Project Overview – Surrey Biofuel Facility Achievement of Financial Close

The City of Surrey, British Columbia (BC) is implementing the second phase of its Rethink Waste program and its goal is to create a fully integrated model for organic waste management that maximizes the diversion of household organic waste from the landfill and is both economically and environmentally sustainable.

The City of Surrey is procuring a biofuel facility under a Design-Build-Finance-Operate and Maintain model and is receiving PPP Canada funding support. When completed, the facility will be designed to receive and process 115,000 tonnes of organic waste annually and will be the largest of its kind in Canada with a capacity to process 100% of the City’s organic waste, along with commercial organic waste, helping Metro Vancouver achieve its regional 70% waste diversion target. Once established, the facility will process the city’s organic waste into a 100% renewable fuel. This fuel will then be used to power Surrey’s waste collection vehicles, creating a sustainable closed-loop system. The facility will be situated on City-owned property.

The Vancouver Infrastructure and Project Finance practice of PricewaterhouseCoopers LLP provided financial advice to the City of Surrey as follows: ✓ Financial modelling of the public sector comparator (traditional procurement option) and the shadow bid (the P3 option); ✓ Determining value for money to the City of Surrey; ✓ Reviewing the risk analysis in order to assess the appropriate risk transfer and risk sharing between the public and private sectors; ✓ Assisting with the negotiation of the funding agreement between the City and PPP Canada; ✓ Participating in a market sounding to determine the market appetite for the project structure, procurement model and bankability of the envisioned solution; ✓ Developing a project specific payment mechanism that took into account the implications of a project that includes some merchant risk; ✓ Providing advice on the implications for, and changes needed to, the Project Agreement to allow for proponents to offer a Corporate Finance Solution as an alternative to a

Project Finance solution; ✓ Financial modelling to assess the sensitivity of the economic analysis to changes in unit pricing for gas offtake; ✓ Providing assistance in the drafting of the procurement documentation (Request for Qualification (“RFQ”), Request for Proposals (“RFP”) and Project Agreement (“PA”)); ✓ Financial evaluation of RFQ and RFP submissions; ✓ Assistance with negotiations and completion of the project documents through financial close.

The project is currently under construction and the major project milestones were as follows: ✓ May 2013: RFQ launch ✓ May 2013 to Feb 2014: RFQ evaluation, site visits and selection of three proponents ✓ Feb 2014: RFP launch including a series of three collaborative meetings with each shortlisted proponent ✓ Dec 2014: Identification of preferred proponent ✓ Feb 2015: Contract Award ✓ Feb 2015: Construction commencement

Members of PwC’s Vancouver team are David Egan, Partner, Catherine Peacock, Managing Director, John Haggett, Director and Joe Hickey, Director and can be reached at their Vancouver office at 604-806-7000.