1. Terralex Cape Town Annual General Meeting B RONS & S ALAS ATTORNEYS AT LAW Guillermo Malm Green

2.  Law No. 24,295 (Official Bulletin, January 11, 1994). Became effective on March 21, 1994 Brons & Salas UNITED NATIONS FRAMEWORK CONVENTION ON CLIMATE CHANGE ARGENTINE CLIMATE CHANGE REGULATIONS KYOTO PROTOCOL  The Kyoto Protocol was ratified by Argentina on July 13, 2001 pursuant to Law No. 25,438. Argentina is a Non-Annex I Country.  National Decree No. 822/98 created the Argentine Bureau of Clean Development Mechanism (OAMDL in Spanish) to implement the Protocol. Created under the Secretariat of Sustainable Development (SAyDS) it is formed by: - a Permanent Secretary and - an Executive Committee

3. -Both Federal and Provincial Governments are empowered to regulate gas emissions. -According to the Argentine Constitution, the Federal Government is granted the power to establish minimum environmental standards to be met throughout the country. The Provinces may enact additional regulations. -Greenhouse gas emissions are neither regulated nor limited. -Though there are no active initiatives to regulate greenhouse gases, Argentina is trying to develop a trading scheme of carbon credits. Brons & Salas ARGENTINE – GAS EMISSIONS ARGENTINE GREENHOUSE GAS EMISSIONS

4.  ARGENTINE CDM Brons & Salas ARGENTINE - CLEAN DEVELOPMENT MECHANISMS  Resolution No. 825/04 issued by the SAyDS sets forth the procedure to obtain the approval of a Clean Development Mechanism Project (CDM) and the subsequent issuance of bonds.  Pursuant to the resolution, a party intending to implement a CDM project must file a document describing the project (“Project Design Document” or “PDD”), its estimated emission reduction, means of financing and long-term monitoring plans. Pre Evaluation Phase: The Permanent Secretary of the OAMDL determines whether the PDD complies with the specifications described in article 12 of the Kyoto Protocol. If so, it submits the document to the local authorities for their review and comment. This phase must be completed within 20 business days. Then, proceedings must be referred to the Executive Committee. Evaluation Phase: The Executive Committee has 5 business days to select an Evaluating Institution from a list of non- profit organizations which will have 10 business days to provide a detailed project report. This report will then be considered by the Executive Committee of the OAMDL which will issue a resolution advising the SAyDS on whether to approve or reject the PDD.

5.  ARGENTINE CDM Brons & Salas ARGENTINE - CLEAN DEVELOPMENT MECHANISMS  Decree No. 1070/05 created the Argentine Carbon Fund under the authority of the SAyDS to promote the implementation of CDM projects.  So far, 19 CDM projects have been approved in the following areas: waste, biofuel, wind and hydroelectric power while three others (in the waste and wind power areas) are in the process of evaluation.

6. Brons & Salas  Law No. 25,019 (1998), as regulated by Decree No. 1597/99, declared the generation of energy from wind and solar sources as an issue of national interest and established promotion and incentive measures.  Law No. 26,190 (2007), unregulated, declared that the generation of electric power from renewable energy sources, the research for technological development and the manufacturing of equipment for such purpose are issues of national interest. Law No. 26,190 fixed as a goal that 8% of the use of electric power in the country should come from renewable energy sources by December 2016. Law No. 26,190 extended the benefits of some sections of Law No. 25,019 to power plants generating energy from other renewable energy sources such as tides, water, biomass, landfill gas, gas from scrubbing plants and biogas. ARGENTINE RENEWABLE ENERGY PROMOTION

7. Brons & Salas Promoted Activities  Generation of wind, geothermal, tidal, biomass, landfill gas, gas from scrubbing plants, biogas and hydraulic power of up to 30 MW systems, trading such power on wholesale electricity markets or intended to be used as utilities.  Electric generation made available to users through photovoltaic solar generators, intended to be used as utilities. ARGENTINE RENEWABLE ENERGY PROMOTION NATIONAL SYSTEM OF INCENTIVES FOR THE GENERATION OF RENEWABLE ENERGY Benefits/Incentives o Payment of a sum of money for each unit of energy output, up to the equivalent of AR$ 0.015 kWh for 15 years, as from the date of actual installation. o Payment of a sum of money for each unit of energy output, up to the equivalent of AR$ 0.9 kWh for 15 years, as from the actual date of installation.

