Confidential - for internal use only Enron-Online Project Enron South America - Brazil April 2000

Confidential - for internal use only 2 Scope of Services Countries Covered:Brazil Argentina Bolivia Products Covered:Natural Gas Power Pulp & Paper Petrochemicals

Confidential - for internal use only 3 Local Involvement - Brazil Power : Marketing and Local Trading Pulp & Paper : Marketing only - trading based out of EOL USA Petrochemicals: Marketing only - trading based out of EOL USA Phase I Phase II Power: Expand products and reach (customer base) Add other commodities as retail group sees opportunities Natural Gas: Marketing and Trading (if any opportunity arise)

Confidential - for internal use only 4 Local Involvement - Argentina Power : Marketing and Local Trading Natural Gas : Marketing and Local Trading Selected Commodities: Marketing only [Business Plan and details to be provided by Enron Argentina Office]

Confidential - for internal use only 5 Local Involvement - Bolivia Natural Gas: Marketing and Local Trading [Timing and Opportunities to be evaluated by appropriate team]

Confidential - for internal use only EOL Brazil

Confidential - for internal use only 7 Scope of Services - Brazil Power : Initial contract excess power monthly trading Pulp & Paper : Depends upon strategic value to the Direct Sales group Petrochemicals : Depends upon strategic value to the Direct Sales group Natural Gas : When and if breakup of Petrobras monopoly

Confidential - for internal use only 8 Power - Brazil Timing Products Delivery Point Customer Type Settlement Training GTC

Confidential - for internal use only 9 Power-Brazil Timing

Confidential - for internal use only 10 Power-Brazil Products Physical transactions only (no traded index available yet) Symbolic delivery –Central dispatch of power plants by ONS –Power deemed to have been delivered even if ONS chose not to dispatch generation unit involved as physical back-up of contracted energy Notional Delivery Point –Power title is transferred at Notional Point (i.e., point where losses can be split equally between generators and users) –Also called as Center of Gravity –1 Center of Gravity for all of Brazil ( initially and in the foreseeable future, estimated to be next 3 years) Phase I

Confidential - for internal use only 11 Power-Brazil Products (cont.) –ANEEL / ONS may decide to split Brazil into 4 different submarkets (S, SE, N, NE) as transmission constrains between each region develop Baseload blocks measured in MW or MWh, characterized by: –Maximum Demand - “X” MWh per month, or –Maximum Demand - “Y” MW with Load Factor of 100% Firm energy only Maturity: –Intramonth (to pre-empt dysfunctional settlement process) –Up to 6 months forward (to enhance product liquidity) Trading Available, as dictated by MAE: –From - 25th of prior month –To - 24th of current, traded month.

Confidential - for internal use only 12 Power-Brazil Products (cont.) Introduce flexibility in load factor: –from 60% up to 100% Different peak and off peak demand Longer maturity (up to 36 months ?) Differentiate 4 sub-markets as a basis risk may be prevalent Phase II

Confidential - for internal use only 13 Power-Brazil Customers LDC’s ( approximately 35), marketers (approximately 10), generators (approximately 25) and selected large free customers (up to 10) Initially pre-approve approximately 20 customers for specific limits in order to start trading online without further delay Phase I Expand pre-approved customers list to numerous free customers and new generators / marketers Phase II

Confidential - for internal use only 14 Power-Brazil Customer List Phase I

Confidential - for internal use only 15 Power-Brazil Settlement Physical transactions only Currency: all quotes / payments are made in Brazilian Reais (R$) All deliveries are made to a Center of Gravity As a result, all traded volumes are exempted from any additional contractual fee such as transmission usage, distribution usage and connection fees –Seller to ECE will be deemed responsible for any additional fee up to Center of Gravity –Buyer from ECE will be deemed responsible for any additional fee from Center of Gravity onward –Anyhow, most volumes initially traded will be excess power covered under Initial Contracts. If buyer or seller is an LDC, no additional charge will be payable

Confidential - for internal use only 16 Power-Brazil Settlement (cont.) ECE net open position at month end (Phase I) –Settled in MAE –no transmission / distribution burden for ECE –credit risk of MAE members to monitor (should be addressed soon by envolvement of a national clearing house)

Confidential - for internal use only 17 Power-Brazil Training Training material –Training material is going to be provided together with the marketing material to the identified targeted customers Training sessions –Trading sessions with simulations can be provided initially to targeted customers, and eventually to new participants

Confidential - for internal use only 18 Power-Brazil General Terms and Conditions (GTC) Parties to be subject to ANEEL and MAE rules Must address responsibility, of Sellers and Buyers, for transmission usage, connection and distribution fees and taxes Must reinforce product standartization, as well as concepts of Symbolic Delivery and Notional Delivery Point Will provide custumary Force Majeure and other legal clauses

Confidential - for internal use only 19 Power-Brazil Next Steps

Confidential - for internal use only 20 Power - Brazil Potential Revenues (as detailed in Annex I) Budget