Tabreed 06 Prospectus - London Stock Exchange

on the giving of two years’ notice. The UAF have the right to terminate the contract at any time
when it is considered in the public interest to do so, giving rise to an obligation to pay adequate
monetary compensation to Tabreed.
Contracts for Construction of District Cooling Plants and Systems
Tabreed undertakes a conceptual design for a plant, and awards the EPC (engineering, procurement
and construction) contract on that basis.
The EPC contracts conform to the Federation Internationale des Ingenieurs Conseils (‘‘FIDIC’’)
standard. Separate contracts are awarded for the cooling plants and the distribution systems. For
cooling plants, Tabreed historically used to select the EPC contractor on the basis of competitive
bidding. Currently, it is using its own contracting joint venture formed with SNC Lavalin, called SNC
Lavalin Gulf Contractors (‘‘SLGC’’), which is described further on page 59. Contractors for the
distribution systems are selected on a competitive basis.
Contracts for Fuel and Water
Tabreed pays the standard market tariff for the supply of electricity and water. Gas is supplied at a
fixed rate (reviewed annually) pursuant to a supply contract with the Abu Dhabi National Oil
Company (‘‘ADNOC’’) which has recently been renewed for five years to expire in April 2011.
Supply Linkages
As described above, Tabreed has a supply agreement with ADNOC for procuring natural gas which
is used in some of its plants. Water and electricity are bought from the local utilities. Although there
are no long-term contracts, supply constraints are not envisaged in the foreseeable future as the local
utilities (Abu Dhabi Distribution Company, Al Ain Distribution Company, Dubai Electricity and
Water Authority and Federal Electricity and Water Authority) have not indicated an inability to meet
Tabreed’s requirements to date.
Out of the total installed capacity under operating plants, just over 50% is gas-based. This is expected
to rapidly reduce, going forward, to about 25% after the commissioning of all the projects listed on
page 61.
Manufacturing
Emirates Pre-insulated Pipes & Industries (‘‘EPPI’’)
EPPI, set up in 2000, is 60% owned by Tabreed and 40% by Saudi Pre-insulated Pipes and Industries.
It commenced operations in 2002. EPPI engineers and manufactures thermally pre-insulated piping
systems for chilled and hot water, oil and gas, and other energy related applications. Nearly 90% of
its output is sold for use in the district cooling industry. It has benefited from the growth in the
UAE district cooling industry, and serves all district cooling providers (including Tabreed) in the
country. Its manufacturing facilities are located in Abu Dhabi, with a built-up area of 50,000 square
metres and equipped with the latest pipe fabrication technology. Apart from manufacturing, it also
provides application engineering support, on-site technical assistance and installation supervision. The
Company is currently expanding its facilities doubling it built up area. This plant facility is being
constructed to add new product lines.
The Manufacturing segment contributed AED120.6 million of turnover, representing approximately
30.1% of the Company’s revenue, for the financial year ended 31 December 2005.
Contracting
Gulf Energy Systems (‘‘GES’’)
GES was incorporated in 1995 and is 99.99% owned by Tabreed. It is a contracting company
engaged in undertaking building conversions in order to making a customer’s building compatible
with district cooling, i.e. assisting the change-over from traditional air-conditioning system to district
cooling. Most of its business is from the military for retrofitting their sites to connect to Tabreed’s
plants.
The Contracting segment contributed AED109.3 million of turnover, representing approximately
27.3% of the Company’s revenue, for the financial year ended 31 December 2005.
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