Investor Presentaiton

חברת החשמל Israel Electric Possession transferring under an agreement to be signed The Sector Reform Timeline (1) Done Prepared for vacant possession Gov' Decision on Reform Sale of 'Alon Tavor' site Sale of the land of 'project D' (2) Separation of the System T=57 T=60 06/03/23 Gradual assessments and opening of the supply segment for competition 12/03/21 07/31/21 06/03/21 In Process Management & PDT which was completed on 12/03/2020 (3) Done Submitting a plan in Reading site before depositing for two new CCGT Done Sale of 'Ramat Hovav' site In Process In Process In Process In Process Sale of 'Reading' site (4) Construction of the first combined cycle H (unit 70) at Orot Rabin' site Construction of the second combined cycle H (unit 80) at Orot Rabin' site Sale of 'Hagit' site(5) Sale of "Eshkol" site In Process In Process Re-examination of the supply segment T=0 T=18 T=22 T=30 T=36 T=38 T=42 12/03/20 T=48 06/03/22 03/03/23 Changes in the schedules set in the electricity market reform agreement 12/03/19 03/31/20 12/03/24 Source IEC 's Financial Statements for 2020FY Notes: 1. 2. 3. 4. 5. In accordance with the IEC's undertakings adopted by the IEC's BOD on May 10, 2018, to the extent that the Government resolutions and/or the legislative amendments and/or the administrative decisions and/or the arrangements of the Electricity Authority and/or the aforesaid licenses given by the State of Israel, that will correspond to the (insofar as these are needed according to the State of Israel position), or that the collective agreement IEC and the employees representatives will not be in force, then all IEC's undertakings, according to the IEC's undertaking document, will not be in force and the State of Israel will not be able to file claims and/or complain against IEC with respect to those undertakings. On June 3, 2018, the required Government Decision was received, on July 19, 2018 the Knesset approved the Amendment to the Law, and on May 17, 2018, the Principles of the policy of the Minister and the Electricity Authority's Regulation as aforesaid were published. In addition, on November 4, 2018, the Collective Agreement came into effect after all the contingent conditions detailed therein were fulfilled. For the purpose of implementing the full structural change outline, it will be required the approval of the regulatory agencies, decisions and regulations of the Electricity Authority and granting licenses which, as of this date, have not yet been received and there is no certainty regarding the date of determining the agreements or the granting of such licenses and their final terms. As of this date, IEC is unable to reliable estimate the exact implications of the additional regulations and approvals that have not yet been formulated or received on its financial position and results. Part of the area at the Rutenberg power station (that was designated in the past for Project which did not carry out) will be transferred pursuant to the assets arrangement agreement as defined in Note 1f in the FY2020 Financial Statements. As for now, the stage of evacuation of the infrastructure, fencing and preparing part of the area intended for delivery to the Israel Land Authority (ILA), in accordance with the reform outline, was completed. The remaining area evacuation and its delivery is awaiting the completion of examinations by the ILA regarding the economic potential of the after-sale area and to its decision. Transfer of the area in practice to the State through the ILA has not been carried out, notice that the Ministry of Energy, the EA and the ILA are expected to make decisions regarding how the area will be transferred, notice for the future use intended for the area, and some other ILA's decisions are required on the evacuation of infrastructure facilities from the site and the financing format of evacuation costs eligible for the company. Then, a suitable agreement between the Company and the State will be signed, for the purpose of transferring the area, in accordance with the decisions which been made, as aforesaid. The implementation date of the transfer and separation the system management activity to the responsibility of the System Management Company (SMC), which originally set for December 3, 2019, was postponed by the relevant bodies and regulators until June 3, 2020 and then postponed again to December 3, 2020. On June 17, 2020, the Electricity Authority decided to grant a license to the SMC, which was approved on June 25, 2020 by the Minister of Energy, and in accordance with its terms, the system management activity will enter into force as soon as possible, and no later than December 3, 2020, subject to the approval of the Authority and the Minister of Energy that the SMC is prepared to commence operation of the activity. Due to additional delays, a framework was formulated of transferring the system management activities from the company to the SMC in a graduated manner, so that in the first stage the activities of the Planning Development Technology Division (PDT) and some of the activities of Statistics and Market Research Department will be transferred from the company to SMC, subject to the amendment of the special collective agreement (reform and structural and organizational change), and the receipt of approvals from the Electricity Authority and the Minister of Energy regarding the company's readiness for partial activity. On December 1, 2020 the transfer of the activities of the Planning Development Technology Division and the Statistics and Market Research Department from the Company to SMC has been completed, after given the approval of the Electricity Authority and the Minister of Energy indicating the readiness of SMC for the start of the partial operation, the amendment of SMC's license was approved, accordingly, by the Minister of Energy and a correcting collective agreement was signed. In addition, a decision to postpone the date for the beginning of operation of SMC for an additional six months (i.e. until June 3, 2021). For further details, please see Note 1e to the 2020FY Financial Statements. On January 10, 2021, the Company appealed to the Ministry of Energy and the EA in order to extent of the production licenses on the site of Reading and also applied for the postponement of the site sale. As of this date, the issue of Reading's sale was brought to the attention of the relevant parties in Israel and no decisions have yet been made regarding the future of the site, which include, among other things, the site's promotional format, the creation regulation that supports this process and the various alternatives to ensure a regular power supply to the Tel-Aviv metropolitan area and at the same time, it is necessary to promote the relevant legislation in the context of the issue of asbestos removal and to adjust the operating dates of the power station. In light of the above, there is no certainty regarding the possibility of the sale of the Reading site on time. On February 11, 2021, the Electricity Authority published a hearing of the production units regulation in Hagit site after their future sale by the Company. For further details, see Note 3 in the 2020FY Financial Statements. 06/03/18 Investor Relations 19