ISAGEN S.A. E.S.P. / HMV INGENIEROS LTDA 1ISAGEN S.A. E.S.P

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PIEDRA DEL SOL HYDROELECTRIC PROJECT

ISAGEN S.A. E.S.P. / HMV INGENIEROS LTDA 3

ISAGEN it’s a Colombian utility company, which mainly engages in energy production, the construction of generation projects and the marketing of electricity, and is currently positioned as the country’s second-leading energy generation company.

We view the company as a group of people that seeks to meet the needs of other groups of people, and alongside them, we want to create welfare and development for the country.

We carry out our work under the highest standards of ethics, social and environmental responsibility, economic rationality and customer focus.

Corporate Overview

We operate seven power generation plants (six hydroelectric and one thermal), in the departments of Antioquia, Caldas, Santander and Tolima, which together have a total installed capacity of 3,032 megawatts (MW).

ISAGEN’s strategy is aimed at increasing its generation capacity in order to meet Colombia’s growing demand for electricity. The Company has a renewable energy portfolio consisting of hydropower, geothermal and wind energy projects.

HMV Ingenieros is an organization with extensive international experience, which it has gained by implementing projects in more than 35 countries. It brings together the expertise of two firms with considerable experience: Hidroestudios S.A., which specializes in civil and environmental engineering, hydroelectric generation, water management and infrastructure projects; and Mejía Villegas S.A., a leader in the region thanks to the valuable services it provides to the energy sector. These companies have amassed over 1,500 projects, implemented in the areas of engineering, consulting and solutions.

Piedra del Sol Hydroelectric Project4

Technical Summary

Location Pinchote - San Gil (Santander)

System Run-of-the-river (no reservoir)

Installed capacity 156 MW

Average annual energy 995 GWh/year

Generating units Three 52 MW Francis turbines - vertical shaft

Current status Environmental license pending

SANTANDER

Santander 156 MW 995 GWh - year

Location Installed capacity

Average annual energy

Socorro

Cabrera

Pinchote

San Gil

Fonce River

Study Area

Tunnel

ISAGEN S.A. E.S.P. / HMV INGENIEROS LTDA 5

Photo: 3D view of weir for the Piedra del Sol Hydroelectric Project

Photo: Amoyá River - La Esperanza Hydroelectric Power Plant in Tolima (run-of-the-river system)

Piedra del Sol Hydroelectric Project6

The Piedra del Sol Hydroelectric Project is located in the department of Santander, specifically in the municipalities of Pinchote, San Gil, Cabrera and Socorro.

The project consists of harnessing the waters of the Fonce River for power generation, by building a weir (drowned) that’s about 7.5 meters tall. It will have an installed capacity of 156 MW and generate an annual average of 995 GWh/year, which is equivalent to the energy required to meet the needs of approximately 380,000 Colombians.

Hydroelectric plants can use water stored in large artificial lakes known as reservoirs, or can operate by means of a river’s flow, without the need for a reservoir. The latter is the case for the Piedra del Sol Hydroelectric Project.

Fonce River

• TheProjectrepresentsahydroelectricplantthatdoesnotrequirelandtobeflooded.

• Thereisnoneedtorelocateorresettlefamiliesinordertoimplementtheworks.

• Onlyasmallamountoflandneedstobepurchased.

• Watersportscancontinuebeingpracticedintheregion(astheyarepracticedina stretch of river other than that planned for the Project’s implementation).

• Theriverwillmaintaintheflowrequiredtosustainlife.

ISAGEN S.A. E.S.P. / HMV INGENIEROS LTDA 7

2008 - 2009• HMV identifies the opportunity for hydropower development and asks the Autonomous Corporation of

Santander (CAS) for permission to study natural resources on a stretch of the Fonce River, downstream

from the municipality of San Gil.

• Signing of the agreement between ISAGEN and HMV to conduct a study on the potential hydroelectric

development and harnessing of the Fonce River.

• The CAS grants a two-year extension to the permit for ISAGEN and HMV to study natural resources.

• The Environmental Authority issues the terms of reference for the Environmental Impact Assessment

(EIA).

• Signing of an agreement between ISAGEN and HMV to undertake the feasibility study and EIA.

• The feasibility study and EIA for the Piedra del Sol Project are completed. These are submitted to the Ministry of Environment, Housing and Territorial Development for the environmental license process.

• The National Environmental Licensing Authority (ANLA) begins the environmental licensing process, and designs are developed together with HMV.

