10
NOTE: (1) Based on Company and ONS data

2.2
Natural Gas-fired Assets
Parnaba I, Parnaba III and Parnaba IV

Parnaba Complex overview

A unique case in Brazil power generation sector with 910MW already in operation
Parnaba III

Parnaba IV

3 Wrtsil GMs x 18MW

1 GE GT x 168,8MW
+ 1 Wrtsil GM x 7,3MW

Parnaba II

Parnaba I

2 GE GTs x 168,8MW
+ 1 GE ST x 181MW

4 GE GTs x 168,8MW

Gas
Treatment
Unit

Parnaba III

Parnaba IV

Parnaba I

Parnaba II

Capacity: 56MW

Capacity: 178MW

Capacity: 676MW

Capacity: 518MW

46% efficiency

38% efficiency

37% efficiency

51% efficiency

Fix. Rev: R$54MM/year

Fix. Rev: R$104.9MM/year

Fix. Rev: R$472.6MM/year

Fix. Rev: R$398.3MM/year

CVU: R$69/MWh

CVU: R$171/MWh

CVU: R$109/MWh

CVU: R$63/MWh

Free market

Auction: A-5/2008

Auction: A-5/2008

Auction: A-3/2011

COD: Dec 2013

COD: Dec 2013

COD: Apr 2013

Op. in substitution: Dec 2014

12
Notes: (1) Bertin project developed by ENEVA; (2) Fixed revenues indexed to inflation index IPCA (Database: Nov 2014)

Parnaba I
Availability

EBITDA (R$MM)

100%

Auction: 95%
93.3%
91.9%

90%

58.8

85.4%

50.3

80%

44.8

70%

32.0

28.2

60%

20.3

50%
40%
30%
2Q13

20%

3Q13

4Q13

1Q14

2Q14

3Q14

10%
0%

Availability

Historical Availab.

1 year Availab.

6 months Availab.

All gas turbines in continuous operation for over 10,000 hours with high availability
First inspections on all gas turbines and generators executed by GE with no major findings
NOTE: (1) Based on Company and ONS data

13

Parnaba III
Availability

EBITDA (R$MM)

100%
Auction: 95%

14.4

90%

85.5%
80%
74.4%
70%
60%

1.1

50%
40%
30%

-8.4
1Q13

20%

2Q13

3Q13

10%
0%

Availability

Historical Availab.

6 months Availab.

Availability reduction as of May 2014 as a result of natural gas optimization run by PGN
Despite availability reduction, lower financial impact due to highest CVU among Parnaba Complex TPPs
NOTE: (1) Based on Company and ONS data

14

Parnaba IV
Availability

EBITDA (R$MM)

100%

15.4
90.6%

90%

10.3

85.1%
80%

70%

2.6

60%
50%
40%

-10.9
30%

1Q13

2Q13

3Q13

4Q13

20%
10%
0%

Availability

Historical Availab.

6 months Availab.

Ongoing project to improve the reliability of Parnaba IV Wrtsil engines

15
NOTE: (1) Based on Company and ONS data

3
Recent Highlights

Regulatory Developments (1)

Parnaiba II PPA restructuring
Parnaba II Final Agreement with Aneel

Parnaba Gas Optimization

Background: Delayed 450MWa PPA, with initial supply date as of

Gas optimization of Parnaba Thermoelectric Complex approved by

Mar 2014

Aneel: Parnaba I substituted by Parnaba II, as soon as it becomes

Balanced negotiation with Aneel, preserving the PPA and mitigating

available.

potential high regulatory/contractual penalty

Final terms and conditions:
o

20-year PPAs start date postponed to Jul 1, 2016

R$334MM, to be paid as tariff contribution

In installments starting in 2022
- 2022 to 2025: R$13.0MM/year
- 2026 to 2036: R$25.6MM/year

Through the partial reduction in annual fixed revenues over PPAs term
o

All plants PPAs terms and conditions fulfilled with a restricted gas
production, as recommended by ANP until further development of
other gas areas (4.4-4.8 million m/day)

Commitment to close the cycle of Parnaba I OCGT in next 5 years

(extendable for +5 years by Aneel), subject to certain conditions
precedent, such as sale of energy in the regulated market

Pecm II and Parnaba I & III

17

Regulatory Developments (2)

Unavailability charges (ADOMP) now calculated and paid as provided for in PPAs

Unavailability charges were being paid on an hourly-based methodology, while PPAs provided for a 60-month rolling average
In January 2014 and Sep 2014, Federal Court ruled in favor of ENEVA, in line with PPAs terms and conditions
All operating plants currently protected against hourly-based unavailability charges
Unavailability costs paid amount to +R$315MM1, 2

Plant

100%

Ownership adjusted

Itaqui

R$100.6MM

R$100.6MM

Pecm I

R$247.4MM

R$123.7MM

Pecm II

R$61.0MM

R$30.5MM

Parnaba I

R$61.9MM

R$43.3MM

Parnaba III

R$39.6MM

R$20.8MM

R$510.5MM

R$318.9MM

Total

In Sep 2014, Aneel granted to Pecm I and Itaqui reimbursement of unavailability charges overpayment. On Nov 2014, these plants received
approx. R$336MM
Pecm II, Parnaba I and Parnaba III will request to Aneel to be also reimbursed for overpayment
NOTES: (1) Consider hourly-based methodology for unavailability charges until Aug 2014; (2) Does not consider amounts paid since Federal Court decisions

18

HoldCo Expenses Reduction and Optimization Plan Ongoing

Consistent reduction of costs in recent quarters
HoldCo Operational Expenses1/2/3