8. Brons & Salas Promoted Activities  Capital expenditures intended for the installation of wind or solar plants and/or equipment.  Enterprises for the generation of wind or solar energy trading their output on the wholesale electricity market or intended for utilities  Generation of wind energy within the Wholesale Market. ARGENTINE RENEWABLE ENERGY PROMOTION NATIONAL SYSTEM OF INCENTIVES FOR THE GENERATION OF RENEWABLE ENERGY Benefits/Incentives o VAT deferral until October 2013, subject to prior approval of the Secretariat of Energy. o Fiscal Stability until October 2013. o Preferential dispatch, access to the national electricity grid.

9. Brons & Salas Promoted Activities  Construction of works for the production of electric power generated by renewable energy sources (wind, solar, tidal, hydraulic, biomass, landfill gas, gas from scrubbing plants and biogas power). ARGENTINE RENEWABLE ENERGY PROMOTION NATIONAL SYSTEM OF INCENTIVES FOR THE GENERARION OF RENEWABLE ENERGY Benefits/Incentives o Investment System with special tax treatment applied to the acquisition of capital goods and/or the performance of works related to the project. o Anticipated VAT refund, accelerated depreciation and amortization of assets and exclusion from the minimum taxable base concerning the minimum presumptive income tax.

10. Brons & Salas Promoted Activities  Execution of Agreements between: 1) Major and Minor Large Users, customers of distributors or Electric Energy Distribution Service Providers and Generators, Co-Generators or Self-Generators. 2) CAMMESA (entity in charge of coordinating dispatch operations responsible for establishing wholesale prices and management of economic transactions performed through the National Interconnection System) and Generators, Co-Generators or Self-Generators. ARGENTINE RENEWABLE ENERGY PROMOTION NATIONAL SYSTEM OF INCENTIVES FOR THE GENERATION OF RENEWABLE ENERGY Benefits/Incentives Resolutions No. 1,281/06 and 220/07 issued by the Energy Secretariat o New Markets. Agreements for additional power are allowed and encouraged o Collection Preference

11. Brons & Salas  Several provinces agreed to the promotion systems provided for by Laws Nos. 25,019 and 26,190 by passing their own rules and regulations. In general, these rules and regulations provide for further subsidies in addition to the national subsidy, differential tax systems, incentives for users and distributors to enter into agreements for renewable energy and preferential grid access conditions. ARGENTINE RENEWABLE ENERGY PROMOTION

12. BIOFUELS PROMOTION Brons & Salas  Law No. 26,093, regulated by Decree No. 109/07, approved the “Regulatory and Promotional System for Biofuel Production and Sustainable Use”. As from January 1, 2010 and throughout the effective term of the law (initial term of 15 years): a) Gas oil and diesel oil shall be blended with at least 5% of | (B5). b) Gasoline shall be blended with at least 5% of bioethanol (E5) c) Tax Benefits are granted: (i) Anticipated VAT refund or, in the alternative, accelerated depreciation of assets for income tax purposes. (ii) Assets used for approved projects shall not be taken into account in the taxable base for minimum presumptive income tax purposes. (iii) Biodiesel and bioethanol shall not be subject to tax on liquid fuels and natural gas, tax on transfers for value or for free, tax on the import of gas oil or the water infrastructure rate. d) Approved projects fall within the scope of the Kyoto Protocol mechanism. ARGENTINE RENEWABLE ENERGY PROMOTION

13. Maipú 1210, 5th floor C1006ACT - City of Buenos Aires Argentina Tel. (54-11) 4891-2717 Fax (54-11) 4311-7025 / 4314-0399 www.brons.com.ar Brons & Salas B RONS & S ALAS ATTORNEYS AT LAW