• Updated EIA submitted to the ANLA.• Detailed designs for construction.• New visit by the ANLA to the project site.• Scheduling of information meeting and public audience.

2010 - 2011

2012 - 2013

2014 - 2015

History of the Project

Piedra del Sol Hydroelectric Project8

Social and Environmental Management

Piedra del Sol is a clean-energy hydroelectric project that reduces emissions of greenhouse gases (GHG), and so it’s a potential candidate for a Clean Development Mechanism (CDM), according to the criteria provided by the United Nations Framework Convention on Climate Change (UNFCCC).

As with any infrastructure project, the construction of the Piedra del Sol Hydroelectric Project brings with it both negative and positive impacts. The negative impacts will be addressed responsibly and promptly, in accordance with the Environmental Management Plan and Environmental License, seeking the prevention, mitigation or compensation of such impacts.

• Management of construction material disposal sites.• Management of solid, liquid and special waste.• Management of crossings over water bodies and surface water sources.• Management measures within tunnels.• Management of vehicular traffic, mobility and accident control.

• Forest compensation.• Landscape management and restoration.• Program for the management of endangered and prohibited species.• Protection and conservation of plants (vegetation) and terrestrial and aquatic wildlife.• Protection of fish resources.• Management of environmental flow.

• Education and training for project workers.• Community Information and Participation Program (PIPC).• Environmental education for the community from the Project's direct area of influence.• Management of employment.• Negotiation of land and easements required for the Project.• Repair, restoration and/or compensation for infrastructure and/or property that may be affected by the works.• Rescue archaeology in the Project's area of influence.

Social Component

Biotic Component

PhysicalComponent

Environmental Management Plan (EMP)

ISAGEN S.A. E.S.P. / HMV INGENIEROS LTDA 9

Benefits of the Project

Care and restoration of the Fonce river basin:

• Investmenttosupportandpromotedecontaminationoftheriverandwaterconservation.• ReforestationoftheFonceriverbasin.• Investmentforwateruse.

The first article of Decree 1900 of 2006, states that “any project whose implementation involves using water taken directly from natural sources, and is subject to environmental licensing, must invest in the restoration, conservation, preservation and monitoring of the watershed that feeds the respective water source.” In the case of the Piedra del Sol Hydroelectric Project, the estimated total value of the investment forwateruse isapproximatelyCOP$4.026billion,and theprojects thatwill be implementedaround theinvestment plan for water use are as follows:

•Acquisition of land and restoration of strategic areas for water conservation in the micro- watershedoftheOjodeAguaandLaLajastreams.

• Sanitationplanandimprovementoflatrinesinthedirectareaofinfluence.

• TrainingofenvironmentalpromotersbystrengtheningtheElCucharoTrainingandEducation Center.

Improvement, construction and maintenance of roads:

•Approximatelengthofnewroads:9km.

•Approximatelengthofroadstobeimproved:3km.

Support for community, village and municipal development:

• Jobcreation,withprioritygiventohiringpersonnel

from the region: approximately 1,000 people at the

peak of the five-year construction phase.

Piedra del Sol Hydroelectric Project10

Semiskilled and assistance personnel: 785 people.

Skilled labor: 215 people.

• Increased demand for local and regional goods and services: food, purchase of supplies, rent payments, leasing of equipment and vehicles, purchase of goods, and support for local businesses.

• GoodNeighboractions.

• Institutionalstrengthening.

Energy sector statutory transfers:

Article 45, Law 99/1994, Governed by National Decree 1933 of 1994: 6% of gross energy sales shall be

transferred,whichisapproximatelyCOP$4billionat2015prices.

› 50% CAS

EnvironmentalProtectionandWatershedDefense(POMCA)

› 50% municipalities located in the watershed

Funds that should be allocated as a priority to basic sanitation: water supply systems, sewerage systems, water treatment, solid and liquid waste management, as well as environmental improvement. This will increase municipal budgets during the 50 years of the Plant’s operation.

Energy generation:Strengthening of the National Grid (SIN) to meet Colombia’s growing energy demand, harnessing renewable and clean energy, and generating power for approximately 380,000 Colombians.

During construction and operation of the Project, we will maintain an open attitude and ongoing dialogue between the company, the community and institutions. This will be in addition to direct, clear, accurate and timely communication, as well as ethical and transparent interaction with all the region’s stakeholders.

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