HoldCo Headcount3
159

33.2
29.8

147

27.9

1Q13

2Q13

3Q13

1Q13

2Q13

148

3Q13

Highlight to Personnel expenses reduction in the last 12 months (-15.8%)

o Headcount drop (-24.5%)
o Streamlining of organization structure

Ongoing HoldCo expenses cut and optimization program

o R$80MM/year targeted until 2015 year-end
o Further reductions in IT and consulting costs over the coming months

19
NOTES: (1) Does not include Depreciation & Amortization; (2) Does not include stock options cost; (3) Holding comprises ENEVA and ENEVA Participaes

Pecm I Sale
Immediate liquidity to move forward in challenging times
Non-solicited proposal from EDP to acquire ENEVA interest in Pecm I
Proceedings: R$300.0MM
Involved assets
o

ENEVAs shares, corresponding to 50% of Pecm I share capital on the transaction signing date

ENEVA credit conversion (R$409.9MM), comprised of:

- Intercompany loan: R$178MM
- Coal supply contract: R$208MM
- Electric energy contract: R$23.9MM

Release of ENEVA of future contributions in the asset

o

Outstanding CAPEX and investments on operational stabilization plan; and

Debt service

Next steps
o

Brazilian anti-trust agency (CADE) approval; and

ENEVAs lenders approval, considering JR requested on Dec 2014

20

4
Judicial Recovery Request

Judicial Recovery Request

Necessary protection to continue operations
Efforts made by officers of the Company in the last months
Private capital increase: R$133MM (net proceedings)

Agreement with Aneel to preserve Parnaba II PPAs

Partial sale of Pecm II: R$408MM

Sale of ENEVA interest in Pecm I: R$300MM

Adjustment on calculation and payment of plants unavailability

Significant improvement in power plants availability

(ADOMP)

Unavailability cost overpayments reimbursement for Pecm I

Significant reduction in HoldCo expenses

and Itaqui: R$360MM

Judicial request reasons

o

No renewal of agreement to suspend amortization and payment of interest on financial transactions, expired on Nov 2014

No agreement with financial institutions to implement a stabilization plan, comprised of:

- Capital structure strengthening; and
- Debt reprofiling

Involved assets
o

ENEVA S.A.

ENEVA Participaes S.A.

None of operating subsidiaries were part of JR request

Judicial request approved by Court and confirmed by shareholders on Dec 2014

22

5
Brazilian Power Market and Greenfield Portfolio

Brazilian Energy Matrix

Brazil is highly dependent on hydro generation with increasingly faster depletion of reservoirs

Brazils Generation Capacity: 134GW

Southeast Reservoirs

Breakdown by source January 2015

~70% of total storage capacity

100%

16.0%

90%
80%
3.7%

75%

70%

1.5%

67%

2.7%

56%

60%
50%

9.4%

40%

30%

66.7%

43% 42% 43%

43%
40%
39% 40%

43%

34%
29%

38%

23%

19%

31%
22%

20%
10%
Hydro

Gas

Coal

Nuclear

Wind

Others

0%
Jan

Feb

Mar

Apr

May

Average 2007-2011

Source: ANEEL

Jun

Jul
2012

Aug

Sep
2013

Oct

Nov

Dec

2014

24

ENEVAs Greenfield Portfolio

Attractive licensed greenfield projects in various development stages

Power
supply-demand
unbalanced

Parnaba
Complex

Hydropower
concentrated
matrix

Spot prices at
historical highs

Demand for baseload generation

Integrated to natural gas resources

Opportunities
for ENEVAs
growth

Solar Tau
1 MW

Located in a tax-advantaged region

Ventos Wind
Complex
600 MW

Located in one Brazils best wind resource areas

Ventos Wind
Complex

Attractive load factor

Just 30km from grid connection
Land ownership assured

Au
(Coal + Gas)

Parnaba
Complex
2,166 MW

Au

2,100 MW Coal
3,300 MW Natural Gas

Located at a port with a regasification terminal build

license

Seival Mine

150km from Campos Basin natural gas accumulations

License granted
152 Mton in proven reserves

Environmental licensed to both coal and gas operations

Sul & Seival

Integrated to the Seival Mine (proven reserves: 152 Mton)

Low operation costs

Sul

727 MW

Seival
600 MW

25

Parnaba I: Closing of the Cycle (1)

Highly competitive expansion to existing site

Highlights

Parnaba Site

Part of Parnaba II Agreement settled with Aneel in Nov 2014

Bottoming of open cycle gas turbines from Parnaiba I power
plant provides extra 360MW
Competitive project as no additional gas needed
Installation Environmental License issued
Plug and Play: 500kV electrical substation and water supply

Bottoming #1

Bottoming #2

already built
Known technology, original design of Parnaiba Generation
Complex done to enable modular expansion, leading to
efficient implementation and operation
o

ENEVA recent experience in Parnaba II combined-cycle plant at

neighboring site

Cost sharing efficiency (O&M, administrative, HSSE, spare

parts etc.) with Parnaba Generation Complex make the project
even more competitive
26
NOTE: (1) To enable expansion additional fuel mainly for PPA/contract harmonization and internal consumption

Parnaba I: Closing of the Cycle (2)

Highly competitive expansion to existing site
Net power output: 352,8 MW
Plants upside efficiency: 51% (previously 37%)
Additional gas consumption: zero
Contractor: TBD (first phase performed by Duro Felguera)

New equipment

Implementation schedule: 36 months

CAPEX: approx. R$1.75 billion
Target capital structure: 70/30, with BNDES financing

Target IRR: 15% real

Main equipment/delivery time

Existing
facilities

o Steam Turbine + Generator: 18 months

o Heat Recovery Steam Generator (boilers): 14 months
o Cooling Tower: 13 months
o Pumps (feed water, condensate, cooling water): 13 months
27